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China, South Africa Sign Deals To Deepen Ties In Resources, Energy

China, South Africa Sign Deals To Deepen Ties In Resources, Energy
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Τρι, 24 Αυγούστου 2010 - 17:58
China and South Africa on Tuesday signed a raft of commercial deals in mining, finance, nuclear energy and other sectors during a visit by South African President Jacob Zuma, as Beijing strengthens its commercial ties with Africa's largest economy.
China and South Africa on Tuesday signed a raft of commercial deals in mining, finance, nuclear energy and other sectors during a visit by South African President Jacob Zuma, as Beijing strengthens its commercial ties with Africa's largest economy.

The list of more than 10 deals, the total value of which wasn't announced, reflects China's focus on expanding its resources and energy reach in South Africa to fuel continued growth of China's booming economy, which is on pace to surpass Japan's this year as the second largest after the U.S. China's demand for resources has lent great support to South Africa's economy as well as its currency, the rand, in recent years.

Chinese Vice Commerce Minister Gao Hucheng said Beijing will encourage domestic companies to invest in South Africa 's mining and resources sectors as well as higher value-added sectors. But senior South African officials also indicated some discontent with the trade relationship. They called on China not to focus exclusively on investing in raw materials and other "primary goods," and to buy more value-added goods from South Africa to help promote more balanced trade.

"We want to work together with China to try to address that so we have a more equitable balance of trade, in terms of the composition of trade as well as in terms of the actual value," South African Trade and Industry Minister Rob Davies said at a briefing.

Davies also said South Africa sees China as something of a model for its currency policy. China 's defense of its competitive currency as part of its industrial development is a "lesson" for South Africa , he said, adding that the rand is too volatile. There is a consensus that South Africa needs a more competitive and stable currency, Davies said, but the rand "has appreciated too much" in the wake of Europe 's debt crises this year and the government isn't hoping to see a further appreciation.

China is South Africa 's top trading partner, and South Africa 's economy--more developed than many others in the region--has been a focal point of a broader Chinese push into the continent aimed at securing resources and expanding China 's international clout. But South Africa has been frustrated by its sizable trade deficit with China .

South Africa bought ZAR70.8 billion (US$9.58 billion) of Chinese goods last year, 13% of its total imports, while exporting ZAR48.7 billion worth to China, about 11% of the total. China is the top overseas market for South African base metals, and the second-biggest destination for South African copper exports, after South Korea , at nearly 24%.

Among deals announced Tuesday, China Metallurgical Group Corp. said it will construct an iron-titanium mine in South Africa . The mine will have annual production of 1.2 million tons of pig iron and 680,000 tons of titanium dioxide, Xu Yongjie, a vice president of MCC International Inc., a China Metallurgical unit, said on the sidelines of the China-South Africa Business Forum.

China Metallurgical's framework agreement, signed with Kermas Mining Fund L.P., sets the Chinese company as the main contractor for building the mine, which is located in northeastern South Africa , as well as for infrastructure for the mine, Xu said. Other details have yet to be finalized, he said.

Separately, an official at China National Nuclear Corp. said it is in talks to build a nuclear power plant in South Africa . A deal on that would mark the latest sign that China is gearing up to export nuclear technology at the same time as it rapidly expands its domestic reactor fleet. The talks involve the potential transfer of nuclear technology to South Africa , although nothing concrete was expected to be signed during Zuma's visit, the official said.

China is working to become self-sufficient in advanced nuclear technology so that it doesn't need to award multibillion-dollar contracts to foreign companies to build domestic plants in the future. It is also looking at selling nuclear technology overseas in countries such as Vietnam , Belarus and Argentina .

Meanwhile, Standard Bank Group Ltd. (SBK.JO) announced a memorandum of understanding with Industrial & Commercial Bank of China Ltd. (1398.HK), China 's largest lender, which owns a minority stake in Standard Bank, to promote nuclear cooperation between the countries, according to a South African government statement. The two banks are working with China Guangdong Nuclear Power Co. to engage with the Chinese and South African governments, the statement said.

Standard Bank also signed a cooperation agreement with state-run China Railway Group Ltd. (0390.HK) on investments in African rail projects.

South African health-care insurer Discovery Holdings Ltd. (DSY.JO) agreed to pay between CNY190 million and CNY200 million for a 20% stake in Ping An Health Insurance Co., Ping An Chief Executive Lu Min said Tuesday.

And State Grid Corp. of China and Trans-Africa Projects also signed a memorandum of understanding on cooperation in electric power transmission technology: The parties agreed to form a committee which will comprise a number of experts on both sides to exchange technical information.

Davies, the South African minister, brushed off concerns that China looms too large in Africa , saying competition for influence and for resources there has also helped give local countries there more choices. "We actually welcome the fact that China has a presence," he said. "We welcome a multiplicity of players, so we simply don't just have to relate to the established trading partners of the developed world."
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