President Jacob Zuma ushers Chinese President Xi Jinping into the Union Buildings on Wednesday. Mr Xi is on a state visit ahead of a summit in SA on Chinese-African co-operation. Picture: EPA/KAREL PRINSLOO

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SA and China have inked 26 agreements valued at R94bn that will go some way to address their trade imbalance.

The Industrial Development Corporation (IDC) and Beijing Auto Works signed a R12bn agreement, the biggest of the lot, to build a car manufacturing plant in SA, Trade and Industry Minister Rob Davies said on Wednesday during Chinese President Xi Jinping’s second state visit to SA.

The China Development Bank is providing a loan facility of $500m to Eskom to support the cash-strapped utility’s infrastructure plan.

China is SA’s largest trading partner, but concern has been raised about the balance of trade.

In April, SA recorded a R73bn trade deficit with China. At the time, International Relations and Cooperation Minister Maite Nkoana-Mashabane said exports to China amounted to R94bn last year. Imports from China in the same period stood at R167bn, with trade between the two countries totalling R262bn. China exports manufactured goods to SA, while importing raw materials for beneficiation.

Mr Davies said the new agreements would begin to improve the situation.

IDC CE Mvuleni Qhena said the entity would identify a site for the car manufacturing plant, which was expected to create 2,500 direct and 7,500 indirect jobs. Cars built at the plant would be exported to the rest of Africa. Currently, other African countries, including Angola, imported cars from China, he said.

President Jacob Zuma said the recent hosting by SA of an inward-buying mission from China would also help to tackle the "structure of our bilateral trade, as well as the industrialisation of our economy". He described relations with China as "at their best levels ever". Mr Jinping said he was looking forward to a deepening of ties.

Meanwhile, Transnet has secured a $2.5bn funding guarantee from China Export Credit Insurance Corporation.

Transnet has already secured a $2.5bn bilateral loan from the China Development Bank. The parastatal will use the 15-year Chinese guarantee to finance railway, ports and pipeline projects.

It said the guarantee allowed it to raise funding in the market for its multibillion-rand infrastructure investment programme, including the acquisition and maintenance of its locomotive fleet.

The guarantee is the second major funding agreement Transnet has reached this month and the second such facility the state-owned freight and logistics company has obtained from an international institution. Last week it raised a R12bn club loan through five institutions, including Absa and Nedbank. Last year, Transnet got a R6bn funding guarantee from American export credit agency US-Exim, which will be financed by Absa, Standard Bank and Old Mutual Specialised Finance.

China North Rail and China South Rail last year won the lion’s share of work in Transnet’s R50bn programme to procure 1,064 locomotives. As part of the deal, the Chinese manufacturer will provide 56% of the locomotives. International winning bidders Bombardier and General Electric will make up the balance.

Transnet has to date invested more than R108bn through its market demand strategy since its establishment in 2012. The company intends to spend R340bn-R380bn in the next 10 years.