Among the different nations on the African continent, South Africa has always been perceived as being ahead of the others on various developmental and infrastructural parameters. Rightfully so, the country has a relatively good network of road and railways, has witnessed rampant urbanisation with the booming of multiple cities and enhanced connectivity between urban centres that facilitates investment. With this kind of a developmental model, one wonders why the African nation in the southern part of the continent would look for more investment in infrastructure, particularly from the Chinese. A look into the push and pull factors into the Chinese efforts in South Africa helps to unearth the nuances of this partnership. As they say, the devil lies in the details.
Typically, Chinese strategic interests in South Africa operate on several fronts. These include acquisition of foreign technology, dual use military application, reinforcement of China’s space and satellite development programme as well as capture of new markets for Chinese products. Two major features characterising the South African economy that appeal to the Chinese companies are the cheap labour that enables companies to reap high profits and the negligible market resistance to the Chinese presence. This openness of the South African market aids China in employing a variety of investment methods in the country such as joint ventures, transnational mergers, creation and investment, etc. China, thus, tactfully entered most of the South African sectors since there were no special requirements or regulations for foreigners who were willing to invest or cooperate in the local production of commodities or provision of services. Investors, irrespective of their foreign origin, were free to establish new branches, launch companies, buy shares, have holdings or even acquire local firms. Aware of these loopholes and taking advantage of them, China massively grew its presence in South Africa, particularly in the period of 16 years (from 2003 to 2019) wherein nearly 90 Chinese companies invested approximately Rand 116 billion in the country.
Blessed with abundant natural resources, South Africa is the world’s largest producer of platinum mines, the second largest producer of palladium mines and the third largest producer of gold mines, in a way making it apparent as to why the Chinese are so keen in investing in this country. Further, South Africa also produces the largest number of diamonds in the world, thus occupying the leading position through the usage of advanced technologies such as deep-well mining.
Thus, even though South Africa has good infrastructure; in July 2020 alone, China promised to invest US$14.7 billion on various kinds of infrastructure projects. Surprisingly, the South African officials, failing to recognise the possibility of a Chinese debt trap as in the rest of the world, agreed to the Chinese terms and conditions. Given the nature of Chinese investments, it is estimated that in 2020 itself, South Africa owed about four per cent of its annual GDP to Chinese lenders. Apart from this, China also promised to provide loans to South African state-owned power utilities and infrastructure companies to the tune of US$2.5bn, further adding value to the existing debt.
Earlier, in 2018, a loan worth R370 billion (US$25.8 billion) was given by the China Development Bank to the South African government as part of an economic stimulus package. The size of the loan and the lack of public debate or general consensus about it subtly indicate the possibility of a Chinese attempt to rope in South Africa in its debt trap model. Under these circumstances, it shouldn’t come as a surprise for the citizens of the country if one day the government decides to start selling off state enterprises to pay off its pending debts or permits higher Chinese stakes in key sectors of the economy. Prospective areas for future Chinese ownership in South Africa may emerge from a combination of taking over three maritime ports, two main railway lines that connect major cities to deep-water ports and the country’s national airline.
On its part, South Africa is looking to boost its technology and communications sector with the expansion of 5G services. Currently, these are being provided by companies such as Huawei and ZTE. As is known, both companies with affiliations to the Chinese military and the Chinese Communist Party have been reportedly found to be involved in surveillance activities across Africa and Europe. By exploiting pre-created loopholes, these firms allegedly facilitate Chinese hackers to covertly redirect surveillance footage, giving them unparalleled access to sensitive data. This has already been witnessed at the African Union headquarters in Ethiopia where the data servers and the CCTVs were manipulated to enable viewing of activities within the AU, sitting in China. Chinese hackers were also found to be involved in data theft with the information being transmitted to China during the peak working hours (10am-2pm) in an attempt to avoid surveillance by the tech units of African nations’ enforcement agencies. Within South Africa too, China has been found to be involved in technology theft in the past. In 2007, the nuclear interests’ models of the Pebble Bed Modular Reactor’s (PBMR) research and development were reportedly stolen from South Africa to advance a rival Chinese project. As was expected, today, China is way ahead in the PBMR project even though it started dabbling in this technology relatively late.
In the realm of industry, Beijing with its massive investments has been trying to dictate terms and manipulate policy decisions across various sectors. For example, with regard to automobiles, it can be said that though Chinese companies invested heavily in the Beijing Automotive Industry Holding Co. Ltd., in the eastern Cape Province, making it the largest auto plant in South Africa, it is South Africa that remains the final looser; as despite the company drawing economic benefits to the tune of R2.4 billion, the country doesn’t stand to benefit anything from taxes and the profits are directly reaped by China. This is being done systematically in a neo-colonial fashion, wherein the auto plant purchases 30% of the raw material from the local companies and the remaining 70% from China and when the final products are manufactured in the plant, these are exported to the rest of the African continent, the EU, and into the US as duty-free entities, without any taxes. Thus, the country where the manufacturing takes place gains the least despite its raw material, land and resources being put to use whereas China benefits immensely from the sales of the products owing to their relatively low costs. This same holds true for the other sectors as well. Presently, Chinese companies are selling cheap products in the local market across domains, be it clothing, textile, footwear and even leather. This has adversely impacted the South African economy, shutting down factories and rendering thousands of people jobless.
Not only in developmental projects, trade and infrastructure; China has also been affecting livelihoods through aggressive domination over primary sector endeavours such as fishing. Illegal fishing by Chinese vessels in South African waters is an emerging problem. In 2016, the South African Department of Fisheries spotted nine Chinese-owned vessels allegedly engaged in illegal fishing. These nine vessels were part of a fleet of 28 Chinese trawlers that were accused by local anglers of illegal fishing within three kilometres of South African waters.
For any vibrant democracy to function, there is a need for a free and vocal press. Clearly, South Africa is plagued by numerous issues that seem to have a Chinese hand. However, it is alarming to see that there isn’t much debate in the media or public forums, civil society groups over the undue Chinese influence in African lives. It is alleged that China, in collusion with South African state authorities, has been exercising significant amount of control over media houses in the country. This kind of gagging has reached such proportions that it wouldn’t be improper to say that articles critical of the Chinese companies or leaders or their policies in South Africa would hardly find a mention in any prominent South African media platform. Despite such curtailment of freedom, if a journalist finally does try to publish, they are likely to face expulsion from the media house. In fact, a columnist of a respected news platform was sacked for writing an article on Uyghur Muslims. China has been all along playing on the vulnerabilities of the media companies that run these platforms, dispensing cash, credit and buying stakes that determine the narrative and set the tone for any kind of engagement. It is time not just the South African press ‘presses’ for its rights to speak fearlessly but that every citizen of South Africa gains the courage to speak truth to power.
Dr Mahmood Hakan, Islamabad, Pakistan
Punch
END
Be the first to comment