Address by the South African Minister of Trade and Industry, Dr Rob Davies, MP, at the South Africa-China Economic and Trade Co-operation Forum signing ceremony

Programme Director
Chairman Jia Qinglin of the National Committee of the Chinese People’s Political
Consultative Conference (CPPCC)
Vice Minister Fu Ziying of Ministry of Foreign Affairs and Commerce (MOFCOM)
Ministers and Deputy Ministers
Captains of Industry
Distinguished Guests
Ladies and Gentlemen

It is an honour for me to make some remarks at the South African-China Economic and Trade Cooperation Forum Signing Ceremony. This signing ceremony will be a deepening of mutually beneficial economic relations between our two countries. Let me take this opportunity to express my sincere gratitude to Vice Minister Fu Ziying and the China Investment Promotion Agency (CIPA) for hosting this Cooperation Forum and Signing Ceremony. Our relationship with the People’s Republic of China is deeply rooted, historical and we enjoy excellent relations at political and people to people level. Our economic relationship is underpinned by a bilateral Trade and Economic Cooperation MOU, Reciprocal Encouragement and Protection of Investments agreement and the record of understanding between the dti and the China-Africa Development Fund.

The Peoples Republic of China established diplomatic relations with South Africa in 1998. In 2008 we celebrated 10 years of diplomatic relations and China was our 4th largest trading partner. Today in 2010, China is our number one trading partner followed by USA, Japan, Germany and the UK. In Asia, China has become our largest export partner followed by Japan and India. On the import side China became our largest import partner before Germany, US and Saudi Arabia and our number one import partner in Asia.

Bilateral trade between China and South Africa has experienced an upward trend since 2002. The total trade between the two countries is R119,7 billion and grew by 2% in 2009, as compared to R118 billion in 2008. In a period of eight years, trade has significantly grown from R23 billion in 2003 to R119,7 billion at the end of 2009. Our trade statistics depicts a trade surplus in favour of China since 2003, but this declined from R46 billion in 2008 to R22 billion in 2009. We are pleased that this is the second Trade Cooperation Forum aimed at sourcing goods from South Africa in excess of R1,2 billion.

There is certainly greater room to grow the volume of two way trade, create a more diversified balance of SA exports, a greater proportion of beneficiated and higher value goods and services in our export basket to China. For instance in the auto sector, SA is home to all the major OEMs in South Africa who have set up base as export platforms. We would like to have an export platform for vehicles to China from BMW, Ford, VW and GM who operate in SA to their plants in China.

In terms of our investment SA is investing more into China with likes of SASOL, Kumba Resources, Naspers, Anglo Ashanti and FNB. Vice Minister, South Africa today is working to position itself as the promising emerging market in the world. We have a combination of a well developed business services support and dynamic investment environment with a number of global competitive advantages and opportunities. As an open economy we would welcome greater investment from China. We would encourage partnerships by Chinese companies to support the economic development in South Africa, build local industrial capacity and support the integration of local production value chains.

We are fortunately now officially out of recession. According to December 2009 reports, manufacturing output was 3,2% higher than in the corresponding month 2008 – representing the first annualised rise for 14 months. Although there remains some uncertainty about the depth and rate of the recovery, forecasts suggest GDP growth of 2,3% this year and 3,2% next year rising to 3,6% in 2012. Ladies and Gentlemen we have no doubt that Africa’s time has come and the African Continent is the new frontier of economic growth and development. Indeed the IMF has predicted that Africa is the next big story after China and India.

Declining costs associated with doing business, together with a more predictable institutional environment have improved the conditions for doing business in Africa considerably. African Governments have adopted a number of policy-related reforms and strategies designed to ensure that our economies are more business friendly. These reforms have begun to gain considerable momentum. 2008 represented a record year for Africa in terms of regulatory reform – with 28 countries completing a total of 58 reforms designed to make it easier to do business.

Our Government will continue to play its part in supporting economic recovery and facilitating economic growth. In hosting the FIFA 2010 World Cup the world will see that we can deliver a world class event. Our government is committed to a US$ 106 bn infrastructure investment programme beyond the 2010 World Cup and over a 3 year period.

We have launched our second phase of our industrial policy in a 3 year Industrial Policy Action Plan. This Action Plan represents a significant step forward in strengthening our efforts to promote long term industrial development and industrial capacity beyond our traditional strengths in commodities and non-tradable services. Our industrial policy seeks to expand production in value-added sectors with high employment and growth multipliers. In addition to manufacturing we will focus on sectors such as energy and energy saving industries as well as those that have the potential to develop long term advanced capabilities: nuclear, advance materials and aerospace.

We are confident that there are enormous opportunities in our country and the subcontinent, particularly for upgrading existing or new investments in manufacturing across a range of sectors both for domestic demand and export, including to the emerging African markets. We are pleased that the Continent is moving in terms of regional integration. The SADC FTA was launched in August 2008, 14 countries with a registered market of 170 million people worth US$ 360 bn. When Angola and the DRC join, there will be 77 million people more and an additional market of US$ 71 bn. Over the past five years, COMESA, EAC and SADC have cooperated in the coordination and harmonisation of programmes through a Tripartite Task Force. The first COMESA – EAC – SADC Tripartite Summit held in Kampala, Uganda on 22 October 2008 called for the establishing of a pan-regional Free Trade Area encompassing the three Regional Economic Communities and a joint programme for free movement of persons and infrastructure development. This future FTA will be from Cape to Cairo and a market size of 700 million consumers.

In conclusion, Ladies and Gentlemen, we sincerely hope this Trade Cooperation Forum and signing ceremony will deliver concrete results in the form of new investments and trade partnerships in key areas of opportunities to deepen mutually beneficial economic relations between our two countries. I would like to congratulate on this Signing Ceremony and to extend a warm invitation to you to become part of a country Alive with Possibilities and I am sure come June and July 2010 you will be in South Africa to enjoy the soccer!

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