Last week Professor Stephen Gelb presented a paper on investment links between South Africa and China which pointed out the need to focus on outward investment and encourage increased cooperation between South Africa and Chinese firms.
Professor Gelb remarked that his previous talk at Rhodes on August 15th, 1985 was delivered as a panellist on United States policy in South Africa. His recall of the exact date, he said, had little to do with faultless memory and everything to do with the event falling on the same day as PW Botha’s famous Rubicon Speech.
To the amusement of the audience, Prof Gelb described the difference in atmosphere in what he termed a more “political” context. He said it was interesting that about 26 years ago he was at Rhodes discussing disinvestment focussed on the United States and that he was back to discuss foreign direct investment focussed on China.
Prof Gelb stated that China was South Africa’s top trade partner in 2009 and 2010. He also discussed the “incredibly rapid growth in export and imports”. However, according to Prof Gelb, there has been limited focus on foreign direct investment links. He lamented the fact that data from both countries are contradictory and inconsistent. In addition, data relating to foreign direct investment links are not particularly useful due to lack of sectoral breakdown. To this end, he prepared his own data set.
Using a case study, Prof Gelb revealed that there were 47 Chinese firms in South Africa and 32 South African firms in China. He compared this to a substantial 93 Chinese firms in India and 45 South African firms in India. From this, he concluded that the relationship between South Africa and China was not as significant as previously thought. He quoted an approximate establishment of 4 000 foreign firms in South Africa.
Prof Gelb made six key recommendations. He highlighted the need for better official data. He also advocated for a shift of balance from trade to investment in South Africa. He said a look at Chinese labour and intensive outward investment was important. This would necessitate a focus on labour intensive manufacturing such as clothing, leather and electronics.
Prof Gelb is the Director of the EDGE Institute and teaches economics at the University of Johannesburg. He was actively involved in the Canadian anti-apartheid movement between 1976 and 1984. He has extensive consulting experience with the South African government, United Nations agencies and several foreign governments. He has also worked as an economist at the Development Bank of Southern Africa.
The seminar was hosted by the Department of Economics and Economic History and the Confucius Institute.
By Zukiswa Kota
Photo by Daneel KnoetzeSource:
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