China and South Africa deepen bilateral relationship

This past Tuesday, China and South Africa signed a raft of commercial deals in mining, finance, nuclear energy and other sectors during a visit by South African President Jacob Zuma to China, as Beijing strengthens its commercial ties with Africa’s largest economy.

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BEIJING, Aug. 25, 2010 (Xinhua News Agency) — China and South Africa announced a “comprehensive strategic partnership” on Tuesday during South African President Jacob Zuma’s first state visit to China.

Chinese President Hu Jintao and Zuma signed the Beijing Declaration after their one-hour talk in the Great Hall of the People Tuesday afternoon, during which the two presidents praised the growth of bilateral ties and agreed to lift relations to new heights.

“In this new spirit of China-South Africa relations, we will work together to advance the bilateral comprehensive strategic partnership,” Hu told Zuma.

Hu made specific proposals that the two countries maintain close contacts between leaders, utilize cooperative mechanism to further implement bilateral cooperation documents and strengthen exchanges between ruling parties and legislatures.

In the economic area, Hu hoped both sides would promote trade and investment growth, energy cooperation and optimize financial services.

China and South Africa need to work together in culture, education, media (AMEX:EMA) , health and tourism, Hu said, bolstering more academic and research cooperation.

On the multilateral front, the countries need to improve consultation and coordination to further South-to-South cooperation and tackle global challenges.

Further, China appreciates South Africa’s important role in maintaining peace and stability on the continent and in promoting the development of the Forum on China-Africa Cooperation, said Hu, adding that China supports South Africa’s playing a larger role in international affairs.

Zuma said the bilateral relations had great potential as China is a major trading partner and investor in South Africa. He hoped both sides take advantage of establishing the comprehensive strategic partnership to promote cooperation in various fields.

Zuma also extended his sympathy to the Chinese people in those regions hit by flood and mudslide disasters.

Zuma, who is on his first state visit to China since taking office, was accompanied by a 300-strong business delegation, which was the largest to accompany him during his foreign state tours.

The business delegation participated in numerous achievements during this visit, with over a dozen cooperative documents signed at a business forum on Tuesday morning.

These cooperative documents, including a loan agreement on 240 million euros, involved projects in areas such as solar power, iron ore, finance, and telecommunications.

Addressing the forum, Zuma said South Africa welcomed China’s investors, as China was one of the most important strategic partners for South Africa.

Statistics from China’s Commerce Ministry showed that China is now South Africa’s largest trading partner and South Africa has become China’s second largest trade partner.

Bilateral trade volume in the first half of this year reached 10.81 billion U.S. dollars, up 56.1 percent year on year, according to officials.

“There is still great potential in bilateral trade,” said Liu Youfa, an expert on African issues at the China Institute of International Studies.

Zuma planned this visit with a view to promoting domestic economic growth by expanding economic and trade cooperation with China, said Liu.

The China visit was the last leg of Zuma’s tour of the BRIC countries — Brazil, Russia, India and China. Experts said this showed South Africa’s strong willingness to take advantage of new trade and investment opportunities in rapidly growing emerging markets.

Besides strengthening economic cooperation with China, Zuma’s visit has reached its other important goal, to elevate its earlier “strategic partnership” with China to a higher level of “comprehensive strategic partnership”.

According to the Beijing Declaration signed by the two presidents, the two countries expressed their desire to further strengthen and deepen exchanges and cooperation between the two nations in both political and regional affairs by establishing a comprehensive strategic partnership based on equality, mutual benefits and common development.

In the area of economics, the two sides agreed to improve the current structure of trade between the two countries, in particular by working towards more balanced trade profiles and encouraging trade in manufactured value-added products.

The Chinese and South African governments on Tuesday afternoon also signed another seven bilateral cooperation agreements covering visa procedures, mining, energy, environment and transport sectors.

This  reflects China’s focus on expanding its resources and energy reach in South Africa to fuel continued economic growth  which just passed Japan this year as the second largest after the U.S. China’s demand for resources has lent great support to South Africa’s economy as well as its currency, the rand, in recent years.

But South Africa isn’t too happy and wants China to buy-trade more than just in resources.

senior South African officials also indicated some discontent with the trade relationship. They called on China not to focus exclusively on investing in raw materials and other “primary goods,” and to buy more value-added goods from South Africa to help promote more balanced trade. “We want to work together with China to try to address that so we have a more equitable balance of trade, in terms of the composition of trade as well as in terms of the actual value,” South African Trade and Industry Minister Rob Davies said at a briefing.

Highlights of Zuma’s trip:

  • China Metallurgical Group Corp. said it will construct an iron-titanium mine in South Africa.
  • China National Nuclear Corp. said it is in talks to build a nuclear power plant in South Africa.
  • Standard Bank Group Ltd. (SBK.JO) announced a memorandum of understanding with Industrial & Commercial Bank of China Ltd. (1398.HK), China’s largest lender, which owns a minority stake in Standard Bank, to promote nuclear cooperation between the countries, according to a South African government statement.
  • Standard Bank also signed a cooperation agreement with state-run China Railway Group Ltd. (0390.HK) on investments in African rail projects.
  • South African health-care insurer Discovery Holdings Ltd. (DSY.JO) agreed to pay between CNY190 million and CNY200 million for a 20% stake in Ping An Health Insurance Co.
  • State Grid Corp. of China and Trans-Africa Projects also signed a memorandum of understanding on cooperation in electric power transmission technology: The parties agreed to form a committee which will comprise a number of experts on both sides to exchange technical information.

What does this all mean?

The relationship probably matters more for South Africa than for China.  But China has been making big strides in trying to win commercial partners, political partners and strengthen cultural ties with a number of states in Africa.

This is a  long term play by China.  Especially in term of politics, this would came in handy when China needs to political space or backing on the international scene. We have seen a preview of this, when South Africa denied the Dalai Lama entry into South Africa.

But South Africa and China’s interests may not always align, given that the current government system that South Africa has, is a unique one. Its Democratic governance with worldly known moral authority, on equal justice due to the struggle to end apartheid. China on the other hand is famously know for what happened at Tianamen Square.

South Africa has to play its alliances carefully and won’t want to be “locked in” to one particular grouping, especially one lead by China.

Here are some video reports on the trip.

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