Chinese import surge piles pressure on SA manufacturers

A new report by Moody’s Ratings has found that a surge in Chinese imports is increasing pressure on South African manufacturers, as China cements a progressively dominant position in African trade.

South Africa ranked as the most exposed to Chinese trade competition among eight major African economies assessed in the report.

In the ratings agency’s manufacturing vulnerability index (MVI), South Africa scored “high” in all three of its measures — displacement risk, economic sensitivity and export capacity — the worst of the eight countries assessed.

Moody’s pointed to South Africa’s relatively large manufacturing base and its declining competitiveness in machinery and automotive components, sectors where domestic producers have steadily lost market share to Chinese exporters over the past decade.

Raphaele Auberty, assistant vice-president at Moody’s Ratings, said South Africa was the most vulnerable economy in the index because it combined a relatively large manufacturing sector, high reliance on foreign and Chinese value-added exports and declining competitiveness, with machinery and the automotive sector most exposed.

“We mostly consider medium-term risks stemming from domestic producers losing market share to Chinese producers for inputs in value chains, while also facing rising competition in export markets,” Auberty said, adding that this could constrain South Africa’s efforts to diversify trade and economic activity.

Vehicles were the single largest driver of the rise in Chinese imports to Africa in 2025, accounting for 16% of the increase, followed by machinery and electronics.

Auberty said the data suggested this was not matched by a corresponding rise in vehicle exports from the continent and that South Africa’s share of that increase was limited. “South Africa accounted for a relatively small share of additional vehicle exports from China in 2025,” she said.

We mostly consider medium-term risks stemming from domestic producers losing market share to Chinese producers for inputs in value chains, while also facing rising competition in export markets

—  Raphaele Auberty, assistant vice-president at Moody’s Ratings

Despite ranking as the most exposed economy in the region, Auberty cautioned against reading this as an immediate crisis for South African industry. “This does not necessarily translate into immediate job losses, plant closures or lost export contracts, and we have not looked at this specific data.”

South Africa’s exposure comes against a backdrop of a widening trade imbalance between Africa and China more broadly. The continent’s deficit in manufactured goods trade grew to 11% of GDP in 2025, up from 9.9% the previous year, as Chinese exports to Africa rose 26%, outpacing every other region globally.

Moody’s said the shift reflected China redirecting exports after facing higher US tariffs on finished manufactures, particularly electronics and vehicles, combined with overcapacity in China’s own industrial base.

The report found little evidence that the rise in Chinese imports was translating into new manufacturing or re-export opportunities for the region. Only in apparel, footwear and electronics did roughly 40% of the increase in imports get matched by a corresponding rise in exports.

In machinery, African exports fell even as imports from China rose, suggesting the bulk of new imports were absorbed by domestic consumption and investment rather than processed and sent onward.

South Africa was not alone in its exposure, with Morocco and Tunisia the only other countries to score “high” overall on the MVI, both because of their deeper integration into global manufacturing chains.

Auberty said the two countries also had the strongest potential to benefit from Chinese-linked assembly opportunities, given their relatively large and competitive manufacturing sectors and logistics capabilities.

She pointed to Morocco as the region’s leading automotive producer, with successful integration into global manufacturing networks, and Tunisia as particularly competitive in textiles and electronics.

Auberty noted this upside came with a risk attached. “These are also among the most exposed economies due to direct Chinese competition in key sectors,” she said, adding that Chinese competition risked offsetting the diversification gains those countries were positioned to make.

By contrast, Nigeria and Cameroon scored lowest on the index. Moody’s said this reflected weak industrialisation rather than resilience, since both economies remain heavily reliant on commodity exports and have limited manufacturing capacity to either compete with or benefit from shifting trade patterns.

Across the continent, Moody’s found that efforts to diversify away from commodity exports had made little progress over the past decade and a half and that South Africa’s own diversification score had barely shifted since 2010. This is despite its comparatively developed manufacturing base, with no country assessed having meaningfully increased its share of industrial exports.

Overall, Moody’s said, these dynamics were likely to constrain rather than support Africa’s broader push to diversify its economies and reduce reliance on commodity exports in the coming years. South Africa, it said, would face the most acute structural pressure on the continent.

Business Times