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
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

CHINESE President Xi Jinping’s second state visit to SA has been honoured with great pomp and circumstance that included 21 gun salutes.

Mr Xi is spending more time in SA than he did at the United Nations talks on climate change in Paris.

The state visit came ahead of the Forum on China-Africa Co-operation that several heads of states and business representatives from the rest of the continent will attend.

The forum is likely to throw the spotlight on the huge trade imbalance between Africa as a whole and China.

And even SA, the most industrialised and diversified economy on the continent, is in major deficit.

The government trumpeted the 26 agreements valued at R94bn that have been signed.

But the list bears scrutiny, with some clearly more substantial than others. There are numerous co-operation agreements and joint working group plans that look useful. They range from various Silk Road — Beijing’s signature foreign policy — commitments to accords on working together on everything from oceans to visas to science parks.

Interestingly, there will be work done on SA’s trade with China and the contested issue of just how wide the deficit is.

Some of the agreements have more financial substance, though, and they are welcome.

A $500m loan facility for cash-strapped Eskom and a $2.5bn export credit facility for Transnet are two of the noteworthy ones.

However, all export credit facilities are linked to the purchase of goods and services in the home country, so Transnet will need to do some Chinese procurement to access the largesse.

Particularly welcome is the promise of foreign direct investment in SA by Beijing Auto Works, which will partner with the Industrial Development Corporation to establish new manufacturing facilities in SA.

That’s potentially the largest new investment in the sector for decades.

We will have to wait and see the benefits yielded by the co-operation agreements. China is SA’s second-largest trading partner and our economic fortunes are inextricably linked.

The same can be said for the rest of the global economy.

Accords, deals and the promise of new investment are standard during state visits of significant trading partners.

But there is no need for SA to fall over itself with gratitude.

Trade relations between SA and China are skewed in China’s favour, and with commodity prices in decline, that imbalance has become worse. Our imports from China far outweigh our exports to it.

What should be of more concern to the government is that our exports are almost entirely made up of raw materials and commodities rather than manufactured goods.

Contrast that with the eurozone bloc, which is SA’s largest trading partner and with whom there’s more balance. For the first nine months of this year, SA’s exports to the eurozone were R163bn, of which about half were manufactured goods, while imports were R230bn.

SA exported R72bn worth of mostly commodities to China and imported R143bn of mostly manufactured goods.

There is a desire by both sides to close that gap, and that is encouraging.

The investment gap with China is also an issue, given China’s fairly low levels of foreign direct investment in SA when compared with the eurozone’s.

European companies are estimated by the European Union to account for about 450,000 South African jobs.

China is important for SA, and those trade and investment ties must be nurtured, but SA needs to do more to achieve a greater balance.

The attention Mr Xi is paying SA indicates China, too, values SA as a partner.

A mutually beneficial relationship does not preclude SA from pushing for better terms of engagement.