JOHANNESBURG - The impact of South Africa's inclusion in BRICS should not be underestimated as China, the world's second-largest economy, is looking after its partners in BRICS.
This is evident in the steadily increasing share of imports from its partners which, on average (excluding South Africa) increased from 1.46percent in 2015 to 1.79percent in 2017.
The member countries’ average share, excluding South Africa, of China’s total trade with the world increased from 1.7percent in 2015 to 2percent in 2017 and, according to Fung Business Intelligence (www.fbicgroup.com), 2.15percent in the first quarter of 2018.
Fung Business Intelligence also reported that China’s year-on-year import growth from Russia, India and Brazil was 32percent, 9.1percent and 23.1percent, respectively, in the first quarter of this year.
The scope for South African exporters and the economy is huge.
At 0.47percent, South Africa’s share of China's total imports from the world is the lowest among the member countries.
If we drew level with India at 0.68percent, this would mean that South African exports to China would increase by nearly 50percent, or more than $4billion (R53bn), in current money terms.
The Chinese market is playing a more dominant role in the South African economy. In 2015 South African exports to China were 8.3percent of our total exports to the world, and that figure has risen to 9.8percent in 2017.
South Africa's exports to China since 2015 have grown by more than 22percent per year to $8.6bn, while global exports increased by 12.6percent per year. Over the same period, local imports from China grew by a paltry 2.1percent per year.
This resulted in South Africa’s trade deficit with China narrowing from $8.8bn in 2015 to $6.6bn in 2017.
South Africa’s strong growth was mostly driven by the ores, slag and ash industries that account for two-thirds of the export value. Exports of these commodities grew by nearly 30percent to $5.8bn.
South Africa’s share in the Chinese market has also grown to 4.6percent of Chinese imports from 3.7percent in 2015. The South African export of ores, slag and ash to China accounts for 51.1percent of South Africa’s total exports of these commodities. The mineral fuels and mineral oils industry that accounted for 5percent of exports to China saw their exports soar to $451million in 2017 from $90m in 2016.
The wool, yarn and woven fabric industry made significant inroads in the Chinese market. The industry has more than doubled its exports to China and in 2017 accounted for more than 7percent of China's imports of these goods, compared to 4.1percent in 2015.
The exports of the goods to China accounts for 62percent of the total exports by the South African wool, yarn and woven fabric industry. The edible fruit and nut industry scored huge, and increased their exports to China by more than 150percent to $105m in 2017 from 2015.
What is also important to note is that the South African fruit industry's share of Chinese imports has grown from 0.7percent in 2015 to 1.7percent in 2017 and accounts for 3.1percent of total South African edible fruit and nut industry exports.
A number of industries managed to break into the Chinese market over the past two years.
The sugars and sugar confectionery industry managed to up their exports to nearly $12m from a paltry $1000 in 2015. The meat industry exported nearly $9m worth of goods compared to zero in 2015. The paper and paper pulp industry’s exports to China climbed to nearly $8m from $1.6m in 2015.
Some industries lost out heavily, though. The precious metals and precious stones industry lost two thirds of their exports to China compared to 2015, while South African iron and steel industry lost market share as its share of Chinese imports dropped to 4.1percent from 7.4percent in 2016.
In regard to the other BRICS members, South Africa's trade with Brazil and Russia is insignificant, as South African exports to the two countries account for 0.3percent and 0.1percent, respectively, of their global imports.
South Africa's exports to India, on the other hand, account for nearly 5percent of South Africa's exports and has increased by 14.7percent per year from 2015 to 2017. South African exports to India accounted for 0.9percent of India’s imports from the world in 2017.
There is no doubt that the association with India, and especially China, through BRICS offers South African companies excellent export opportunities and will support economic growth in this country.
Brazil and Russia are wild cards at this moment, but South African trade with the two countries may surprise on the upside.