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South Africa’s Zuma sets sights on boosting investment from China

South Africa has said proposals to scale-up Chinese investment in the country will be on the agenda when the countries’ leaders meet to review bilateral relations next week.

China is being urged to boost support for South Africa’s industrialisation “by investing in the development of science and technology, agro-processing, mining and mineral beneficiation, renewable energy, finance and tourism”, the South African Government News Agency said.

South African president Jacob Zuma and his Chinese counterpart Xi Jinping, who will hold talks in China on 4 and 5 December, “are also expected to review progress on cooperation in infrastructure development”, the agency said.

“China has become South Africa’s single largest trading partner in the world and South Africa has become China’s largest trading partner in Africa,” the agency said. “China regards South Africa as a key partner in advancing its relations with the African continent.”

According to the South African government, total trade with China is on “a steady upward growth”, with trade in 2013 totalling 192 billion rand (ZAR) ($17bn), “albeit skewed in China’s favour”. To date there are 39 Chinese companies investing in the country with a capital expenditure of ZAR 14.7bn ($1.3bn) between January and September 2014.

South Africa’s trade and industry minister Rob Davies said on 27 November that the value of the country’s total international trade has grown from ZAR 121bn ($11bn) to ZAR 271bn ($24.5bn) by the end of last year. Davies said: “The trade balance has been in favour of China since 2008 due to the composition of trade between the two countries where South Africa exports primary products and commodities to China.”

More than 50 South African firms, representing sectors including plastics, steel, agribusiness and aluminium, took part in a ‘trade expo’ visit to China early in November supported by South Africa’s Department of Trade and Industry.

In 2010, China and South Africa signed a general co-operation agreement in the field of energy, covering oil and gas, renewable energy, energy efficiency and skills development.

Last March, South Africa’s state-owned freight transport and logistics company Transnet awarded what it said was the biggest locomotive supply contract in the country’s history to Chinese and South African firms.

Transnet said the ZAR 50bn ($4.5bn) contract to build 1,064 locomotives was South Africa’s single biggest infrastructure investment initiative by a corporate and was designed to support government efforts aimed at ‘road-to-rail migration’.

The African Development Bank has said trade between China and Africa grew by 20% in 2012 to reach $26.4bn. At the end of 2012, Chinese investments in Africa totalled $20bn.

The ‘World Investment Report 2013’, published by the UN Conference on Trade and Development (UNCTAD) (264-page / 2.18MB PDF), said Chinese foreign direct investment (FDI) stock in Africa at the end of 2011 stood at $16bn. South Africa was the leading recipient of Chinese FDI, according to UNCTAD.

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