MANUFACTURERS are calling for a political solution to the "huge problem" of Chinese imports and the effect on job creation in South Africa.
In terms of World Trade Organisation rules, countries are allowed to impose countervailing duties if a trading partner is subsidising its exports. There is no evidence that China is doing this.
Trade between South Africa and China has increased in recent years to about $45.5bn, with exports to China totalling about $30bn and imports about $13bn.
Stewart Jennings, chairman of the Manufacturing Circle, representing some of South Africa’s largest manufacturers, said on Thursday the government needed to adopt more measures to protect the sector.
He said this could be done through placing dumping or countervailing duties on Chinese imports, which he said were "costing South Africa thousands of jobs".
Mr Jennings called for a political solution to Chinese imports, saying that summits such as those organised by Brics (Brazil, Russia, India, China, South Africa) were good platforms for South Africa to engage China.
"The (solution) has to be political. South Africa has to punch above its weight in Brics and say it’s not going to let China, in particular, destroy jobs in this country. We need to have much fairer quid pro quo on exports and imports."
At a high-level forum on China-Africa co-operation in Beijing last month, President Jacob Zuma praised China’s commitment to Africa, but warned that a trade relationship heavily tilted in the Asian giant’s favour was not "sustainable in the long term".
Mr Jennings proposed that the government impose countervailing and dumping duties on Chinese imports.
"We also need the government and Itac (the International Trade Administration Commission) to stand up and place dumping duties and countervailing duties on China, which they’re not doing."
But Wei Jiang, councillor for economic and commercial affairs at the Chinese embassy in Pretoria, said duties had already been imposed on a few Chinese imports.
He said the problem was not China’s imports, but the competitiveness of the South African manufacturing sector.
"We have to pay attention to increasing competitive capacity. Duties can help local industries in the short term and you can impose dumping tax on Chinese products, but you can’t stop others because trade competition is global," Mr Wei said on Thursday.
Improving skills, education and technology in South Africa’s manufacturing sector could help it to grow, as well as addressing labour costs.
"Local labour costs are sometimes very high. If labour costs are high, that can reduce competitiveness. Even without China, they (South Africa’s manufacturers) need to pay attention to improving their competitiveness," he said.
The Manufacturing Circle’s quarterly bulletin, released on Thursday, showed that 43% of companies surveyed in the sector reported poor to fragile business confidence, up from 33% in the previous quarter.
The survey — compiled from data collected from 67 small, medium and large manufacturing businesses — showed that only 33% believed business conditions to be stable, down from 45% in the first quarter.
It also found that the sector had shed 44,000 jobs in the quarter.
Just more than 60% of companies reported positive changes to their operating profits and cost of capital, probably due to the reduction in interest rates last month.
The Manufacturing Circle called on the Reserve Bank to not only target inflation, but the currency, suggesting a level of R8.20-R8.60 against the dollar.
This, it argued, would make the volatile rand — which played a significant role in the fortunes of manufacturers that exported — much easier to manage.
Iraj Abedian, economist and CE of Pan African Investment and Research Services, said the call for currency targeting did not mean the organisation advocated fixing the currency at those levels.
Much like the Reserve Bank used monetary policy as a tool to manage inflation within the 3%-6% target band, it would find tools to manage the rand at the levels suggested.
"Remember, with inflation targeting, everybody was asking whether it will work. It’s now 12 years later (and) we’ve made it work. We’ve learnt how it should be done and we can use the same process again. It will be a process of learning, fine-tuning our research, the monitoring of these two bands .…"
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