South Africa bets on Africa-China partnerships to offset global trade disruptions

South Africa’s Trade Minister, Parks Tau, has announced that the country is focusing on strengthening trade and investment ties within Africa and with China, its largest trade partner, amid growing global trade tensions. While he highlighted positive engagements with US leaders and collaborative efforts with Europe, Tau emphasized the importance of increasing intra-African trade to enhance economic resilience.

The impact of trade wars

He said global trade was becoming increasingly complicated as the U.S. and China imposed tariffs on each other, while Europe has added carbon import taxes.

“There’s almost an undeclared trade war,” he told Reuters after attending the FT Africa summit in London. “It has a direct impact on us.”

Concerns have risen among global finance leaders that if Donald Trump wins next week’s US presidential election, it could mark the start of a fresh tit-for-tat global trade war.

Trump has vowed to slap a 10% tariff on imports from all countries, and 60% duties on imports from China, which would hit supply chains throughout the world.

Tau said more countries are acting unilaterally on trade measures, making it imperative that African nations take advantage of the African Continental Free Trade Area (AfCFTA) to boost their integration – and power on the global stage.

“It’s rather a way of leveraging our collective strength. We think there is great opportunity with the free trade area… Africa will grow,” he said.

The AfCFTA, which entered into force in 2019, aims to bring together 1.3 billion people in a $3.4 trillion economic bloc.

Focus on critical minerals and exports

Tau cited a need to leverage the continent’s critical minerals capacity – and work together to not just export raw materials but also create more value at home.

He also cited South Africa’s ability to export more white goods, steel and mining sector equipment to other African countries, as well as its services and business processes.

“Many of those mines will complement one another,” he said.

He declined to specify which minerals could be processed within the continent and said ministers are meeting next week to formulate specific strategies.

Tau also said they are looking to boost exports to China – namely of beef and manufactured goods – and that more Chinese investment in South Africa’s automotive industry is also possible. A delegation from China would visit South Africa next week, he said.

He also said that the government is working on proposals to help foreign-owned companies comply with Black empowerment laws.

While a bid from Elon Musk’s Starlink to operate in the country is with regulators, he said, the government recognised that rules requiring a 30% equity ownership by historically disadvantaged groups were challenging to a variety of foreign investors and that they are considering proposals to tweak it.

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