China’s announcement that it would commence with its “zero-tariff” trade dispensation with African exporters gave a shot in the arm to trade activities between South African exporters and the world’s second-largest economy.
China announced during last weekend’s AU summit that it would implement its zero-tariff policy for 100% of tariff lines on imports from 53 African countries starting in May.
South Africa has prioritised the diversification of its trade network since US President Donald Trump shook the global trade market with a raft of unilateral tariffs and other protectionist policies.
From an agricultural perspective, this is positive, as China is the world’s second-largest agricultural importer. They import about $200bn worth of agricultural products each year.
— Wandile Sihlobo, Agricultural Business Chamber of SA chief economist
Business Times understands the department of trade, industry & competition will keep engaging with China on the implications for South African exports and, in the meantime, will engage China based on the framework agreement on economic partnership for shared prosperity signed with Chinese commerce minister Wang Wentao earlier this month.
Wandile Sihlobo, chief economist of the Agricultural Business Chamber of South Africa, welcomed South Africa’s signing of the China-Africa framework agreement, as it would leave South Africa well-positioned to diversify its export networks in a fragmented global trade environment.
“From an agricultural perspective, this is positive, as China is the world’s second-largest agricultural importer. They import about $200bn worth of agricultural products each year. South Africa has a small share here, about 0.4%, because of higher tariffs and phytosanitary barriers.”
He said this framework promises to lower the tariffs, which will allow us better access and is aligned with South Africa’s stated export diversification approach.
Dr Saul Levin, executive director of Trade & Industrial Policy Strategies, told Business Times that the zero-tariff agreement for South African goods going into China is to be welcomed and that the announcement that there is no expectation this is reciprocal is very important.
“An expectation of reciprocity would not be good for key South African industries. The general tariff South Africa has for goods going into China has come down to 2.2% in recent years, but for key South African exports such as macadamia nuts and wine, it is a much higher tariff, 12% and 20%, respectively.
He said the reduction in tariffs will be a boost for these industries, especially with the current US tariffs.
“It would see South African products being exported to a growing consumer market and contribute to economic development and job creation in South Africa. The zero tariffs also send an important signal to South Africa that China is stepping into the trade and global alliance vacuum created by the US.”
He said the World Economic Forum speech by Canadian Prime Minister Mark Carney stated that there is a global rupture in international politics and trade.
“China is taking full advantage of the opportunity and the change in global dynamics. It will come with increased exports, investment and co-operation between the two countries.”
Today the Chinese market is a strategic necessity, not merely an opportunity for South Africa’s agricultural resilience. This is a milestone that ambassador Peng and I have worked toward together, and today I am happy that we have realised it.
— John Steenhuisen, agriculture minister
On Wednesday agriculture minister John Steenhuisen and Chinese ambassador Wu Peng announced that South Africa’s first shipment of stone fruit was prepared for export to China at the Freshness First Packhouse in Franschhoek, Cape Town.
“Today the Chinese market is a strategic necessity, not merely an opportunity for South Africa’s agricultural resilience. This is a milestone that ambassador Peng and I have worked toward together, and today I am happy that we have realised it.”
He said with China importing approximately $200bn in agricultural products annually, South Africa currently holds a modest 0.4% market share, which South Africa aims to drastically increase by targeting a doubling of the current R400m export value over the next four years.
“South Africa does have the capacity to provide the quality and quantity of fruit that consumers in China will enjoy. The implementation of this stone fruit protocol will offset the immediate impact of tariffs imposed by other trading partners, particularly on plums. I am confident that our volumes into the Chinese market are going to increase tremendously.”
Trade minister Parks Tau said both South Africa and China intend to further expand bilateral trade, including by promoting the export of South African agricultural products and high-value manufactured goods to China.
“As China-SA relations continue to deepen, new opportunities emerge for South African businesses seeking to enter the Chinese market, particularly in sectors such as mining, agriculture, renewable energy and technology.”
He said the government hoped that the signing of the framework agreement and the outcomes of our joint economic trade commission meeting would signal the urgency we attach to growing our bilateral trade and investment relations.
“Together with the framework agreement, these should provide a strong foundation for a mutually beneficial partnership and for our respective private sectors to do more business together.”
Business Times
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