How imports from China harm local growth in South Africa

Sep 03, 2012 12:00 AM

by Adri van Zyl

From 2001 to 2010 competition from China dealt the South African economy a serious blow. A British university has attributed the loss of 77,000 South African jobs and $ 900 mm in revenue from trade over this period to the influx of Chinese products into Africa.
Professor Rhys Jenkins from the School of Development Studies at the University of East Anglia says competition from China negatively impacts South Africa’s manufacturing sector, crowds out exports to other African countries and aggravates unemployment.

Jenkins says South Africa’s manufacturing sector grew 14 % between 2001 and 2010, but could have been five percentage points higher if imports from China had not grown as strongly.
The South African manufacturing sectors worst affected are footwear and clothing, as well as electronic goods such as television sets, radios and electric lights. Jenkins says manufactured articles imported from China rose from 2 % in 1995 to 18 % in 2010. In 2010 only 5 % of products produced in South Africa were exported to China.

Imported Chinese manufactured goods represent only around 6 % of final consumption, but that’s not the whole story. There are great differences between the various sectors of manufactured goods.
Jenkins says around 40 % of all footwear and knitted goods is imported from China – and more than 30 % of all electronic products. The ten industries in which most goods are imported from China are labour-intensive industries and this has an enormous impact on employment of unskilled workers.

The emergence of the Chinese manufacturing sector has also resulted in South Africa exporting fewer goods to other countries in Africa.
Jenkins says more than a fifth of the goods manufactured in South Africa are exported to other African countries and Chinese competition is squeezing out South African products. In 2001 the value of Chinese products exported to Africa was $ 4.1 bn, but in 2010 it rose to $ 53.3 bn.

Research shows that exports of South African products to its ten biggest trading partners in Africa – Zimbabwe, Zambia, Mozambique, the Democratic Republic of Congo, Kenya, Angola, Nigeria, Tanzania, Malawi and Ghana – contracted by 10 % between 2001 and 2010.
The value of the lost market share is put at $ 900 mm. At the same time both the value and the range of products imported from China have increased significantly.

South Africa’s biggest loss of market share has been in Angola and Tanzania, to which it previously exported 20 % of its products.
In Zimbabwe, Zambia and Malawi, with whom South Africa has a free-trade agreement, the impact has been less severe.

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