Source: President of South Africa –
Programme Director, Mr Lester Bouah;
Ministers and Deputy Ministers;
Mr Wang Shaodan, Chairman of the China-Africa Development Fund;
Business leaders;
Distinguished guests;
Ladies and gentleman,
It is a great honour to address you today at the South Africa China Investment Forum in this beautiful city of Beijing. I would like to extend my sincerest gratitude to our hosts for organising this important gathering that aims to strengthen economic ties between our two nations.
Together with delegates from South Africa, we have been here for about a week, and during this time, we were privileged to be able to participate in the third China International Supply Chain Expo (CISCE). This event afforded us an opportunity to showcase the most recent advancements in supply chain management.
We have also come here as part of reflecting on the evolving strategic trajectory of the South Africa–China relationship and reaffirming both countries’ commitment to deepening mutual cooperation in support of inclusive economic growth and sustainable development.
As South Africa, we want to continue to build on the economic relations that have seen substantial growth since the establishment of diplomatic ties in 1998. We value this longstanding relationship because it has been established on a shared vision for a prosperous future.
It goes without saying that this relationship is solid; we are both part of the BRICS economic partnership, along with Brazil, Russia, and India.
Additionally, both our nations participate in various other multilateral institutions, including the United Nations and the G20, where we collaborate on global issues and promote the interests of developing countries.
While the relationship has benefited both nations by increasing trade and investment, there are some drawbacks, such as a continuing trade deficit that favours China.
South Africa’s trade imbalance with China is mostly attributable to the nature of our trading relationship. South Africa mainly exports raw materials and minerals while importing manufactured goods and capital goods from China.
To put it in numbers, South Africa’s trade deficit with China has risen from less than USD 1 billion between 1988 and 2000 to USD 9.71 billion by 2023. Since FOCAC’s inception, this trade imbalance has resulted in an accumulated cash outflow of USD 114.83 billion from South Africa to China.
This calls for urgent actions between our two countries to ensure a mutually beneficial outcome. We need to develop a more coordinated and strategic approach. We need to address challenges such as access to the Chinese market due to factors like tariff and non-tariff barriers, distance, and competition from other countries.
Addressing these challenges necessitates expanding South Africa’s export portfolio, encouraging value-added exports, and establishing a more balanced trade relationship. As I indicated at the working dinner yesterday, we need to expand partnerships in various sectors.
It is through strategic trade and investment partnerships with China that we can both create a balance and subsequently play a significant role towards South Africa’s economic growth, job creation, and overall development.
The bilateral economic trade and investment exchanges between the two nations have consistently expanded over the past two decades, with China serving as South Africa’s largest trading partner.
We recognise with gratitude that Chinese investment in South Africa has included several businesses and key sectors, including banking, manufacturing, and renewable energy.
There have been a great deal of advantages for South African sectors in China.
South Africa’s mineral exports, agricultural commodities, and manufactured items have achieved significant penetration in the Chinese market.
Moreover, there has been a steady flow of investment from Chinese companies since the announcement of President Ramaphosa’s Investment Mobilisation Drive.
This investment forum offers an additional opportunity to strengthen the investment relationship by facilitating exchanges and sector-specific discussions aimed at exploring the many available investment opportunities.
A major significant investment was by the Industrial and Commercial Bank of China (ICBC) which purchased a 20% stake in the assets and earnings of Standard Bank, one of South Africa’s largest banks, for USD 5,5 billion.
Another major Chinese electronics manufacturer, Hi-Sense, entered the South African market in 1997. In 2013, the company established an industrial park.
Other Chinese flagship companies such as Zhong Xing Communications (ZTE) and Huawei Technologies are also expanding their presence in South Africa. Over the last decade, 48 Chinese companies invested in South Africa with a capital investment of over USD 11, 69 billion.
As South Africa-China relations continue to deepen, new opportunities emerge for Chinese businesses seeking to enter the South African market, particularly in sectors such as renewable energy, green hydrogen, energy storage, infrastructure and logistics, our special economic zones, pharmaceuticals and medical devices, and the beneficiation of critical minerals, as well as in the digital economy.
Ladies and gentlemen,
Allow me to outline in detail these opportunities, which I feel are relevant to our areas of interest and where we want trade and investment collaborations with China.
We seek to attract investments to increase Green Field Investments, Infrastructure Investments, Unlock Funding or Financial Support, Partnerships with SOEs, Technology Transfer and Innovation Partnerships, Investments in Special Economic Zones (SEZs) and Industrial Parks, Black Industrialist Partnerships, as well as capacity and technical assistance for SEZs.
Our SEZs offer an internationally competitive value proposition for the country with an attractive suite of incentives. They are located across the country, and each SEZ has unique offerings for investors, some of which could include tax relief, reduced corporate rate taxes and reduced costs for key inputs such as land, water and electricity.
South Africa’s economic recovery, renewal, and expansion momentum is being catalysed by a massive rollout of investment across the energy, water, road, rail, ports, telecommunications, and digital sectors, as well as community and social infrastructure segments.
The strong focus for investments is on transport & logistics, as well as energy & water to expand capacity and improve efficiencies.
We are also undertaking significant reforms in our rail sector to modernise and revitalise our system for both freight and passenger transport.
A white paper on national rail policy has been developed and adopted. It outlines a framework for restructuring the rail market, including third-party access and the establishment of the Economic Regulator of Transport.
We have also developed a National Rail Master Plan which outlines South Africa’s long-term vision for the rail network and guides the reform process, including legislation to facilitate private sector involvement.
Key reforms include introducing private sector participation, restructuring Transnet, and establishing an independent rail regulator.
The aim is to create a more competitive and efficient rail network.
Ladies and gentlemen, I must highlight that we have an infrastructure investment plan in place to drive a range of projects in six sectors of our economy: energy, water and sanitation, transport, digital infrastructure, human settlements, and agriculture and agro-processing.
The plan is supported by an Infrastructure Fund, offering investment opportunities in water development and irrigation projects across nine provinces, a road network expansion, a rehabilitation and maintenance program for construction companies, and high-demand spectrum.
Furthermore, we are on a path to revolutionise our energy sector in pursuit of low-carbon, climate resilient development and are actively seeking investment in the energy sector with a particular focus on renewables and green hydrogen. Key reforms include the Electricity Regulation Amendment Act, which paves the way for a more competitive and open electricity market, and the diversification of the energy mix, including increased investment in renewable energy sources.
As we undertake this just and inclusive energy transition, we see many opportunities for growth and job creation in the green economy. We have introduced policies to promote the development of the electric vehicle industry in South Africa.
We are certain that Chinese companies will find South Africa a unique and advantageous location that can serve as a hub to reach other markets.
Over the past few years, regulatory changes have stimulated substantial new investment in electricity generation capacity, mainly from renewable sources. We now have a pipeline of over 130 confirmed private sector energy projects that will produce approximately 22 500 MW of electricity.
We are also making significant investments in our electricity transmission infrastructure.
South Africa’s reforms in the minerals sector, particularly through the Mineral and Petroleum Resources Development Act of 2002, have been aimed at fundamentally restructuring the industry.
We are currently working on a new Mineral Resources Bill, which aims to address some of the challenges with the current legislation, including streamlining regulations, enhancing investor confidence, and fighting illegal mining activities.
South Africa has also developed a Critical Minerals and Metals Strategy, identifying minerals crucial for economic growth, industrial development, and national security.
South Africa is abundant in renewable energy resources and has significant deposits of minerals needed to drive green growth, and we are well-positioned to be a leader in the green energy and related industries.
We are fortunate to hold the world’s largest reserves of platinum group metals, giving us a competitive advantage for the production of sustainable energy technologies, including electric vehicles, new energy vehicles, and renewable energy components.
With the track record of China in developing and implementing innovative renewable energy solutions, together, we can create sustainable and environmentally friendly energy solutions that benefit both our countries. By working together, we can create value chains that are mutually beneficial, leading to job creation and economic growth.
I therefore encourage Chinese businesses to partner with us in this regard.
We are also developing the value chains and have significant reserves of critical energy transition minerals as we position ourselves to be at the forefront of the green energy revolution.
South Africa presents a great opportunity for Chinese companies to deepen their global value chains. We call on Chinese companies to take advantage of the numerous investment opportunities. With the capabilities that your companies have, we encourage you to play a more active role in our economy for mutual benefit.
Another area of investment is pharmaceuticals and medical devices. South Africa’s significant reliance on imported medicines and medical devices, along with robust market growth, presents appealing potential for investors seeking to establish onshore pharmaceutical and medical equipment production.
I would like to conclude by encouraging investors who are interested in expanding to the rest of the African continent to capitalise on the African Continental Free Trade Area, which is anticipated to provide access to the African market for companies in the pharmaceutical and medical device sectors and infrastructure.
The growth of the South African economy supports the African Continental Free Trade Area that opens access to a market of over 1.3 billion people and will drive a new era of industrialisation in South Africa and across the continent.
Ladies and gentlemen, I would like to reiterate that South Africa is a country that offers a wealth of options to explore across several major areas.
Let us collaborate to exploit this immense, uncharted potential across South Africa’s diverse sectors, paving the way for economic prosperity in both our nations and making a meaningful impact on global growth.
I thank you.
