Impacts of China´s investments in South Africa

Studenteropgave: Speciale (inkl. HD afgangsprojekt)

  • Sabrina Larissa Woltmann
4. semester, Udviklingsstudier, Kandidat (Kandidatuddannelse)
South Africa’s increasing international importance has attracted China’s interest and both countries intensified their cooperation in the past decade. Especially economic relationships were strengthened and became a highly debated international issue. This study attempts to investigate this increasing bilateral relation by exploring the aspect of Chinese foreign direct investment (FDI) in South Africa and examines whether the cooperation is as exploitative and asymmetrical in favor of the Asian power as often stated. The Chinese investments in terms of their benefits and costs for the South African development are examined and this is used to either confirm or reject the negative mainstream assumptions about the possible exploitation and dangers for South Africa’s autonomy through economic dependencies.
First a contextual introduction provides general knowledge about the Chinese-South African relations, foreign investments, markets and the current international debate on the topic. The main focus of the study is defined to lay on the impacts on human development and economic benefits; a second aspect is the investigation of created (inter)dependencies and political power increase through the investments.
A deductive approach is used to test the main liberal assumptions about positive influences of FDI in general. Furthermore is investigated, whether the Chinese FDI has exceptional features, like strategic political influences, which would make additional theoretical frames necessary. This paper utilizes a “case study” to test the theoretical basis and for the operationalization a detailed indicator set is used, including indicators regarding the activities of Chinese firms in South Africa.
The data collection entails an amount of general data, giving insights about FDI volume and composition, Chinese companies’ impact towards South Africa’s labour market, skills development and legal compliance, as well as some comparative aspects including other African nations. Furthermore is a sample of Chinese companies, operating in South Africa, examined and the main information about them depicted.
This data collection is analyzed first with regard to the liberal notions and is valued in terms of whether it is less positive for South Africa’s development than other comparable foreign investments. Besides that is also examined, whether Chinese companies have “unfair” competitive advantages and through this harm South Africa’s local industry and in a more broad context, whether the Chinese firms operate
in a political manner that facilitates dependencies and is aimed towards the increase of China’s political power.
The findings were extremely divers, apart from the statement that the investigated material was often found to be unreliable. This draws a diverse picture and it is concluded that the impacts of Chinese activities vary according to industry sector and company size. It seems that in several cases the Chinese investments might lack behind the positive expectations, but are far away from a harming or exploiting structure. Additionally is found that the Chinese companies seem to have some monetary advantages, due to government support. This appears to be unpleasant for other foreign companies, but not for local firms. It is concluded that no coherent strategy for political power increase can be reasonably assumed, although certain governmental preferences are supported by policies.
However, one of the most interesting outcomes of this study is the observation, that the extensive media coverage and excessive discussion is inappropriate in relation to the importance of the issue. The matter of Chinese FDI in South Africa seems to be way less relevant, than the misrepresentation makes one assume.
This study concludes that some aspects of this issue need a further, more detailed investigation, to generate a holistic picture of the bilateral relationship and it is pointed out that the pure focus on FDI cannot be seen as representative for the whole cooperation.
ID: 78933488