Landmark deal with China offers SA many advantages, but there are risks

SA’s recently signed landmark agreement with China, which grants our exports 100% duty-free access to the Chinese market for two years, is a significant strategic advantage for this country.

The China-Africa Economic Partnership Agreement presents SA with the opportunity to increase export volumes across key sectors such as agriculture, mining and manufacturing, thereby strengthening its trade position and economic growth prospects.

But it also raises important red flags that warrant careful consideration.

The deal does give SA an important alternative destination for its agricultural exports, especially outside the US, which tends to use trade as leverage in political disagreements.

This is especially true under the administration of President Donald Trump, who tends to weaponise access to US markets to achieve national and foreign policy interests.

SA is a victim of this political stance.

Washington has imposed punitive tariffs of up to 30% on our exports and has repeatedly threatened to remove the country from the Agoa trade agreement.

This is because the Trump administration disagrees politically with the genocide case that SA brought against Israel at the International Court of Justice.

The deal with China gives SA an important economic safety net, while also opening the door for it to lessen a dangerous dependency of African countries on Western economic markets.

While these remain valuable, history shows us that they can expose African countries to external shocks and undermine national sovereignty.

So, access to the Chinese market provides SA with a strategic alternative for its agricultural goods.

That’s a good thing.

But international deals can be highly complex, and so it would be a mistake to take the agreement with China at face value.

Trade and industry minister Parks Tau and his team need to ensure that it is structured and implemented in a way that advances the transformation of SA’s economy.

Critically, they must guard against SA becoming more economically dependent on China without building its own industrial strength.

It would be short-sighted to substitute dependence on one dominant export market with a similar reliance on China.

Also, access to a market does not automatically translate into success.

Exporting at scale requires reliability, consistency and speed, areas where SA is still struggling due to internal structural challenges such as weak infrastructure, energy shortages and inefficient transport systems.

These constraints could limit how much SA actually benefits from this deal.

And the fact that it is only for two years provides little time to address these issues to realise meaningful gains.

This means the biggest beneficiaries of this deal could be the well-established white agribusinesses that already have the resources and export networks in place.

It will be easy for them to move quickly and meet the strict volumes, quality and regulatory requirements of the Chinese market.

That pushes to the margins smaller and black farmers, many of whom are still trying to recover from years of unequal access to land, finance and markets.

So instead of narrowing economic gaps, this deal could widen them unintentionally.

Even with minerals and raw materials exports there are potential red flags.

China has an enormous appetite for resources. The problem is that our resources will leave this country in their raw, unprocessed form.

This means SA will remain trapped in the cycle of exporting raw materials and importing finished goods at a higher cost, the oldest weakness in Africa’s resources-driven economies.

SA may earn more money in the short term by increasing export volumes, but it risks missing out on long-term industrial development.

Without investing in beneficiation of its minerals, the structure of the SA economy will not change.

Another potential risk is that China is not only a buyer but also a dominant global manufacturing powerhouse.

So, while SA-manufactured products will gain duty-free access to the Chinese market, its cheap imports are likely to flood the domestic market.

This poses a big threat to the local manufacturing sector, especially the textile industry which was decimated by cheap imports from China, resulting in factory closures and job losses.

This agreement may therefore worsen existing challenges instead of revitalising local production and could potentially accelerate SA’s deindustrialisation.

So, it is crucial for SA to protect vulnerable industries, strengthen local production and ensure that smaller, black-owned enterprises do share in the new opportunities it creates.