Chinese Competition and the Restructuring of South African Manufacturing

Lead Research Organisation: University of East Anglia
Department Name: International Development

Abstract

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Description The research set out to examine the effects of Chinese competition on the South African manufacturing sector through two main channels. First it analysed the effects of Chinese imports to South Africa, looking at the extent to which these substituted for imports from other countries or displaced local production. It showed that since China joined the WTO in 2001, almost three-quarters of the growth of Chinese imports to South Africa have come at the expense of local production. This not only implied a lower rate of growth of manufacturing production in the country but also had a significant impact on employment.



The second aspect considered was the impact of Chinese competition on South African exports to the EU, USA and Sub-Saharan African countries which are an important market for South African manufacturers. The study found that South Africa has been losing market share to China since 2001. Despite this "crowding out", South African exports to the SSA grew significantly in dollar terms because of the rapid increase in the demand for imports in Africa, as a result of the commodity boom which was partly a result of Chinese demand.
Exploitation Route There are implications for South African government, particularly the Department of Trade and Industry and for the manufacturing sector in terms of how best to meet Chinese competition both in the domestic market and in South Africa's export markets especially in Sub-Saharan Africa
Sectors Government, Democracy and Justice,Manufacturing, including Industrial Biotechology
 
Description It is difficult to show specific impacts of the research on policy for several reasons. Apart from the general problem of attribution, the findings tended to reinforce some of the concerns of both the South African government and the manufacturing sector regarding Chinese competition and would thus not be expected to lead to a clear change of policy or strategy. The research's impact was rather in contributing to a more informed debate in South Africa about the effects of Chinese competition. This was reflected in both the extent of media coverage and the interest shown by both the private and public sectors in the research as documented below. A report quoted our research extensively in discussing the concerns expressed by the South African minister of trade and industry to the Chinese in October 2012 and the statements made at the COSATU annual conferenence in September 2012 (Africa Research Bulletin, Vol.49(11), Dec 2012 available at: http://onlinelibrary.wiley.com/doi/10.1111/j.1467-6346.2012.04847.x/pdf) The findings of the project which had most impact were the quantitative estimates of the impact of Chinese employment on manufacturing production, employment and exports in South Africa as described in the Briefing Paper. These were the focus of many of the reports that appeared in the South African media. A range of dissemination activities were carried out for the project. Two workshops were held in South Africa, one during the early stages of the project and one to report the findings of the research in July 2012. These were both held at Trade and Industrial Policy Strategies in Pretoria, a think-tank with good links, particularly with policy-makers. These were attended by representatives of various government departments, such as the Department of Trade and Industry, the International Trade Administration Commission, the Office of the Premier Limpopo, the Competition Commission, the National Treasury, as well as the British High Commission, the Embassy of Brazil, academics and some representatives from the private sector. A Briefing Paper was published in August 2012 summarising the main findings of the research and a press release was issued which attracted considerable media interest in South Africa. The research was widely reported in the South African press with articles in the Financial Post, Business Day, Engineering News and Mail and Guardian. PI Jenkins was interviewed on South African television and radio. A report by Reuters on China's involvement in Africa also quoted the report. Further, the various online media (fin24.com) and trade-related institutions (e.g. TradeMark Southern Africa, South African Foreign Policy Initiative) have reported and commented on the research. Following the dissemination activities described above, the research team were contacted by a number of interested organizations for further information. These included some manufacturing companies such as Sasol and ArcelorMittal South Africa and other private sector organizations such as Manufacturing Circle, TradeMark Southern Africa and QED Solutions. The was also interest from government departments who were represented at the Workshops, particularly the Department of Trade and Industry.
First Year Of Impact 2012
Sector Government, Democracy and Justice,Manufacturing, including Industrial Biotechology
Impact Types Societal,Economic