How SA Should Milk The Dragon

China is forging ahead with its move towards a consumption-driven economy and its consumers are getting wealthier. South Africa – amid a lacklustre economic situation – can benefit from this shift in our largest trade partner’s economy.

- Jaco Visser

As China continues its ambitious shift towards a services-and consumption-led economy, and remains engaged in a trade dispute with the US – the world’s largest producer of goods and services – there will inevitably be an impact on South African exports.

SA exporters shipped goods worth R1.247tr, or 25.5% of nominal GDP, during 2018. That is equal to a quarter of all produced goods and services. In the same vein, the country imported goods worth R1.231tr, or 25.2% of nominal GDP, during the same year, according to data from Sars and Stats SA.

This data also shows that during the first three quarters of 2019, goods worth R956.26bn, or 25.4% of nominal GDP, were exported and merchandise worth R953.75bn, or 25.3% of nominal GDP, was imported. For a breakdown of SA’s top export destinations and the origins of imports, see the accompanying tables in this article.

For such an open economy, or an economy reliant on trade, the happenings in the world’s two largest economies are important as this will have a direct impact on local economic output and, subsequently, job creation and tax receipts for the government. And when two of SA’s top three trade partners are in a tussle, or at “war” as some commentators refer to the US and China tariff dispute, local policymakers should take note.

China shipped R198.9bn worth of goods to SA during the first ten months of 2019. Exports to China from SA totalled R116.6bn, trade data from Sars shows. The second-largest economy in the world accounted for 18.5% of all SA imports and 10.8% off all exports during the first ten months of 2019, trade statistics show. The bulk of exports to China comprise mineral products, iron and steel, which totalled R103.1bn, or 88.4% of all exports to this country, in the first ten months of 2019.