In search of a demandeur – Exploring the contours of a SACU-China trade deal

The document examines the dynamics of trade between China and the Southern African Customs Union (SACU), noting that while South African exports of resources are booming, the region faces significant job losses in labour-intensive light industries like apparel and footwear due to Chinese competition. It discusses the tension between the welfare gains of cheaper imports for the poor and the political pressure from trade unions and business to protect domestic industry. The text suggests that SACU is likely to pursue a narrow, symbolic preferential agreement similar to its deals with Mercosur and India, although some participants argue that a comprehensive FTA would better force necessary economic adjustments and improve long-term productivity.

• China's integration into the global economy has created a complementary trade relationship with SACU, where South African exports are dominated by resource-based products—specifically metals and chemicals—while Chinese exports to the region focus on electrical machinery, footwear, and textiles and apparel.
• Trade with China is viewed as a threat to job creation and poverty reduction in SACU because it displaces labour-intensive light industries, making a full Free Trade Agreement (FTA) politically unlikely to find support.
• Despite the risk to light industry, cheaper Chinese imports provide significant welfare gains for the majority of poor SACU citizens and have spurred growth in the informal wholesale and retail sectors.
• SACU is expected to seek a narrow preferential trade agreement with China, mirroring its cautious approach with India and Mercosur, which may result in a deal high on political symbolism but low on commercial impact.
• The document argues that rather than using carve-outs to protect sensitive sectors, SACU should use a comprehensive trade engagement with longer implementation periods to force industries to adapt and improve productivity.
• China's own future economic strategy involves reducing its dependence on exports by promoting domestic consumption and diversifying its energy imports into solar, hydro, and gas to improve coal efficiency.

APA

South African Institute of International Affairs (2006). In search of a demandeur – Exploring the contours of a SACU-China trade deal. https://saiia.org.za/wp-content/uploads/2006/03/In-search-demandeur-Exploring-SACU-China-trade-deal.pdf

Chicago

South African Institute of International Affairs. In search of a demandeur – Exploring the contours of a SACU-China trade deal. 2006. https://saiia.org.za/wp-content/uploads/2006/03/In-search-demandeur-Exploring-SACU-China-trade-deal.pdf.

Wikipedia

{{cite report |author=South African Institute of International Affairs |title=In search of a demandeur – Exploring the contours of a SACU-China trade deal |date=30 March 2006 |url=https://saiia.org.za/wp-content/uploads/2006/03/In-search-demandeur-Exploring-SACU-China-trade-deal.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{southafricaninstituteofinternationalaffairs2006search, author = {{South African Institute of International Affairs}}, title = {{In search of a demandeur – Exploring the contours of a SACU-China trade deal}}, institution = {South African Institute of International Affairs}, year = {2006}, month = mar, url = {https://saiia.org.za/wp-content/uploads/2006/03/In-search-demandeur-Exploring-SACU-China-trade-deal.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }