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Whatever the merits or demerits of the Brics grouping might be, South Africa can at least count on a friend in China – with deep pockets. The $14.7bn (R193bn) promised to President Cyril Ramaphosa by Chinese leader Xi Jinping is a substantial windfall for the beleaguered economy and as a result, the rand reacted with a degree of enthusiasm not seen for many months.
Given South Africa’s enthusiastic participation in Brics – an acronym for the grouping of the world's leading emerging economies, namely Brazil, Russia, India, China and South Africa – the country is certainly punching above its weight by playing in the same field at China and India. A closer relationship with China – both economically and potentially diplomatically – is likely to cement the broader Brics relationship too along with continued co-operation to a lesser extent with Russia and India.
For South Africa though, the promised package of funds looks more like a rescue package to offset the disastrous state of Eskom’s finances to the tune of almost R35bn. Given the ability of the Eskom meltdown to possibly create either a debt (or currency) crisis – or both – China has come to something akin to a rescue.While this cash injection is not only massive, but critically timed, the role of Brics in an emerging new world order has recently taken on added geo-political significance. Since the advent of more unilateralist trade policies and their accompanying punitive tariffs, China has been in the firing line.
Whether there is a broader plan from the Trump administration to systematically weaken China in view of some sort of global hegemonic battle – or whether it’s just pure protectionism amid a healthy dose of populism – China’s economy will not be unscathed.
To this end, the Brics Summit (and his broader visit to Africa) has presented President Xi with an opportunity to, once again, draw a distinction between China’s more multilaterlist approach and the Trump doctrine of “Make America Great”. Indeed, Xi systematically referred to the need for increasing co-operation across geographical borders and in particular, for enhanced South-South co-operation along with a broader appeal for deepening emerging market ties.
In so doing, Xi was able to position China as the father-figure for a vast swathe of nations who increasingly are distanced from the Trump doctrine.
The Brics Summit was a chance to regain the global stage and present an alternative not only to the United States, but also to the Bretton Woods institutions that have dominated global finance since the end of the Second World War. The Brics Development Bank is starting to flex it’s muscles across Africa as a real alternative to the World Bank.
China therefore strides the global stage with a unique selling proposition of global co-operation and mutual support – very different from the prevailing view in Washington. It’s the stuff most developing nations’ politicians – often cash-strapped in debt – lap up. Here is a veritable Santa Claus, doling out vast loans and commitments to an eager bunch of recipients.
Ultimately, there are three interrelated problems here. Firstly, China is surely cementing its broader sphere of influence by taking a global lead on these issues. Even assuming the most altruistic of motives, Beijing will always look for a degree of payback – probably political or down-the-line in security co-operation. South Africa has already felt the effects of a friendly relationship with China on its foreign policy and this is likely to increase in future.
Secondly, a closer ‘look East’ policy can make doing business with the United States even more problematic. Again, assuming the current administration begins to ‘punish’ those cosying up to the Chinese, South Africa could be in the firing line. President Ramaphosa will need to tread yet another fine line as he keeps his options open with a much more problematic USA – especially when it comes to renegotiating the AGOA trade dispensation.
Related to this is just how a more side-lined US will react to the development of Brics as a global force. President Donald Trump is not known to sit-back-and-take-it-on-the-chin and South Africa – given its relatively small economy and less developed global trade footprint – could find it even more sidelined by Washington.
Finally, and perhaps most importantly, the deep pockets of China may not be quite as deep as many in government think. The country is mired in debt – from household to government to the financial sectors. The Financial Times reports that between 2008 and the first quarter of 2018, China’s gross debt mushroomed from 171% to just under 300% of GDP.
The danger for China (of which there are many including demographic ageing, environmental degradation, corruption and political expression) now also includes slower growth. This may occur as a result of an overstretched financial system or as a result of a prolonged trade war with knock-on effects into currency valuations.
Offers of assistance from China should therefore also be seen in the context that everyone is – to a degree – vulnerable. With global trade and geo-politics entering a particularly volatile and disruptive era, even China can be battered. South Africa too needs to understand that just as attractive as China seems at the moment, its fortunes can change.
While Brics does bring the two countries (and the other three) together, South Africa should continue to diversity its global out-reach. Don’t get carried away by the immense power, deep pockets and ideologically compatible message from Beijing.
While it may well strike a very welcome chord within the ANC, prudence suggests that a wide range of friends can still act as a bulwark against the vagaries of the future.
*Daniel Silke is director of the Political Futures Consultancy and is a noted keynote speaker and commentator. Views expressed are his own. Follow him on Twitter at @DanielSilke or visit his website.
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