https://www.moneyweb.co.za/wp-content/uploads/2018/07/180725-02.mp3 NOMPU SIZIBA: My colleague, Ray Mahlaka, spoke today. to MP Makgabo Reginah Mhaule at the Brics Summit
RAY MAHLAKA: South Africa has had a pretty long week, Chinese President Xi Jinping pledging to make big investments in South Africa. But what do you think China sees in South Africa to justify these large-scale investments?
MAKGABO REGINAH MHAULE: I think what China sees in South Africa is growth potential. Taking from where they come from, China was more than before, China has grown for a period of 10 years. They have become a big economy and they are still clbadified as "developing economies" because South Africa is under "developing economy". That's why they are considered poor, so if you hold them together, they move the two economies into the giants of tomorrow.
RAY MAHLAKA: Is the purpose of these investments – to foster an investment relationship between China and South Africa? And how important is it to foster and develop this relationship between the two?
MAKGABO REGINAH MHAULE: It takes heads to make the whole body coherent. Thus, the head of the Chinese state is determined to maintain the relationship with South Africa; The South African head of state is also determined, and he says that this relationship and these bilateral agreements will be taken to another level.
You can see where we are from. And if you can look at the trade and some of our cooperation, like the one that has relations with China, we are doing very well as a country in terms of trade, agriculture, education, science and technology and all those other things; we are doing very good. Remember that we are the only African country exporting red meat to China, and that tells us that we need each other in South Africa and China. And, seeing that they were able to raise their economy to that level in a ten-year period, like South Africa we had to learn what we need to do to grow our economy to mimic that. that China did.
RAY MAHLAKA: Obviously, China is a very interesting superpower here, and South Africa is relatively small compared to China. But how can we ensure that South Africa will build on this relationship to further develop trade to South Africa, as China would benefit more than South Africa because of many African countries do not have the necessary weight and competitiveness? a foot of equality with China?
MAKGABO REGINAH MHAULE: We can. When we will be at a distance, you will see China benefit from South Africa. But where I'm sitting, I see both countries benefiting because, as I said earlier, the transfer of skills and even the willingness of the Chinese to transfer their skills, which led them to develop their economy. is today, and they are ready to transfer it to South African youth. And also on science and technology or research, they are ready to come on board and advance South Africa. This shows that we benefit, if not more, from China.
RAY MAHLAKA: And just on those two big loans that were announced yesterday, the Chinese state bank is also investing in Eskom and Transnet, ie Is that you think it's an act of kindness on the part of China, or are there any links to these loans?
MAKGABO REGINAH MHAULE: I do not think there are any conditions. All five Brics countries, these benefit. But because, like South Africa, we are perceived as Africa, we say that African countries must also benefit from Bricks Bank. So we think that Africa is gaining more because we do not come as South Africa as a single country, but we are bringing the whole of Africa together. That's why even our theme says this time Brics in Africa, that is, like Africa … the vision of being … Africa like the 2020 vision that would like to do advance Africa. So the Brics must understand that, if South Africa comes to Africa, we have gathered in Africa.
RAY MAHLAKA: You would see why people would be a little nervous to see China grant loans to South Africa. and state-owned enterprises, because China has a long history under which loans that are extended, especially to a smaller counterparty, would often be tied to high interest rates – there would have very strict conditions attached to these loans. Do you think these concerns are justified?
MAKGABO REGINAH MHAULE: The South African people have the right to worry when someone grants you a loan; and from where we come as a country, we know that they do not help us but make us fail. But in this particular case, it is a multilateralism. Five countries are meeting. That's why even the forums that have come and made recommendations to this summit, in fact they even like the Brics currency that will work at the Brics Development Bank. So I say that people in South Africa, as opposed to being scared, are supposed to think as you say correctly, but I say that this relationship is a mutual relationship of five countries.
NOMPU SIZIBA: This was my colleague, Ray Mahlaka, addressing the Deputy Minister of International Relations and Cooperation, Makgabo Reginah Mhaule
South Africa and China have joined forces today to encourage other nations to reject protectionism and unilateralism. This is in the context of the trade tensions that have simmered with the United States being the main instigator. He imposed import duties on billions of dollars of Chinese goods and South Africa was hit hard by US import duties on steel and oil. aluminum.
The Minister of Trade and Industry Rob Davies Africa is subject to this, but it is a process. Well, to talk about the Brics meeting and the relevance of the forum, I'm joined by Martyn Davis, Managing Director of Emerging Markets – and much more – at Deloitte.
Thank you very much for being here, Martyn. So, South Africa and China have come out against protectionism and they say the latest trade disputes have given even more impetus to the 10th Brics meeting. Now, it's fair enough, but what can this forum do to fight back – or is it not to retaliate, but to find new business solutions? And, if so, where will they be found?
MARTYN DAVIES: Yes, thank you very much. Well, as a start, China and South Africa have no doubt joined the global economy at the same time – 1994 in the case of SA, reinstatement. The Chinese market opened in 1992. It is therefore undeniable that globalization and liberalized free trade agreements – the WTO – have supported economic progress and improved the livelihoods of China and China. of South Africa over the years
. has not really been mentioned among the Brics group. During this decade, there has never been talk of liberalizing trade inside a Brics summit – and suddenly, it is the hottest topic of the day. Brics event; in large part, it gives them a common purpose. In other words, now we do not know very well what we are but we know what we are not – and it is Western. Now, with a common interest, it is an anti-Western type program, to be quite frank, and even if we are not undeserved. We are trying to say that we must protect and safeguard at least one predictable and relatively well-governed world trade regime, and certainly seek to counter this belligerent ad hoc unilateralism that is very damaging to the United States at present.
NOMPU SIZIBA: But I think that one of the problems that my previous colleague, Ray, mentioned, is the power dynamics within Brics. I think the total of Brics countries is $ 19 trillion or something like that, and China's market capitalization is about $ 12.7 trillion. So, you immediately see how much weight China has in this particular group. And if there are going to be strategies to try to improve the trade, in favor of whom?
MARTYN DAVIES: Well, I think we should not be too Trumpesque in our way of seeing trade. This is not a question of winners and losers here. I think we're too often counting the figures for trade imbalances, and that sort of indicates winners and losers. I think it's totally superficial and false. I think that what is in a stable, robust and fast growing China is in all our interests, mainly because it supports South Africa as the only economy to a certain extent, considering a great part of South Africa and most African exports, resource exports to the Chinese economy. So 6.5% growth in China is very good news for us.
I think the other thing you're referring to is perhaps that China has been incredibly empowering, has been a growth driver in emerging markets. Now we are the second largest country [in terms of] nominal GDP, as you call it. But on the other hand also disruptive from the point of view of manufacture. But again, South Africans are too quick to blame China for … the industrial recess in South Africa. Well, I sort the wicket saying good, look at Thailand, look at Korea, look at Malaysia, look at Indonesia. More and more manufacturing provinces have flourished, despite competition from China, which is in their own neighborhood.
So for me, getting out of Brics, one thing that has desperately failed in South Africa is peer pressure, peer pressure from high-growth economies. Think about China, India and how are we starting to emulate this growth …? Do we deserve to be in the group, is it a fair balance? If we grew to 6, 7%, people would not ask these questions. And that's the growth rate that we should increase, or at least learn from Brics savings, as we should be.
NOMPU SIZIBA: South Africa always seeks to emphasize that its membership in Brics is also the benefit of the rest of the continent. Do you think that's the case?
MARTYN DAVIES: Well, it's a polit-service, to be quite frank. I think we are the only country to want to bring a region with it. And I'm afraid that the intake of 53 or 54 other countries is virtually impossible. Of course, again, if South Africa reached a growth rate of 5 or 6%, I'm sure our neighboring countries in our commercial sector – think of SADC to some extent – would be very, very happy. South Africa is the engine room, after all. Now, trying to make sure that Brics is lined up one way or another on a regional program across the continent is simply implausible.
I think what is interesting is the new Development Bank and the capital. I believe that $ 5 billion has been spent so far, and the energy and other similar resources in other African countries – that 's great. I do not think it helps a big problem. I think it's the availability of projects. Let's bring some viable bankable projects to the market. They will usually raise capital on their own. If development capital is more concessional, longer term, minus a cost, then of course, it's a great thig. And, above all, it is not only the availability of capital, but the efficiency … of this capital. You go to the World Bank three years ago for the evaluations to be done; you go to [Beijing] and you did it in six months. Okay, there may be some drawbacks – the new Development Bank, maybe somewhere in between. Let's look at this in a deeper context
NOMPU SIZIBA: President Cyril Ramaphosa has put his head in the limelight, he wants to reap 100 billion US dollars over the next five years to stimulate growth . and obtain direct investments in the country. There were some pretty substantial pledges – $ 10 billion from the United Arab Emirates and the United Arab Emirates, and the same from Saudi Arabia – and yesterday China pledged $ 14.7 billion. Now, it looks pretty good. What do you think of that? And, when it's specifically about our state-owned enterprises, Eskom having a debt of about R360 billion, does R33 billion make a big difference? Does it really help to deal with its underlying problems?
MARTYN DAVIES: First of all, it's good that a country has stretched goals – think about 100 billion rand. I wish we also have a growth target of 6% per year. There has been a lot of reporting in recent days and mbadive confusion, for reasons beyond me, between what is a loan and what is an investment. These are two very, very different things. The loan of a company is not an investment, unless this debt is converted into equity all along the line; and it's an interesting conversation maybe. Maybe that's the end of the game – the furtive privatization of state-owned companies if those loans are not repaid, which is a potential possibility, I think.
But, as you say, this money goes to public companies. It is not the capital that is important with the money that arrives. Of course, we need [not only] to consolidate the coffers of the country, but the intellectual property that accompanies it and how they integrate it. The history of China does not concern so much the attracted capital – it is important of course – but above all how to attract the expertise in management, skills, technology – who always follows people with the capital city. So, if you are looking for $ 100 billion, how can we start easing our visas that we need in the process? Otherwise we say we want your money, we do not want you . And for me it does not seem very smart to do.
So yes, there are mbadive promises from Saudi Arabia and the UAE, but when we hit the road and the money is in the bank, we can start quantifying it , not before.
NOMPU SIZIBA: You are absolutely right. More to talk about, but not enough time. Thank you very much, Martyn, for your time.
