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Recession: China promises to assist South Africa

China has pledged to assist South Africa, which is desperately battling with current economic recession, but details on the assistance are sketchy.
A report published recently by the Mail & Guardian points to President Cyril Ramaphosa securing almost R370 billion in financing from China.
Most of the funding is due to aid with government’s planned financial stimulus.
Contracted economic growth in the second quarter has led South Africa into recession; the first of its kind since 2009.
The knock-on effect has had a horrendous effect on the currency, which has, in turn, resulted in a massive fuel hike expected to hit motorists in October.
Ramaphosa was in China, on an official state visit, when the technical recession was first announced. In an attempt to allay fears of a full-blown economic slump, the president hinted at ‘stimulus packages’ designed to revitalise the economy, saying:
“I don’t believe that a full recession will take hold in South Africa. Our economy is facing its own challenges that we have to respond to [and] government is going to be responding to the challenges that we’re facing. We’re finalising a stimulus package that we’ll be announcing to inject impetus and growth into our economy at a number of levels.”
Following Ramaphosa’s announcement, China offered a further $10 billion, which will form part of the ‘stimulus package’.
International Relations and Co-operation Minister Lindiwe Sisulu commented on China’s role in revitalising South Africa’s embattled economy, saying:
“The Chinese are saying it’s about time that we got our independence … We would like to tap into that. Most of the infrastructure we [Africa] have has been with the support of the Chinese government and they have become very adept and good at it.
If we want to industrialise, at the rate that we would like to industrialise, we would like to do it on the back of somebody that we can depend on and we have to industrialise to be able to grow our economy.”
Is South Africa over-indebting itself?
But these continuous investments have been a cause for concern among analysts and the local manufacturing sector. The worry is that, besides defaulting on loan payments, South Africa may damage its economy more by allowing Chinese corporations into the industrial manufacturing sector.
Trade and Industry Minister Rob Davies denied that China would supply its own materials and workforce, as they have done in other African countries.
“They might have that reputation in other countries but they don’t do that here. They don’t bring a skilled labour force in South Africa where there are people who are capable of doing the job.”
During the Africa-China conference earlier this month, the eastern nation pledged a total of $60 billion for African investment. Much has been written about fears regarding China’s liberal loans, which have been referred to as ‘debt colonialism’.