A worker polishes steel coils at a factory in Dalian, in China's Liaoning province. File picture: Reuters

#FOCAC: Johannesburg - South Africa’s exports to China received a boost with the signing of more than 20 co-operation agreements and contracts to the value of $918 million, the Department of Trade and Industry (dti) said on Monday.

These agreements and contracts were signed during the China Inward Buying Mission event that took place in Sandton, Johannesburg, ahead of the Forum on China-Africa Co-operation (Focac)

“More than 16 South African companies signed these purchase and investment agreements with the Chinese companies,” the dti said in a statement.

The Inward Buying Mission forms part of the implementation of the Comprehensive Strategic Partnership Agreement (CSPA) signed between South Africa and China.

“Both countries agreed that China would increase its sourcing of value added products from South Africa in order to improve the structure of trade between the two countries, which is mainly dominated by exports of raw materials from South Africa to China, and imports of value added products from China by South Africa,” said the dti.

Speaking at the event, dti Deputy Director-General Garth Strachan said the Inward Buying Mission served as a symbol of incremental progression as the governments of the two countries had been planning to hold an event of this nature for some time.

“Within this (CSPA) agreement, China has also committed to (1) encourage its enterprises to increase investment in South Africa’s manufacturing industry and promoting the creation of value-adding activities; (2) explore co-operation opportunities in infrastructure projects such as roads, railways, ports, power generation, and airports,” said Strachan.

“Most importantly, China has agreed to (3) increase its source of value added products from South Africa. Let me emphasise that this inward buying mission is part of the implementation of the third pillar of the CSPA.”

Strachan said South Africa was concerned about the skewed imports and exports pattern between the two countries that are in favour of the Chinese as over 85 percent of South Africa’s exports to China comprise raw materials.

“This is a troubling characteristic of our trade given that a Comprehensive Strategic Partnership Agreement (CSPA) has been in implementation for 5 years and has not yet achieved one of its main objectives,” said Strachan.

“It is also concerning in that South Africa and China refer to each other as the developing partners of the 21 century, yet continue to reinforce problematic trade behaviours of the past.”

Strachan said that South Africa would like to see a reduction in the dominance of raw materials in its export basket to China.

“We call on the Chinese government and Chinese private sector to collaborate and send more value added orientated inward buying missions to South Africa,” said Strachan.

“We believe that this action will fast-track the industrialisation of our economy and contribute to successful long-term industrialisation and developmental plans.”

Strachan also said that in any healthy economy, the manufacturing sector was a key driver towards accelerating growth.

The South African government has key policies to further develop and support the manufacturing sector in order to ensure its sustainability.

Strachan said the government plans to expand the current supply measures to attract downstream value adding manufactures.

“In this regard, we have developed plans to increase the level of beneficiation in the following areas: iron ore and steel; platinum group metals; polymers; titanium; upstream mining inputs and the energy value chain,” said the deputy director general.

“This development will require major foreign direct investment in the identified priority areas. We welcome China’s participation in the development of these priority sectors which we have identified for beneficiation as well as investment in all the other areas of manufacturing.”

Strachan said the signing of the co-operation agreements and contracts was in line with Focac, which will be held in Johannesburg later this week. It is the first time Focac is being held on the African continent.

ANA