South African exports to other African countries are being crowded out by Chinese products – at a cost of $900 million in lost trade – according to new research from the University of East Anglia.

Researchers found that increased competition from China has impacted the South African economy by reducing domestic industrial production, displacing its exports to neighbouring countries, and exacerbating the country’s employment crisis.

Worst hit industries include footwear and clothing manufacturers, as well as electronic goods manufacturers – particularly TVs, radios, and electric lighting.

The Economic and Social Research Council (ESRC) funded research, published today, has been led by Prof Rhys Jenkins, from the university’s school of International Development.

He said: “One of the most significant transformations of the global economy over the past quarter century has been the re-emergence of China as a major economic power. This has posed a major challenge for South Africa’s manufacturing sector, which is the largest and most developed in Africa.

We found that South Africa is facing increased difficulties in competition with China – both domestically and in international markets.

Jobs have been lost – both directly through lay-offs and plant closures, and indirectly where firms respond to Chinese competition by introducing more capital-intensive technologies, or move out of the most labour-intensive product lines in each industry.”

The research shows that more than 77,000 South African jobs were lost to Chinese imports between 2001-2010 – particularly among unskilled workers.

Meanwhile China’s exports to Sub-Saharan Africa increased from $4.1 billion in 2001 to $53.3 billion in 2011. Although there are anecdotal reports of South African exports being crowded out by Chinese product, this is the first study to look in detail at the issue.

South Africa’s top 10 most important export markets in Sub-Saharan Africa are Zimbabwe, Zambia, Mozambique, the Democratic Republic of the Congo, Kenya, Angola, Nigeria, Tanzania, Malawi and Ghana – in that order. Although total South African exports to these countries have grown, its share of their imports has declined.

Without losing market share to China over the last decade, exports to these countries would have been almost 10 per cent higher – or $900 million more.”

Last month the South African president, Jacob Zuma, described the unequal trade relationship with China, based on the supply of raw materials, as unsustainable. The current structure of trade with China is of particular concern to policy makers and it is hoped that this research will help focus their efforts.

The research briefing ‘Chinese Competition and the Restructuring of South African Manufacturing’ is published by UEA’s School of International Development.

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