In June 2025 China made an audacious strategic trade policy move, announcing complete, nonreciprocal tariff-free entry into its markets for 53 African countries. Its market is huge: with an expected GDP of $43.5-trillion in 2026 (adjusted for purchasing power), China is the world’s largest economy.
Why this deal?
With China giving up about $1.4bn in foregone tariff revenue, the question is — why? It did not offer nonreciprocal, tariff-free access to its market out of solidarity and in a gesture of goodwill to Africa. It did so for the following strategic reasons:
- China has 20% of the world’s population but only one 15th of the world’s arable land — not enough to be self-sufficient in food production. It needs to tap into Africa’s food production potential.
- Its labour force is ageing and becoming more expensive, eroding its global competitive advantages in manufacturing. It wishes to move this manufacturing to Africa, employ cheaper African labour, and access these goods duty free.
- China is investing more heavily in Africa, particularly to ensure access to critical minerals and to get African countries to adopt its digital platforms (the digital Silk Road). To do so, it needs to ensure African countries do not default on debt and interest repayments. Raising Africa’s export potential helps ensure African countries have the resources to service their debts to China.
- It is in a process of dedollarisation. By encouraging more African exports to China the country will aim over time increasingly to have this trade settled in yuan, not dollars.
Why is it an opportunity for SA?
For South Africa, the Chinese tariff move was formalised in February when the countries signed a Framework Agreement on Economic Partnership for Shared Prosperity (Caepa). A follow-up “Early Harvest Agreement” is expected to be finalised by month-end, with full duty-free treatment scheduled for May 1.
While Caepa does not yet constitute a full free trade agreement, it establishes a negotiation architecture that both sides intend to develop further. It is a potentially significant opportunity for South Africa to grow and diversify its exports. Currently, South Africa’s major exports to China are largely metals and minerals.
As these products, except for coal, ferrochromium and other nonmetallic minerals, currently face zero tariffs, the new agreement does not change anything. Yet, big opportunities remain for South Africa to grow the extent of these exports over the coming years, particularly in iron ores, for which our modelling indicates unexploited export opportunities worth about $17.1bn.
Where the elimination of tariffs may make a bigger difference is for products for which tariffs were imposed. These are especially in agricultural products. Hence we will outline the potential export opportunities that can be realised in these nontraditional areas.
As the table shows, the most significant agricultural opportunity in China for South Africa in the short term would be exports of more forestry products, such as wood pulp and wood chips, marine products such as fish and crustaceans, frozen cuttle fish and squid, rock lobsters and other sea crawfish, and traditional agricultural products such as wine, raw leather hides, vegetable oils and fresh fruits such as grapes and plums. Hundreds more product lines could gain from this development.
What SA must do now
The removal by China of tariffs on these products does not mean South African producers will automatically have market access from May 1. The framework’s nonbinding character means South African exporters cannot invoke it yet as a legal basis for tariff exemption at the Chinese border.
The details still need to be hashed out between the Chinese and South African governments, which could take as long as another two years. A major potential nontariff barrier that remains, and could in future be used by China as a trade weapon against South Africa (as it did in 2020 in the case of Australian agriculture), is the strict sanitary and phytosanitary standards set by the general administration of customs of China
These may be especially relevant for South Africa in the case of potential premium beef exports to China. What we did not show in Table 2 was that there is a potential export opportunity of $1.8bn in this regard, but South Africa lacks a revealed comparative advantage in premium beef exports. Clearly, industrial and agricultural policy measures aimed at strengthening this could pay off, and given that South Africa already has a revealed comparative advantage in leather (a related industry), this should be considered. An immediate and key policy thrust in this regard should be to deal decisively with foot-and-mouth disease.
South Africa also has the following internal barriers:
- The most visible are port backlogs, slow vessel turnaround times and rail network failures, which erode the price advantage gained from zero tariffs.
- Drastic increases in electricity tariffs have made energy-intensive industries such as ferrochrome and aluminum smelters less competitive.
- Deteriorating infrastructure (quality roads, availability of water and sanitary services, among others) at local government level is adding hidden costs to any plans to raise production capacity where these opportunities lie.
Perhaps the biggest opportunity for South African agro-entrepreneurs lies in establishing agricultural aggregators in Africa, given that the Chinese demand for African food is (and will continue to be) virtually unlimited. To service China’s demand will require large-scale operations, whereas most African food is currently grown by smallholder farmers (there are some exceptions, specifically commercial scale farms in South Africa).
If South African agricultural firms do not use the opportunity for such expansion under the African Continental Free Trade Area agreement, Chinese firms certainly will. In such a scenario the future food security of Africa may be at stake.
• Dr Naudé is professor of the economics of innovation, trade & development at RWTH Aachen University in Germany, and distinguished visiting professor at the University of Johannesburg. Dr Cameron, a quantitative economist, is MD of Trade Research Advisory, a company spun out of North-West University.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.