South Africa invests eight times more in China than the other way around.
The $14.7 billion (R193 billion) in Chinese investments – which include loans to Transnet and Eskom – announced during Chinese President Xi Jinping’s state visit to South Africa this week, are dwarfed by South Africa’s investment in that country, which stood at just over $80 billion in 2016, according to a recent report compiled by Deloitte for the Department of Trade and Industry.
At that same time, China’s investment in South Africa was $10 billion.
Trade and industry minister Rob Davies pointed out this discrepancy this week during this Brics summit in Johannesburg, when he was asked whether the new Chinese investments would not “overcrowd” the South African market.
“We are in the situation where we welcome more,” Davies said. “Of course when they do invest we indicate that we are looking for productive activity and that we are looking for them to increase the value addition.” He also called for investment-led trade.
Naspers alone owns a $175 billion stake in Chinese internet start-up Tencent, while China’s major investment in South Africa is the recently-opened $840 million (R11 billion) BAIC vehicle plant in the Coega Industrial Development Zone
China is the most significant investor in South Africa out of the Brics countries, and its investments created on average 301 jobs per project. India was the second largest investor, with $61.2 million and an average of 135 jobs per project.
Between 2003 and 2017, Brics countries officially invested a total of $17.8 billion in 189 projects in South Africa, creating 36 852 jobs. In the last two years, however, the number of projects from these investments dropped to the levels it was at in the early 2000s.
South Africa held $82 billion in foreign investments in Brics in 2016, while Brics countries only held $11 billion in foreign investments in South Africa.
Investments from South Africa into Brics countries surged since South Africa became a Brics member in 2010.
South African investment in Brics countries as a whole grew from a net negative position of $261 million in 2001 to a net positive position of $71 billion fifteen years later.
This could be attributed to, amongst others, “an increased foreign expansion by South African firms and a considerable relaxation of exchange controls by monetary authorities in 2011 that allowed South African companies to invest much larger sums abroad,” according to the Deloitte report.