WANDILE SIHLOBO: Exploring China’s zero tariff access offer with a careful eye

Two weeks ago at the SA—China Trade and Investment Promotion Conference in Johannesburg, China's ambassador to SA, Wu Peng, said China had steadily increased imports from SA.

“Take agriculture as an example: today, as avocados and dairy products have gained market access to China, 68 categories of SA agri-food products can be exported to China. Ninety percent of SA’s pecans and half of its macadamias are sold to China.

These products have enriched the food baskets of Chinese consumers and, more importantly, increased the incomes of SA farmers and exporters.” 

I want to add that while we appreciate this momentum and want to see a deeper integration of agricultural products into China, there are still some constraints.

For example, many of the products the ambassador mentioned still face various levels of tariffs. Consider our macadamia nuts, which face a 12% tariff in China. In the case of wine the industry must pay tariffs ranging from 14%-20% (depending on whether the wine is bottled or sold in bulk).

I raise this not to discourage the trade conversation with China, but to highlight that there remain essential hindrances that both our countries must work on. We face these tariffs because we don't have a formal trade agreement.

Such an agreement would involve various trade-offs, with implications for other sectors of the SA economy, which means policymakers will need to be cognisant of these when engaging with China. 

SA’s modest foothold in a vast Chinese market

The Chinese market remains vital for the growth of our agricultural sector, and it is the second-largest market in the world, accounting for roughly 11% of global agricultural imports in 2023, valued at $218bn. The leading suppliers of farm products to China are Brazil, the US, Thailand, Australia, New Zealand, Indonesia, Canada, Vietnam, France, Russia, Argentina, Chile, Ukraine, the Netherlands and Malaysia. 

SA remains a negligible player in the Chinese agricultural market, accounting for a mere 0.4% ($979m) of China’s agricultural imports of $218bn in 2023. These exports include a variety of fruits, wines, red meat, nuts, maize, soybeans and wool. Some of these products are subject to various levels of tariffs. Our goal is to achieve greater access to more fruits, grains, wine and beef at lower tariff levels. There is room for more ambitious agricultural export efforts. 

Balancing trade deals and economic interests

China’s offer to remove tariffs on various products from the African continent remains a key consideration in these conversations. However, any SA policymaker must remember that our economy is diverse. While I generally write about agriculture here, when engaging China broadly one has to consider the implications for other sectors of our economy in any conversation involving trade agreements with countries such as China.

Like other countries globally, China will eventually look to the world to increase its exports as it moves to counter friction in the US market. Such diversification efforts may involve the African continent, which for now is starting from a generous path of extending zero-tariff access. It is possible that in the long run, reciprocity will be China’s request, which is a fair point in terms of trade. It cannot be a one-way street.

In that case, each country will need to have eyes wide open as they engage with China’s offer of zero tariffs, with a long-term mindset and consideration for other sectors of the economy. 

• Sihlobo is chief economist at the Agricultural Business Chamber of SA and a senior fellow in Stellenbosch University’s department of agricultural economics.