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Headlines can deceive and don’t the spin doctors just know it. So after yesterday’s meeting between Chinese President Xi and his South African counterpart Zuma, the banners proclaim a relationship taken to a “new level” with R94bn in deals concluded. Zuma’s supporters will hail their man as having brokered a breakthrough. But, as ever, the devil is in the detail. Of the 26 agreements signed between the Governments, two account for almost half the $6.5bn that translates into such a big Rand figure (but in reality is under 2% of SA’s annual GDP). Of these loans extended by the Middle Kingdom, $2.5bn is to fund Transnet’s purchase of equipment from Chinese companies while $500m will be lent to Eskom which will grab funding wherever it can right now. Most of the other “agreements” are MOUs (Memoranda of Understanding) promising co-operation on this or that between State Departments. Key questions not addressed in the official blurb are what interest rate is being charged (ie is the R94bn new borrowing coming cheaper than SA’s more traditional sources of funding) and what exactly has Zuma promised Xi in return. Two private sector companies did get a look in: Standard Bank is to raise up to R10bn in loans for its Chinese associate ICBC; and media group Naspers is committing work closely with, and promote engagement between “media practitioners” at Xi’s propaganda machine, the China State Council Information Office. That is sure to go down like a lead balloon at 40 Heerengracht, especially if Naspers management were to replicate China’s “censor in every newsroom” approach. – Alec Hogg
By Joe Brock
PRETORIA, Dec 2 (Reuters) – Chinese President Xi Jinping presided over the signing of agreements and loan deals with South Africa worth 94 billion rand ($6.5 billion), mainly to build infrastructure in the continent’s most industrialised nation.
South Africa’s President Jacob Zuma hailed relations between the two nations as at their “best ever” after the two leaders held talks focused on boosting investment and addressing a trade imbalance that favours China.
“China and South Africa relations are at a new historical level. We want to build it into a model for relationships between China and other emerging economies,” Xi said at a media conference following the talks.
China has made a string of cheap loans in the past few years to countries in Africa, a continent which supplies oil and raw materials such as copper and uranium to the world’s most populous country and its second-largest economy.
Chinese influence is broadly seen by Africans as a healthy counterbalance to the West, though Western governments accuse China of turning a blind eye to conflicts and rights abuses as they pursue trade and aid policies there.
Xi, who began his tour of Africa in Zimbabwe on Tuesday where he pledged loans to revamp the ailing economy, will also co-chair a two-day Forum on China-Africa Cooperation which begins in Johannesburg on Friday.
Several African heads of state are expected to attend the summit, with discussions centring on how much China will extend in new loans as its own economic growth slows, while African nations may push for debt moratoriums and technology transfers.
Nigeria’s President Muhammadu Buhari will ask Xi to fund rail and power projects urgently needed to diversify an economy hit hard by a plunge in oil prices, a spokesman said.
As part of the 26 deals signed on Wednesday, China will lend South Africa’s cash-strapped power utility $500 million.
The two countries also signed a deal to improve cooperation in nuclear power, but gave no details.
South Africa is in the throes of a chronic electricity crisis that is increasing costs for industry and discouraging investment. Part of its response is to build new nuclear plants that experts say may cost as much as $100 billion.
China will also help to build a car manufacturing plant on South Africa’s coast which should begin exporting vehicles to other African countries by the end of 2017.
South African Investec, a Johannesburg-based investment bank and asset management firm, agreed to work with China Export-Import Bank to enhance export finance, project finance, and the internationalisation of China’s renminbi currency and its use as a settlement currency in trade.
China’s Credit Insurance Corp. signed a deal to provide state-owned logistics firm Transnet with $2.5 billion in loans to pay for contracts and equipment with Chinese companies.
The two nations also agreed to waive visa requirements for diplomatic and government passport holders.
From the SA Presidency
Twenty six agreements worth R94 billion were signed today, 2 December 2015 at the Union Buildings in Pretoria, taking bilateral cooperation between China and South Africa to a higher level.
President Jacob Zuma today hosted his counterpart His Excellency the President of the People’s Republic of China, Mr Xi Jinping who is in South Africa on a State Visit.
The two Heads of State used the State Visit to evaluate the progress achieved by the two countries since the conclusion of the Five to-Ten Year Strategic Programme for Cooperation adopted in December 2014, during a State Visit by President Zuma to the People’s Republic of China.
In this regard, the two leaders received progress achieved in the implementation of Strategic Programme with specific reference to the six priority areas identified for 2015, as follows:
- Alignment of industries to accelerate South Africa’s industrialisation process;
- Enhancement of cooperation in Special Economic Zones (SEZs);
- Enhancement of marine cooperation;
- Infrastructure development
- Human Resources cooperation, and
- Financial cooperation.
The following agreements were signed today:
- Action Plan on the Strengthening of the Joint Working Group between China and South Africa
In order to accelerate bilateral cooperation on major projects, both sides agreed to further strengthen the Joint Working Group (JWG) through the Action Plan to emphasise the following aspects: locomotive procurement, civilian nuclear energy project, investment in renewable energy, investment cooperation in industrial parks, trade promotion, specifically focused on South African product expos and Chinese trade missions, promoting the export of South African products to China and cooperation in Black Industrialists Programmes; visa facilitation, financial cooperation and the upgrading of national electricity transmission and distribution system.
- MoU on Jointly Building the Silk Road Economic Belt and the 21st Century Maritime Silk Road
Both South Africa and China are committed to jointly promote the building of the Silk Road Economic Belt and the 21st Century Maritime Silk Road (the Belt and Road) through the MoU on Jointly Building the Silk Road Economic belt and the 21st Century Maritime Silk Road. China proposed the Belt and Road Initiative in an endeavour to uphold the spirit of the Silk Road, which includes peace, cooperation, openness, inclusiveness, mutual learning, mutual benefit and win-win results and to enrich its meaning with the characteristics of the new era. The MoU also aims at creating opportunities for mutual learning, realizing better exchange and integration of goods, technology, capital and personnel and promoting the coordinated development and common progress of countries concerned in the fields of economy, society, environment and culture, thereby facilitating dialogues and integration of different civilizations. Both South Africa and China have agreed to jointly explore the converging points between the Belt and Road Initiative and national development of South Africa, to enhance policy coordination and pragmatic cooperation, promote win-win cooperation and mutual learning so as to realize peaceful development and common prosperity for both countries.
- Agreement between the Department of Environmental Affairs and the NDRC on Strengthening Cooperation in the Oceans Economy
The objective of the Agreement on Strengthening Cooperation in the Oceans Economy is to create cooperation and a consultation platform and to promote cooperation on the Oceans Economy between the two countries and related organisations and enterprises. The Agreement outlines broad areas of cooperation in the following areas i.e. Maritime transport; Offshore petroleum resources development; Ocean drilling platform building; Aquaculture and processing of fish products; Port development/construction and operation; Port industrial park development; Skills development and capacity building; Research, technology innovation and technology transfer; Oceans environment conservation and management; and other areas of mutual interest as agreed by the Parties.
- Agreement on the Waiver of Visa Requirements for Diplomatic and Official Passport Holders
The Agreement on the Waiver of Visa Requirements for Diplomatic and Official Passport Holders allows for those citizens from South Africa and China, who hold valid diplomatic or service passports, to enter into, exit from, transit through, or stay in the country of the other Party for a period not exceeding 30 days to be exempt from the requirement of having to obtain a visa for the duration of that period. Accredited diplomatic and consular staff, as well as members of their families, shall not be required to obtain a visa for the duration of their accreditation. The Agreement shall replace the existing Agreement regarding the Waiver of Visa Requirements for Holders of Diplomatic Passports, signed on 24 August 2010.
- Memorandum of Understanding on Cooperation in Health and Medical Sciences between the People’s Republic of China and the Republic of South Africa
The objective of the MoU in Health and Medical Sciences between South Africa and China is to expand exchanges in the fields of public health, health care delivery systems and biomedical sciences, as well as establish regular cooperation between health institutions. Areas of cooperation include: Public health services and biomedical research, medical research; Primary health care, including family medicine; Quality assurance in health care and standards practice; education and training in, and research of, traditional medicine; healthy lifestyles; regulation of medicine, including traditional medicine; pre-hospital emergency medicine; HIV and AIDS and TB and MDR-TB treatment; Recruitment of health professionals; and Human resource development.
- MoU on Cooperation and Development on Science Parks
Following the Agreement on Science and Technology Cooperation concluded between South Africa and China on 30 March 1999, the Five to Ten Year Strategic Framework for Cooperation between South Africa and China (2015-2024) signed on 4 December 2014; and the China-Africa Science and Technology Partnership Programme that was launched in November 2011, the two countries have committed to continue to expand cooperation in the field of science parks on the basis of equality and mutual benefit in order to enhance bilateral research and development partnerships and innovation activities. The MoU on Science Park Cooperation highlights cooperation between the two countries in Business incubation, High-End Skills Development and ICT Research and Development Investment.
- Memorandum of Understanding between the Government of the People’s Republic of China and the Government of South Africa on the establishment of a China Cultural Centre in the Republic of South Africa
The Government of the People’s Republic of China and the Government of the Republic of South Africa wish to promote the cultural and exchanges expertise and cooperation between the two countries and strengthen the mutual understanding and friendship. The Government of the People’s Republic of China will establish a China Cultural Centre in South Africa. The Cultural Centre will provide quality and publicly-accessible cultural programmes through friendly collaboration with its partners.
- Memorandum of Understanding between the Department of Public Enterprises, Republic of South Africa, and the State-Owned Assets Supervision and Administration Commission of the State Council, The People’s Republic of China
The Memorandum of Understanding between the Department of Public Enterprises of South Africa and the State-Owned Assets Supervision and Administration Commission of the State Council, of the People’s Republic of China intends to facilitate strengthening cooperation in terms of infrastructure construction projects; information communications, as well as co-operation between Chinese and South African energy related companies. The Agreement will create a legal framework for South African and Chinese state-owned enterprises (SOEs) within their oversight control to conduct exchanges and cooperation in the areas of common interests; and as well as to share information and expertise in their respective enterprises.
- Memorandum of Understanding on Anti-Monopoly Cooperation between the Ministry of Commerce of the People’s Republic of China and the Economic Development Department of South Africa
The purpose of the Memorandum of Understanding (“MOU”) is to enhance the partnership of the Ministry of Commerce of the People’s Republic of China and the Economic Development Department of South Africa by providing a sound mechanism for their communication and cooperation in the fields of competition law and policy, including enforcement. Exchanging information regarding developments in their respective competition legislation, enforcement and policy; Providing comments on drafts of each other’s competition law, regulations and other legal or guidance documents; exchanging information on issues including, but not limited to, definition of relevant markets, theories of harm, the competitive impact assessment and the design of remedies; Sharing competition law enforcement experience; Sharing practice and experience with respect to law enforcement capacity building; and Exchanging views on issues relating to international cooperation on competition law and policy.
- Memorandum of Cooperation between the South African Revenue Service of the Republic of South Africa and the Great Administration of Customs of the People’s Republic of China
The Memorandum of Cooperation between the South African Revenue Service (SARS) of the Republic of South Africa and the Great Administration of Customs (GAC) of the People’s Republic of China, intends to strengthen cooperation in the field of administrative assistance in customs matters with the focus of improving mutual understanding of the Participants’ custom practices. The Agreement will create a legal framework for the SARS and the Great Administration of Customs to promote communication and cooperation in customs administration; technology application, the formulation and implementation of laws and regulations; capacity building; and trade statistics. The Memorandum of Cooperation will also pave the way for the Participants to enhance cooperation by developing their capabilities through particular activities, projects and arrangements as well as facilitate cooperation in specific areas namely the exchange of trade statistics; trade facilitation and identifying and controlling trade risks; improving the existing collaboration in terms of anti-smuggling; exchanging customs valuation methodologies, capacity building as well as exchanging views in areas applicable to multilateral contexts.
- Action Plan on Cooperation in Human Resource Development between the Department of Higher Education and Training of the Republic of South Africa and the Ministry of Commerce of the People’s Republic of China
The Government of China offers 2000 training offered to South Africa for the period 2015-2020. The Department of Higher Education and Training of the Republic of South Africa and the Ministry of Commerce of the People’s Republic of China drafted an Action Plan on Cooperation in Human Resource Development as part of the implementation programme for these training offers. The Action Plan will also assist in strengthening the promoting personnel exchanges, and enhancing mutual friendship between the two countries and is part of the Five-to-Ten-Year Strategic Programme for Cooperation between the Republic of South Africa and the People’s Republic of China 2015-2024.
- Report on the Statistical Discrepancies of Merchandise Trade between the Republic of South Africa and the People’s Republic of China
In recent years, the bilateral merchandise trade between South Africa and China has grown rapidly. From 2004-2014, the total bilateral trade value increased 28.4% (compound annual growth) according to Chinese statistics and 20.4% according to South African statistics. The discrepancies between the trade data of the two countries have been a concern and have had an effect on the objective of understanding and evaluating bilateral trade. Consequently, a Joint Working Group on trade statistics analysis between South Africa and China was established in November 2010, comprised of the Department of Trade and Industry of South Africa, the South African Revenue Services and the Chinese Ministry of Commerce. The Working Group conducted a cooperative study on the cause of the statistical discrepancy in the 2004-2009 bilateral merchandise trade data and focused on critically analysing the trade data of 2007 and 2009.
State Owned Enterprises Agreements
- Memorandum of Understanding on Strategic Co-Operation entered into between Eskom Holdings Soc Ltd And State Corporation Of China
The Memorandum of Understanding between Eskom Holdings SOC Ltd And State Grid Corporation of China intends facilitating the strengthening of cooperation between South Africa and China in the field of energy. The Agreement will create a legal framework for Eskom and the SGCC to establish a strategic relationship in order to deepen their co-operation in international business and to exchange experience in technical, managerial and financial fields. The MoU will also allow the Parties to pursue commercial opportunities and exchange information on projects in geographic regions of mutual interest in the fields of transmission and distribution projects; renewable energy projects, off-grid rural electrification programmes.
- Loan Agreement between the China Development Bank Corporation and Eskom
Eskom and the China Development Bank will conclude a loan agreement to facilitate-South Africa-China investment and trade cooperation and to further support Eskom’s infrastructure construction. The loan facility is to the value of USD 500,000,000.
- Framework Cooperation Agreement between the China Export Credit Insurance Corporation (Sinosure) and Transnet
Transnet and the Export and Credit Insurance Corporation of China (Sinosure) will conclude a Framework Agreement of Cooperation. Sinosure is willing to provide insurance support to Transnet with respect to the financing activities with a total amount of no more than USD 2.5 Billion (the “Quota”) in the first phase of cooperation with Transnet, in relation to the procurement by Transnet of mechanical and electrical products and whole-set equipment from Chinese enterprises, and projects contracted by Chinese enterprises in South Africa, as well as operation, maintenance and other related services. The Quota will be preferably used for projects in South Africa, e.g. railway, ports and pipeline, etc., and other projects recognized by both Parties.
- Strategic Cooperation Agreement to Fund Infrastructure and Industrial Development Projects in South Africa and the Rest of Africa between China Construction Bank Corporation and Industrial Corporation of South Africa Limited
The Parties will fund Infrastructure and Industrial Development projects, directly and indirectly in South Africa and the rest of Africa, subject to their internal funding processes. The Parties will, inter alia, fund project opportunities in South Africa and the rest of Africa with the IDC taking underlying project risk and CCB taking project risk at the IDC level. This would involve debt funding. Sectors to be considered for funding include industrial infrastructure (which encompasses energy renewable and conventional) agro-processing; manufacturing and mining beneficiation; amongst others.
- Memorandum of Understanding between the Beijing Automotive Group (BAIC) and the Industrial Development Corporation (IDC)
It is the mutual intention of the Parties to co-operate with each other by establishing motor vehicle manufacturing facilities in South Africa at a coastal city either Durban or East London. The manufacturing facility is intended to create jobs and sell motor vehicles in South Africa and the rest of the African continent in accordance with the terms of reference referred to in this MOU to make reasonable profit.
- Cooperation Framework Agreement between the Trans Caledon Tunnel Authority (TCTA) and the China Communications Construction Company
The purpose of this Agreement is to assist in establishing and developing a long-term friendly cooperation relationship between the Parties in order to fund and implement new projects in the water and sanitation sector in the Republic of South Africa.
- Agreement on the Final Acceptance for CBERS-04 Satellite Ground System in South Africa between the South African National Space Agency (SANSA) and the China Aerospace, Science and Technology Corporation (CAISC)
With the support of the China-Africa Science and Technology Partnership Program (CASTEP) launched by Chinese Ministry of Science and Technology in 2009, the China Aerospace Science and Technology Corporation (CASC) has appointed the China Center for Earth Resource Satellite Data & Application (CRESDA) to execute the task of CBERS-04 Satellite Ground System in South Africa for the South Africa National Space Agency (SANSA). In October, 2015, CRESDA completed installation, integration, and training of the CBERS-04 Satellite Ground System in South Africa. During 17th October – 31st November 2015, SANSA successfully completed a Test Run of the CBERS-04 Satellite Ground System in South Africa. CRESDA and SANSA on 2 December 2015 will sign a Final Acceptance Agreement for the CBERS-04 Satellite Ground System in South Africa to certify that the CBERS-04 Satellite Ground System in South Africa is accepted by SANSA and is formally handed over to SANSA.
- Project Management Cooperation Agreement for CAP1400 Project between State Nuclear Power Technology Corporation (SNPTC) and the South Africa Nuclear Corporation (NECSA)
The Agreement will allow for SNPTC and NECSA to enhance bilateral cooperation in the field of nuclear power. China and South Africa have enormous potential in the peaceful use of nuclear energy. SNPTC owns the CAP1400 Project, a nuclear power plant, operated by its subsidiary, State Nuclear Power Demonstration Plant Company Ltd. Through this Agreement, SNPTC agrees to provide an opportunity for NECSA’s personnel to participate in the construction management of the CAP1400 Project Site.
Private Sector Agreements
- Collaboration and Framework Agreement between Industrial and Commercial Bank of China and Standard Bank-South Africa.
The Agreement between Standard Bank South Africa (SBSA) and the Industrial and Commercial Bank of China (ICBC) will facilitate the raising of Rand denominated funding for the ICBC, which will be made available to strengthen the various sectors of the South African economy, with a particular focus on power and infrastructure. The Agreement is worth up to R10 Billion over the next 5 years.
- Cooperation Agreement between Investec and the Export-Import Bank of China.
On 2 December 2015, South Africa’s Investec Bank Limited and the China Export-Import Bank will conclude a Strategic Cooperation Agreement aimed at strengthening and enhancing trade and economic cooperation between the two countries and industrial development. The Agreement establishes a framework for developing a long-term business relationship between the two Banks aimed at promoting cooperation in the areas of export finance, project finance, the internationalisation of the Chinese Yuan Renminbi (“CNY”) and its use as a settlement currency in trade, and other finance fields. The two Banks will further place special emphasis on cooperation in projects to enhance trade between China and South Africa in mechanical and electronic products, complete sets of equipment, high and new-technology products, energy, raw materials, agricultural products and other products consistent with the economic and industrial development goals of the Government of China and Government of South Africa; Energy and infrastructure projects located in China, South Africa or third countries in sub-Saharan Africa to be invested or developed by Chinese and/or South African enterprises, amongst other fields.
- Cooperation Agreement between the China State Council Information Office and the NASPERS Group SA.
The Cooperation Agreement between the China State Council Information Office and the Naspers Group SA will promote and create a legal framework to improve cooperation between South Africa and China to actively promote communication between their media practitioners through mutual visits and exposure to local media operations as well as co-produce or promote the co-production of media products, exchange or promote the exchange of content of media products based on a variety of media.
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