“BRICS provides the only true counterweight to the potential global trade wars playing out,” Stavros Nicolaou, a senior executive at Aspen Pharmacare said to me this week at the BRICS Summit in Johannesburg. The BRICS formation is acting as a bulwark against US unilateralism and hegemony, and this theme has been woven through the fabric of discussions at the landmark Summit this week marking a decade of collaboration between Brazil, Russia, China, India and South Africa.
The US has made it quite clear that South Africa will be penalised just as heavily as its other traditional trading partners through the imposition of new tariffs on aluminium and steel. Instead of the US administration putting things into perspective in that South Africa only accounts for 1% of US steel imports, but that 1% represents a significant amount of revenue and jobs for the South African economy, the US has refused to reconsider its decision when it comes to South Africa. There is absolutely no consideration given to supporting South Africa’s development agenda or priority given to job creation in this country.
Contrast that to Chinese President Xi Jinping’s remarks this week that China and South Africa are brothers, friends, partners and comrades. President Xi said China is committed to supporting South Africa’s development agenda in terms of job creation, manufacturing, industrialisation and development financing. For China, it goes beyond words, as we witnessed with the announcement this week that China has committed US$14,7 billion of investment in our economy, US$2.5 billion of which is a lifeline for Eskom at a time when Eskom desperately needs to raise R72 billion this year.
Consider also that the current Chinese Ambassador spent his weekends for months on end earlier this year visiting our Special Economic Zones in provinces throughout the country in order to study the strengths and challenges with a view to attracting Chinese investors to the zones, many of which are in desperate need of investors. He then brought 100 Chinese business executives to visit the Coega Industrial Development Zone last month in a push to bring investors to speed up the manufacturing sector in this country.
Then there is the vision that the Chinese Ambassador has articulated to bring close to a million Chinese tourists to South Africa in the short term. This is surely more than doable considering there are around 120 million Chinese tourists travelling abroad, so attracting a million to South Africa shouldn’t be too hard, and it represents a huge cash injection into our economy.
It is difficult not to compare this genuine interest in our development with the fact that since President Donald Trump came to office he hasn’t even bothered to appoint a US ambassador to South Africa.
But as Minister for Trade and Industry Rob Davies alluded to this week, there will be pushback from South Africa to US intransigence on the trade front. South Africa had certain guarantees from the US with regards to trade access according to our benefits under the African Growth and Opportunity Act (AGOA), and these new tariffs are in breach of agreed trade access.
Davies has warned that the poultry industry in South Africa is preparing to launch a court challenge against the highly controversial concessions that South Africa made to the US in terms of allowing US chicken into our market. This was fiercely contested by our own poultry industry, and now the argument will be made that given the US breach of our AGOA benefits, why should we continue letting in cheap American chicken to undercut our own producers?
I can’t help mentioning that while the US has its own small-scale trade war on the go with South Africa, China has taken significant steps forward in terms of allowing access for South African beef into the Chinese market, presenting huge export opportunities for us. Add to this the fact that President Xi Jinping promised this week to ensure that more Chinese buying missions come to South Africa.
The Chinese have given South Africa Special Guest Status at their landmark International Import Expo in November, the first of its kind, which will showcase an array of South African products that will be of interest to Chinese consumers. This is China’s way of showing that their economy is open to South African (and other) business and is seeking ways to bring value-added and manufactured products to the Chinese market, not only raw materials.
When the US talks about rebalancing the global trading system, what it really means is rebalancing it in the interests of America, not in the interests of the majority in the international community, and certainly not in the interests of the developing south. That, my friends, is why BRICS is so relevant for our future – it is a way for us to leverage development financing, especially for infrastructure, and without infrastructure, we cannot even begin to reverse the low levels of intra-African trade.
* Ebrahim is Independent Media's Group Foreign Editor.