Engaging Asia’s Biggest Tiger

The report examines the trade and investment dynamics between SACU (primarily South Africa) and China, arguing that while Chinese imports threaten SACU's light manufacturing, the complementarity of their economies—specifically China's demand for natural resources—makes a phased free trade agreement (FTA) a strategic necessity for restructuring SACU's economy.

• South Africa's trade relationship with China is characterized by a significant bilateral deficit, with imports from China growing much faster than exports to China. In 2004, China accounted for 8.8% of South Africa's total imports but only 2.9% of its exports, resulting in a goods trade deficit of $2.6 billion.
• The trade structure between SACU and China is highly complementary, as SACU possesses a competitive advantage in the raw materials and minerals that China requires for its industrial growth. Base metals and mineral products accounted for nearly 73% of South Africa's exports to China on average between 2001 and 2005.
• Chinese exports pose a severe threat to SACU's labour-intensive light industries, particularly textiles, clothing, and footwear. An FTA would likely increase these pressures, as over half of China's potential market access gains in South Africa would be in textiles, textile articles, and footwear.
• A potential FTA could provide market access gains for South Africa, particularly in natural resource-intensive products like base metals, precious metals, and chemicals. However, these gains are limited because China already maintains low tariffs on the resources it most needs.
• Bilateral investment is embryonic and asymmetrical; South African companies have invested significantly more in China than Chinese companies have in South Africa. South African FDI in China reached approximately R4.5 billion by mid-2005, while Chinese FDI in South Africa is estimated between $200 million and R500 million.
• China's engagement in Africa may conflict with South Africa's vision for the continent (NEPAD) due to China's policy of non-interference and its support for regimes like those in Sudan and Zimbabwe to secure natural resources.
• China is viewed as a flexible and pragmatic negotiating partner in FTA discussions, particularly outside East Asia. It often uses 'early harvest programmes' and requires partners to grant it 'market economy status' as a prerequisite for comprehensive deals.
• The report argues that SACU should pursue a comprehensive but well-sequenced and phased-in trade agreement. Such a deal would force necessary economic restructuring and improve productive efficiency, rather than attempting to protect unsustainable industries indefinitely.

APA

Alves, P. (2006). Engaging Asia’s Biggest Tiger. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2013/06/14-TPR_14.pdf

Chicago

Alves, Philip. Engaging Asia’s Biggest Tiger. South African Institute of International Affairs, 2006. https://saiia.org.za/wp-content/uploads/2013/06/14-TPR_14.pdf.

Wikipedia

{{cite report |last1=Alves |first1=Philip |title=Engaging Asia’s Biggest Tiger |publisher=South African Institute of International Affairs |date=2006 |url=https://saiia.org.za/wp-content/uploads/2013/06/14-TPR_14.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{alves2006engaging, author = {Alves, Philip}, title = {{Engaging Asia’s Biggest Tiger}}, institution = {South African Institute of International Affairs}, year = {2006}, url = {https://saiia.org.za/wp-content/uploads/2013/06/14-TPR_14.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }