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SA seals China solar deal

Nov 17 2010 18:38 Reuters

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Cape Town - South Africa has signed a deal with Chinese company Yingli Solar to build a $435m manufacturing plant with a local partner, a senior government official said on Wednesday.

Nelisiwe Magubane, director general at the department of energy, told Reuters on the sidelines of a visit by China's vice president that Yingli would partner with a local company and aimed to start building the plant within 12 months.

Magubane on Wednesday also signed an agreement, witnessed by Vice President Xi Jinping, between South Africa and the China Development Bank on energy cooperation.

"We have a memorandum of understanding on various projects ... and this allows them the opportunity to invest in other's energy infrastructure projects," Magubane said, adding that no specific funds were discussed yet.

Yingli is on track for about a 10% share of the US solar modules market by volume this year, and if it meets forecasts, would vault the company among the top US suppliers.

Xi on Wednesday started talks with the government which were also aimed at securing minerals the Asian giant needs to fuel its growth.

China is South Africa's biggest bilateral trading partner, and the focal point of its plan to divert more trade and investment from traditional markets in Europe and North America to the world's fastest growing economies.

Xi, touted as China's next president, on Tuesday began a three-day visit to South Africa which is seeking to decrease a trade deficit, which hit $2.7bn in 2009, skewed in Beijing's favour.

Deputy President Kgalema Motlanthe and Xi will co-chair the fourth China-South Africa bilateral commission and sign a number of agreements, including on the mining sector.

Details of the agreements have yet to be released.

Beijing sees South Africa as a vital source of commodities and a stepping stone to other African states.

For South Africa, China also serves as a model of state action in the economy, with Pretoria hoping to join it in the Bric - Brazil, Russia, India and China - group of fast emerging economies.

But a "Bricsa" grouping seems unlikely for now with South Africa's growth projected at 3% this year, hardly the blistering pace of other members.

Its economy is also less than a quarter of the smallest Bric economy's size.

The ANC has in recent weeks rolled out plans to tackle the country's massive unemployment problem, with many ANC officials seeing the Bric's success as evidence that the state should intervene more.

But experts said the ANC is loath to add flexibility to the rigid labour market to make it simpler for SA companies to hire and fire staff with the ease with which Chinese firms operate.

"There are things to be learnt, but that can only come if one is willing to listen. Around labour policy, there is no translatability of a China or US approach to labour and labour flexibility," said Martyn Davies, CEO of Frontier Advisory and an expert on Africa-China relations.

anc  |  solar energy  |  china  |  trade deficit
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