China to plough big sums into South Africa’s car industry

China continues to have an appetite for investing in Africa, with a deal to build a new car manufacturing plant in South Africa signalling its optimism about the continent. The hope is that the investment will generate jobs in the Eastern Cape, a province in much need of economic growth, though fears will inevitably be that the Chinese will bring their own labourers in to do much of the work as they have elsewhere in Africa. These fears are largely unfounded, according to China scholar Deborah Brautigam. She estimates that the ratio works out to one Chinese for every five African workers, though this ratio varies between countries. While Africa is a relatively small trading partner to China – an estimated 5% of its global trade – South Africa is a favoured nation, says the Brookings Institute. Although South Africa is its largest trading partner in Africa, at a volume of more than US$20bn, it represents only a fraction of Chinese trade with the EU. – Jackie Cameron

By Arabile Gumede

A Chinese state-owned car manufacturing company will invest 11 billion rand ($819 million) in a new plant in South Africa, giving a further boost to one of the fastest-growing industries in the continent’s largest economy.

Chinese President Xi Jinping walks with South African President Jacob Zuma upon his arrival at the Union Buildings in Pretoria , December 2, 2015. REUTERS/Sydney Seshibedi
Chinese President Xi Jinping walks with South African President Jacob Zuma upon his arrival at the Union Buildings in Pretoria , December 2, 2015. REUTERS/Sydney Seshibedi

Beijing Automotive International Corp. signed the deal with the Coega Development Corporation, the operator of an industrial development zone in South Africa’s southern coast city of Port Elizabeth, Coega said in an e-mailed statement on Friday. The investment is a result of agreements signed by President Jacob Zuma and Chinese Prime Minister Xi Jinping in December last year.

“The size of this investment demonstrates confidence by China and confidence in South Africa as an investment destination,” Trade and Industry Minister Rob Davies said in a statement. The Eastern Cape province is “an automotive hub and has the potential of deepening the component supply chain, job creation and economic development,” he said.

South Africa’s automotive-manufacturing industry has been among the bright spots of an economy expanding at the slowest pace since a recession in 2009. South Africa’s government auto-incentive program has attracted companies including Toyota Motor Corp., Ford Motor Co. and BMW AG to set up and invest in factories. The industry has the potential to boost production by almost 50 percent to more than 900,000 vehicles a year by 2020, the local producers’ group said in May.

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