http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 14.15Change: 0.09
R/$ = 10.69Change: 0.05
Au 1279.62 $/ozChange: 4.67
Pt 1419.00 $/ozChange: -1.20
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Aug 31, 2012

SA exports 'crowded out' by Chinese products

Back
Beijing|Engineering|Africa|Ghana|Industrial|Africa|Angola|China|Democratic Republic Of Congo|Germany|Ghana|Kenya|Malawi|Mozambique|Nigeria|South Africa|Tanzania|United Kingdom|United States|Zambia|Zimbabwe|USD|University Of East Anglia|Manufacturing|Manufacturing Sector|Products|Jacob Zuma|Sub-Saharan Africa
Engineering|Africa|Ghana|Industrial|Africa||||Products||
beijing|engineering|africa-company|ghana-company|industrial|africa|angola|china|democratic-republic-of-congo|germany|ghana|kenya|malawi|mozambique|nigeria|south-africa|tanzania|united-kingdom|united-states|zambia|zimbabwe|usd|university-of-east-anglia-facility|manufacturing|manufacturing-sector|products|jacob-zuma|subsaharan-africa
© Reuse this



South Africa has lost out on $900-million in trade with sub-Saharan Africa because of increased Chinese imports, costing the country more than 77 000 jobs over a decade, a new report by the University of East Anglia (UEA) from the UK has revealed.

South Africa’s industrial production, which grew by 14% between 2001 and 2010, could have been about 5% higher had the country not lost market share to China, while its exports to sub-Saharan Africa would have been 10% higher.

The research has warned that South African industrial exports to sub-Saharan countries were at risk of being crowded out by Chinese exports, which had grown from $4.1-billion in 2001, to $53.3-billion in 2011.

Sub-Saharan Africa accounts for over a fifth of South Africa’s total exports, with Zimbabwe, Zambia, Mozambique, the Democratic Republic of Congo, Kenya, Angola, Nigeria, Tanzania, Malawi and Ghana the most important markets.

Despite the value of South African exports to these countries increasing markedly over the past decade, its share of total exports to the ten countries had declined from about 21% in 1997 to 15% in 2010.

In contrast, China’s share of exports into the region increased from 5% in 1997 to 24% in 2010, with a marked increased seen since the Asian nation joined the World Trade Organisation (WTO) in 2001.

The most significant trade losses were felt in Angola and Tanzania, while the impact was least severe in neighbouring countries, particularly Zimbabwe and Zambia, as well as Malawi.

Notwithstanding this loss of market share, the report put forward that economic growth and demand for imports in a number of African countries had risen in response to the commodity boom, led by the surging demand for raw materials in China.

“South African exporters to Africa have benefited indirectly from this over the past decade,” the document stated.

EMPLOYMENT

Meanwhile, a further major concern in South Africa, which has an official unemployment rate of 25%, had been the effect of Chinese imports on employment. The manufacturing sector alone shed over 350 000 jobs since 1990 and employed less than 1.2-million in 2010.

The direct loss of employment attributable to displacement of domestic production by imports from China in the period 1992 to 2001 was 24 117, but this figure grew to 77 751 after China joined the WTO.

Many of the ten industries with the highest level of Chinese import penetration were traditional labour-intensive sectors, including textiles and clothing, footwear, leather products and furniture.

The report found that Chinese competition in these industries was likely to have a particularly severe impact on employment, especially of unskilled workers.

Econometric analysis during the study confirmed a significant negative impact of Chinese imports, particularly in low-wage industries, suggesting that it was largely contributing to the failure of the manufacturing sector to create jobs in South Africa.

However, the report indicated that there were positive benefits to consumers from the availability of cheaper consumer goods, which may have stimulated increases in employment in the retail sector.

Producers also benefited in the form of cheaper intermediate inputs and capital goods.

ASYMMETRIC TRADING

The declining share of the manufacturing sector in South Africa’s gross domestic product (GDP) has also been partly attributed to increasing competition from imports.

The country has faced increased difficulties in competing with China domestically and in international markets, as the Asian giant is the world’s second-largest economy in terms of GDP, after the US, and has overtaken Germany as the world’s largest exporter.

By 2010, it had become the largest source of imports ahead of Germany and the US.

Trade between South Africa and China has grown dramatically over the past decade; however, the levels and structure of trade showed significant asymmetries.

The current structure of trade with China is of particular concern to policy makers in South Africa.

President Jacob Zuma stated at the Forum on China–Africa Cooperation, in Beijing, in July, that the imbalance in trade between China and Africa was unsustainable in the long term, as it comprised mainly African exports of raw materials to China and Chinese exports of manufactured goods to Africa.

GOING FORWARD

Coauthor of the report, Professor Rhys Jenkins of the School of International Development at UEA, told Engineering News Online that China’s export growth was likely to continue in the future, although at a reduced rate, given the greater emphasis that was being placed on the domestic market and the recession in Europe.

International Monetary Fund projections over the next five years showed Chinese exports growing at over 10% a year in volume terms.

“However exports to Africa may well continue to expand even more rapidly, as China needs to find new outlets for exports because of the slowdown in developed country markets,” Jenkins said.

He indicated that Chinese imports would therefore probably continue to impact on industrial production in South Africa over the next five years with more industries being affected.

Meanwhile, Jenkins pointed out that the impact on employment in the most labour-intensive industries might be less dramatic in future, as the increases in import penetration could be in more capital-intensive industries.

“The impact on [South African] exports is also likely to continue for several years, although eventually South African exporters may move out of those products and markets where they compete with China and once that has occurred then the negative effects diminish,” Jenkins stated.

The experience of quotas on textile and clothing imports in South Africa in 2007 and 2008 suggested that protectionist measures were not an answer to mitigating the impact of Chinese imports.

“The Department of Trade and Industry is negotiating with China to obtain better access for South African manufactured exports to the Chinese market and this might help reduce the deficit with China in the future,” Jenkins noted.

He added that at a general level, it was important to maintain a stable and competitive real exchange rate and an active industrial policy to enable manufacturers to upgrade and develop new markets.

Jenkins said problems could arise if commodity prices fell, which would affect the growth of other African economies, so that the relative loss of market share to China in sub-Saharan Africa would turn into an absolute decline in exports and further depress the domestic manufacturing sector.

Edited by: Mariaan Webb
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Manufacturing News
Updated 3 hours ago JSE-listed investment and empowerment group Grand Parade Investments (GPI) and electronics contract manufacturer Tellumat have teamed up to create a 51:49 joint venture company Grand Tellumat Manufacturing. The transaction would see the engineering skills and...
Nampak, Africa's biggest packaging firm, will invest $10-million in the next 12 months to expand its Zimbabwean business after consolidating the operations under one company, the local chief executive said on Thursday. Nampak consolidated its shares in three...
Article contains comments
South Africa had to embark on an aggressive export drive, particularly into the rest of Africa, to adequately grow its manufacturing sector, Department of Trade and Industry (DTI) industrial development policy and strategy adviser Nimrod Zalk said on Wednesday,...
More
 
 
Latest News
Sacci CEO Neren Rau
Updated 2 hours 29 minutes ago The South African Chamber of Commerce and Industry (Sacci) would work with the office of the Afican National Congress (ANC) secretary-general Gwede Mathashe on a series of constructive engagements on improving the domestic economic climate and building a more...
Updated 2 hours 41 minutes ago JSE-listed investment and empowerment group Grand Parade Investments (GPI) and electronics contract manufacturer Tellumat have teamed up to create a 51:49 joint venture company Grand Tellumat Manufacturing. The transaction would see the engineering skills and...
Updated 2 hours 41 minutes ago JSE-listed property group Redefine Properties on Friday said its acquisition of all the assets and the property portfolio of Fountainhead Property Trust, had not been approved by the requisite majority of Fountainhead unitholders and would, therefore, not be...
More
 
 
Recent Research Reports
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
 
 
 
 
 
This Week's Magazine
MODDERFONTEIN NEW CITY Modderfontein New City will aim to exemplify an integrated city node and improve infrastructure utilisation through mixed-use spaces
The multibillion-rand development of the Zendai Modderfontein New City, east of Johannesburg, will aim to exemplify an integrated city node, says property group Zendai South Africa COO Wenhui Du. The development will focus on the Modderfontein Gautrain station to be...
The South African Civil Aviation Authority (CAA) hopes to have finalised regulations for the flying of Unmanned Air Vehicles (UAVs) – also designated Remotely Piloted Air Systems (RPAS) and popularly called drones – in the country’s civilian airspace by the end...
Various stakeholders have expressed optimism that the Small Business Development Ministry, created after the national elections in May, will add much needed impetus to enterprise development in South Africa, where a strengthening of the entrepreneurial culture is...
BOB SCHOLES To ensure that emissions plateau by 2020 and then decline until a net negative emission level is achieved by the end of the century, CO2 capture and storage in addition to major emission reduction efforts will be needed
Capturing and storing carbon dioxide (CO2) is the only way through which the world will achieve the lowest of the United Nations Framework Convention on Climate Change’s (UNFCCC) global warming predictions, called the representative concentration pathway (RCP) 2.6....
PARKS TAU Ongoing investigations had identified at least 30 large power users in Johannesburg as having defrauded the city
The City of Johannesburg has recovered R107-million following the arrest of 22 people allegedly involved in corruption, collusion, fraud and tampering with the city’s electricity systems, which had ultimately cost the city R200-million in lost revenue.
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks