(Cape Town, 15 February 2005)
Mr. Francis Moloi, Chief Director: Asia and Australia at the Department of Foreign Affairs,
Mr. Jappie, Vice President of Cape Regional Chamber of Commerce and Industry,
Your Excellences, Heads of Mission from Asia and Middle East,
Ladies and Gentlemen,
It is indeed a great honour for me to be invited to this seminar and speak to you. At the outset, I would like to thank our host, the Department of Foreign Affairs and the Cape Regional Chamber of Commerce and Industry, for their gracious invitation. I feel very encouraged and inspired by my previous speakers who have very well elaborated on the objectives of this seminar and the increasing interest of the South African business community in China. My presentation, therefore, will primarily focus on how the two countries complement each other in the trade and economic cooperation as well as what and where to look at in China for business opportunities, both existing and potential.
I. The Robust Chinese Economy
I will start with some background information about the Chinese economy. From 1979 to 2003, China registered a 9.4% annual growth rate for its national economy. China's GDP in 2004 reached US$ 1.65 trillion, representing a 9.5% year-on-year growth. Its total import and export volume rose from the fourth place in 2003 to the third in the world at US$ 1.1547 trillion.
The robust growing trend of the Chinese economy is expected to continue for years to come. The first two decades of this century is considered a period of important strategic opportunities for China's socio-economic development. It is projected that in 2020 China's GDP will reach US$ 4 trillion, quadrupling that of 2000, and per capita GDP will reach US$ 3,000. The jump from US$ 1,000 to 3,000 in per capita GDP will be a critical stage in China's modernization drive and an important period of profound changes in socio-economic structure. Experiences in many other countries have shown two possible consequences out of this stage. To address the possible contradictions and problems in the process of development, the Chinese Government has drawn up policies and measures, the most fundamental of which is to follow a scientific concept of development and apply this concept to guide our socio-economic development.
China's scientific and sustainable approach to development connotes the following principles. First, it adopts a human-centred, or in South African terms, "Batho Pele", development strategy with all-round human development as the ultimate objective. The entire Chinese people shall benefit from the country's development. Second, economic development shall be the central task of the nation while economic, political and cultural advancement is promoted in an all-round way. Third, harmonious development of man and nature shall be pursued to coordinate economic development with population growth, resource availability and environmental protection to embark on a road of sustainable development consistent with the characteristics of a modern society, i.e. high productivity, prosperity and good ecological environment.
In 2003, China became the world's third largest importer. In 2004, China's imports totalled US$ 560 billion. China's imports will continue to grow with our sustained and rapid development and constantly rising economic aggregates. The rise of China over the past two decades in the international arena, both political and economic, is conducive to world peace and development. South Africa and the developing world at large will gain rather than lose from China's modernization drive. The Chinese people love peace and need peace. China adheres to a road of peace, cooperation and development, determined to develop itself through maintaining world peace and promote world peace through its own development. China's development will by no means pose a threat to other countries. This is our set policy.
II. China and South Africa: Partners in Cooperation
I am gratified to have witnessed during my tenure in this great rainbow nation the rapid yet sustained growth of mutually beneficial cooperation between our two countries. Thanks to the concerted efforts on both sides, we have well exemplified the true meaning of "strategic partnership". Despite the short time span since the establishment of formal diplomatic ties, the two countries have managed to become each other's major trading partners.
In 2004, bilateral trade volume nearly surpassed US$ 6 billion, an increase of 52.8% over the previous year. China's export to and import from South Africa grew 45.5% and 60.9% respectively. As for investment, the total volume of two-way investment between China and South Africa is now well above US$ 500 million. South African conglomerates such as Anglo-American, SAB-Miller, Khumba Resources and Naspers have made substantial presence in China. Of specific importance inter alia is the Letter of Intent signed last year between Sasol and a consortium of Chinese companies including Shenhua Group on the feasibility study of the first phase of a "coal-to-fuel conversion" programme. Sappi, the world's largest fine paper producer, injected some US$ 58 million in an expansion project in China. Chinese investors, on the other hand, have by no means been lagging far behind. TV set and other home appliance manufactured with Chinese investment and technology have already secured a niche on the South African market. Also of particular importance are new and expanded Ferro-chrome joint venture projects, with investment from JISCO (Jiuquan Iron & Steel Corporation) and the second phase of China Iron & Steel Industry and Trade Group respectively.
III. Potentials Unlimited
As the Chinese ambassador, I rejoice not only at the achievements in the reciprocal cooperation between our two countries, but also the vast potentials waiting to be further tapped. Though I am not an expert in economic affairs, I can always sense some of the opportunities knocking on the door of both countries. Humbly, I would like to compare notes with our friends present here today.
Firstly, the exchange of experience and expertise on developmental issues between China and South Africa needs to be encouraged. The two countries, despite different historical and economic backgrounds, do share many things in common, especially the challenges. Both are endeavouring to attract FDI, create more jobs, develop agriculture, restructure SOE's and prioritise capacity building. As an old Chinese saying goes, "Giving, not fish, but fishing". To acquire a broader perspective and avoid unnecessary repetition of efforts, the two countries can draw from each other useful lessons and experiences. One of the successful cases in this regard has been the on-going exchange programme between the ruling parties of the two countries. Besides political issues, this programme deals largely with practical topics pertinent to both sides ranging from rural development and SOE reform to poverty alleviation and job creation. The two sides gained quite a lot from each other through this initiative.
Secondly, given the strong mutual complementarity between the two countries, focused two-way investment can create a win-win situation. Huge domestic market, abundant labour force and improving investment climate are becoming China's winning formula. The Chinese Government welcomes and encourages foreign investment in high-tech industries, modern agriculture, modern services, environment-friendly industries and infrastructure. China wishes to see more foreign participation in the development of the western region, revitalization of old industrial bases in the northeast, and reform and reorganization of SOEs, as well as the establishment by multinationals of R&D centres, procurement centres, production and manufacturing bases and regional headquarters in the country.
On the South African side, it excels in pharmaceuticals, prospecting and mining, metallurgy, occupational safety, digital TV networking and many other aspects. Related business entities from South Africa will find it rewarding to enter into cooperation with Chinese partners and make investments in China. The Chinese government offers incentives for Chinese businesses to invest in South Africa, particularly in the development of those resources China badly needs and in the implementation of BEE strategy. While giving further impetus to South Africa's industrial development, Chinese investment can also help create more employment through equity joint ventures with local counterparts.
Thirdly, in commodity trade, the two countries can supply precisely what the other needs. Chinese manufactured goods, known for their fair quality and price, are always welcome by South African importers, retailers and consumers alike. Iron ore, steel, aluminium and other similar products from South Africa can find promising market in China. As more and more people in China step into the class of the affluent, demand for precious jewelleries increases remarkably with each passing day. In the view of many Chinese, South Africa is where the best diamond, platinum and gold in the world come from. The signing of inspection and quarantine cooperation agreements between the two countries has paved the way for the export of South African agricultural produce and fruits to China.
On the government front, preparations are under way for FTA negotiations between China and SACU, China and South Africa will surely benefit even more within the FTA framework. Businesses in both countries, therefore, need to prepare themselves well for future cooperation.
With these words, I now conclude my presentation. I hope you find it helpful. Should you have any questions, I would be very pleased to respond at a later stage. Thank you for your attention and patience.