Sino-Africa Summit: briefing

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International Relations

04 October 2000
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FOREIGN AFFAIRS PORTFOLIO COMMITTEE
4 October 2000
SINO-AFRICA SUMMIT: BRIEFING

Relevant Documents
Forum on China-Africa Cooperation, Ministerial Conference 2000, Beijing, October 10-12 (see Appendix 1)

SUMMARY
Mr Matsila stated that the aim of the Ministerial Conference held this month in Beijing is to establish a durable and equitable new partnership between Africa and China. The conference serves the national interest of South Africa and departs from the bilateral process while adopting a broad strategic process.

South Africa seeks to achieve the following with China:
- Establish a framework and parameters for Africa-China relations on the basis of equality and mutual benefit
- Commit China to the implementation of a mutually beneficial trade regime with Africa
- Develop regional cooperation within Sino-African relations
- Realign China's developmental assistance policies to support the priorities of Africa and to be conducive to the economic development of the Continent
- Seek China's support for the African Renaissance to engage one of the world's most powerful and influential political and economic entity. It serves the national interest to influence and guide the relationship between China and Africa to the benefit of the entire continent and in support of the ideals of African Renaissance.

MINUTES
Mr J M Matsila, Deputy Director General: Asia and the Middle East in the Department of Foreign Affairs, accompanied by Messrs H Lambrechts and I Basson, briefed the committee on the Sino-African Summit. He highlighted the following issues:

Forum on China-Africa Cooperation
With the redefining of power relations within the Asian region, South Africa's move to seek a strategic partnership with People's Republic of China is based on the growing trade between the two countries. However, given China's permanent seat on the UN, from a political leverage point, it is hoped that China would back South Africa and developing countries generally on issues ranging from debt relief and greater voting power at international organs such as IMF / World Bank.

Rationale for adopting China
Firstly China is a global power with potentially the largest consumer market in the world, which remains largely untapped in many areas. Thus purely from an economic perspective it makes strategic sense to align ourselves with China and not Taiwan. But of concern is that South Africa has a huge trade deficit with China, which has been increasing. This is not sustainable and beneficial for SA. This issue will be addressed at the Conference.

Government structures

Thus far ties between the two countries was locked by the Joint Commission but this status will be up-graded to a formal Bi-national Commission to be chaired by President Mbeki. In the interim both countries agreed to regular consultations and visits. Of importance is that for trade purposes / analysis, the Department of Foreign Affairs follows the 'one China, two systems' approach. Essentially trade figures are held separately for Hong Kong and the mainland given that Hong Kong is mainly a shipment area / gateway for movable goods to the China mainland.

South Africa will lobby for more beneficial arrangements in the following areas:
- Agriculture
- Increasing automotive exports
- Include labour issues in co-operation forums
- Chinese assistance programs need to be revamped given that contracts put out by Chinese companies have no black empowerment stipulations etc. In essence restructuring their developmental assistance model to suit South African business needs.

Financial services
China's largest banks are entering the banking sector by establishing local offices. China's largest international bank, Bank of China, is opening a branch in Sandton while the China Reconstruction Bank is opening a local agency. The twin aim of this expansion strategy is to exploit the growing trade and investment between the two countries but also to promote trade, economic development and financial activity.

Positioning in the greater Asian region
Mr Matsila emphasized that South Africa would follow closely developments in this region. Chinese-Indian relations are improving and given the combined mass market of these two countries they have exceptional leverage power when it comes to trade matters. The preliminary talks between North and South Korea is another example.

Discussion
[Note: The discussion between Mr Matsila and the committee is not recorded]

Appendix 1:

FORUM ON CHINA - AFRICA COOPERATION

MINISTERIAL CONFERENCE 2000

BEIJING : OCTOBER 10-12, 2000

 

BRIEFING BY AMBASSADOR JM MATSILA

DEPUTY DIRECTOR GENERAL: ASIA AND THE MIDDLE EAST

DEPARTMENT OF FOREIGN AFFAIRS

INTRODUCTION

  • The Conference will be held in Beijing, China during October 10-12, 2000
  • South Africa will be represented by the Minister of Foreign Affairs and the Minister of Trade & Industry
  • more than 40 African countries are expected to attend at the ministerial level
  • The aim of the conference is to establish a durable and equitable New Partnership between Africa and China, based on mutual benefit and mutual support, and on equality
  • The Conference follows the Millennium Summit of the UN, and it is significant that China will be the first major country to provide an opportunity for the practical implementation of the principles embodied in the Millennium Declaration
  • The Conference is a broad strategic process between China and Africa as a whole, rather than focused on a bilateral approach. However, the realisation of the vision and aims of the Conference will also be in South Africa's national interest

 

OBJECTIVES WITH SOUTH AFRICA'S PARTICIPATION AT

THE CONFERENCE

  • establish a framework and parameters for Africa-China relations on the basis of equality and mutual benefit
  • seek common ground with China on ways to advance the interests of the developing world in the international political and economic system
  • commit China to the practical implementation of a mutually beneficial trade regime with Africa
  • foster regional cooperation in the context of Sino-African relations
  • realign China's development assistance policies to support the priorities of Africa and to be conducive to the economic development of the Continent
  • seek China's unambiguous support for the African Renaissance
  • The Conference is an event between Africa and China - South Africa is only one of the participants. In order to be successful, South Africa's objectives should firstly enjoy the support of the other African participants, and such a consensus position should then be translated into an attainable reality regarding Africa's relationship with China.
  • The Conference is envisaged to establish a platform for the development of a dynamic and positive relationship between Africa and China. South Africa is therefore keen to ensure an institutionalisation of this contact process, supported by a substantive follow-up and review mechanism

CHINA'S EXPECTED OBJECTIVES WITH THE CONFERENCE

  • consolidate China's position as a leader of the South
  • affirm China's position as a leading international power, and to establish a Sino-African relationship similar to (or better than) the Africa-US; Africa-Europe and Africa-Japan (TICAD) processes
  • secure Africa's support for China's international aspirations, notably accession to the WTO and at multilateral fora such as the UN Human Rights Commission
  • ensure a political basis for China's economic relations with Africa (especially Africa as a source for primary commodities and a market for Chinese manufactured products)
  • counter (especially US and Japanese) rivalry with China for a leading position of influence on the African Continent

CONFERENCE DOCUMENTS

The Conference is expected to adopt two basic documents, and the following is an outline of South Africa's approach to, and suggestions for, those documents:-

  • Beijing Declaration

Should be a visionary document which sets the foundation for Africa-China relations. Envisaged that it will create the New Partnership between China and Africa

  • Programme for Africa-China Cooperation

Sets out practical steps in the realisation of the New Partnership in detail. Circumscribes specific steps to be taken in areas such as :-

  • expansion of inter-governmental cooperation on the bilateral level, and mutual support at multilateral fora - aimed specifically at the economic development of Africa
  • realignment of the trade and investment relationship to secure fair and balanced trade, market access for African products in the growing Chinese market, and the development of a manufacturing industry in Africa
  • agricultural cooperation in areas such as transfer of appropriate technology and preferential market access for African agricultural products
  • development of Africa's natural resources with emphasis on benefaction in Africa, and preferential market access in China
  • debt reduction, with specific emphasis on policy support from China for the HIPC initiatives and reform of the international financial architecture
  • tourism - China should allow tourism to Africa by granting the required "Approved Destination Status to interested states in Africa
  • scientific and technological cooperation as well as health and educational cooperation and human resource development
  • focused development assistance in support of Africa's own priorities
  • limiting destabilising aspects such as uncontrolled arms sales and migration

STRUCTURE OF THE CONFERENCE

  • Senior Officials Meeting to advance negotiations on the Conference Documents.
  • Ministerial Conference
    • Plenary Sessions for general debate and the setting of the political platform
    • Specialised Sessions for detailed discussions on core areas of the New Partnership, will be held on :-
      • Trade and Investment
      • Health and Science and Education Cooperation
      • Poverty Alleviation and Agricultural Cooperation
      • Exchange of Experience on the African and Chinese Reform Processes

CONCLUSION

  • The Conference is a historic opportunity for Africa to engage China in an equal and mutually beneficial, but also practical relationship
  • China is developing in one of the world's most powerful and influential political and economic entities, and this position will continue to grow substantially over the foreseeable future. The conference is therefore also an opportunity for Africa to align itself, on an equitable basis, with this powerful entity
  • It is in South Africa's national interest to, as far as possible, influence and guide the relationship between China and Africa to the benefit of the entire Continent, and in support of the ideals of an African Renaissance
  • China's influence as one of the Permanent Members of the UN Security Council provides opportunity for Africa regarding its own vision of the reform of the international political architecture, as well as in efforts for peacekeeping and peacemaking
  • The Conference is an opportunity for Africa and for China to rejuvenate and concretise their historic relationship, and to make that relationship relevant for the 21st century

 

THE PEOPLE'S REPUBLIC OF CHINA: A PROFILE

  • The People's Republic of China (PRC) was founded on October 1, 1949 under the leadership of Chairman Mao Zedong and the Chinese Communist Party .This followed nearly 50 years of internal strife, a devastating Civil War (with the Nationalist Party, which fled to Taiwan Island in 1949, following its defeat by the Communist Party), the Japanese invasion of China and the Second World War.
  • Most of the first 30 years following the founding of the PRC was a period of social and economic upheaval (e.g. the Cultural Revolution and the Great Leap Forward)
  • Following the death of Chairman Mao in 1976, Deng Xiaoping became General Secretary of the Party. By 1978, Deng had started introducing a process of reform of the Chinese economy. These reforms concentrated on a reform of agricultural production policies, but by the late 1980's, has broadened to a general liberalisation of industrial production. Lured by the prospects of a well-schooled, but cheap, labour force, foreign companies started using China as a base for the production of especially labour-intensive manufactured goods. Initially Hong Kong entrepreneurs invested across the border in southern China. They were rapidly followed by Taiwanese and Japanese entrepreneurs, and soon by other industrialised nations, who not only saw the importance of utilising the Chinese labour force, but also the growing (and potentially huge) consumer market in China. Realising the value of foreign investment in the reconstruction of the Chinese economy, the Chinese Government responded by establishing Special Economic Zones, which facilitated the entry and presence of foreign investors into China. The attraction of China as an investment destination remained, to the extent that China has become the world's second largest recipient of FDI (after the USA), and the largest FDI destination in the developing world (by the 1990's, 60% of FDI to the developing world has been invested in China).
  • The depth of the process of economic reform is exemplified by the fact that the Chinese Constitution was changed in 1999 to reflect the de facto importance of private enterprise and entrepreneurship. Before that year, China did technically not acknowledge the presence of economic activity outside state-owned enterprises (apart from the joint ventures and enterprises in the Special Economic Zones).
  • The process of economic reform, however, has been concentrated on the southern coastal provinces and the northeast of the country. This led to large disparities in development and affluence, which, in turn, led to social instability because of aspects such as uncontrolled migration. The non-performance of state-owned enterprises aggravated this situation through growing unemployment in the formal sector. As a result of this, it has become a national priority of the Chinese Government to develop the central and western parts of the country and this has become a focal point of the government. It is understood that the World Bank has made available loans of up to US$ 7 billion to China for this purpose.
  • Following the Tiananmen upheaval of 1989, Jiang Zemin (then the Mayor of Shanghai) was elected General Secretary of the Party. While he was initially seen as a (weak) transitional leader, he soon established his authority and was elected President of the PRC in 1993. He continued with the economic reforms initiated by Deng Xiaoping, but also had to contend with growing social instability. The Communist Party is still seeking to affirm its authority, and has clamped down on rival political groupings (such as the Democracy Party) and social movements (such as the Falun Gong movement). Corruption (mainly among Party cadres and the bureaucracy) has been identified by Jiang as a primary threat and much has been done to address this issue.
  • On the international front, Jiang has overseen the successful return to Chinese sovereignty the territories of Hong Kong and Macao. The Taiwan issue has however remained unresolved and an area of concern in China's relations with especially the USA. The reunification China (with Taiwan) has become a key interest of the Chinese Government, but has been complicated by the recent election of a Taiwanese President (Mr Chen Sui-bian) with expected pro-Taiwan-independence leanings.
  • China remained an important player in the multilateral arena - primarily because of her position as a Permanent Member of the UN Security Council. She is also considered one of the leaders of the developing world and is linked to the South through the G-77+China. China is expected to join the World Trade Organisation in the near future.
  • China has been closely associated with Africa since her founding and these links are expected to be affirmed through the Ministerial Conference of the China-Africa Cooperation Forum, which is scheduled to be held in Beijing in October 2000.
  • South Africa and the PRC established diplomatic relations on January 1, 1998. The PRC has an Embassy and three Consulates General in South Africa, while South Africa has an Embassy in Beijing (a decision regarding the establishment of a South African Consulate General in Shanghai is pending).
  • Trade Statistics (1999)

South Africa's exports to China : R 1,3 billion

China's exports to South Africa : R 4,6 billion

South Africa's deficit : R 3,3 billion

(China is of the opinion that Chinese exports to South Africa are substantially lower)

South Africa is China's largest trading partner in Africa (28% of China's trade with Africa) followed by Angola (11% - but this consists mostly of oil imports from Angola) and Egypt (6%). Oil imports constitute 37% of China's total imports from Africa, followed by timber (14%).

In 1998, China's largest trade was with Hong Kong/Taiwan (US$ 66 billion), followed by Japan (US$58 billion) and the USA (US$55 billion).

  • China's socio-economic indicators

Total GDP ('98) : US$ 900 billion

GDP growth ('99) : 7,1%

Per-capita GNP : US$ 783

Per-capita GDP (PPP) : US$ 3 860

Total Trade ('98) : US$ 325 billion

Exports ('98) : US$ 186 billion

Foreign Debt ('99) : US$ 149 billion

Foreign non-gold reserves : US$ 152 billion

FDI (1997) : US$ 60 billion

Population : 1,268 billion (rural: > 900 million)

Population growth : <1%

Urban workforce : 148 million

Private enterprise employment: : 27 million

Registered unemployment : 3,1% (22 million) [actual unemployment

could be as high as 14% (98 million)]

People per telephone : 12,1

People per TV : 4,4


CHINA'S GOVERNMENT & ECONOMY

GOVERNMENT

Country name

Conventional long form: People's Republic of China

Conventional short form: China

Local long form: Zhonghua Renmin Gongheguo

Local short form: Zhong Guo abbreviation: PRC

Data code

CH

Government type

Communist state

Capital

Beijing

Administrative divisions

23 provinces. (sheng, singular and plural)

5 autonomous regions (zizhiqu, singular and plural)

4 municipalities (shi, singular and plural)

Anhui, Beijing, Chongqing, Fujian, Gansu, Guangdong, Guangxi, Guizhou, Hainan, Hebei, Heilongjiang, Henan, Hubei, Hunan, Jiangsu, Jiangxi, Jilin, Liaoning, Nei Mongol, Ningxia, Qinghai, Shaanxi, Shandong, Shanghai, Shanxi, Sichuan, Tianjin, Xinjiang, Xizang (Tibet), Yunnan, Zhejiang

Note: China considers Taiwan its 23rd province

Independence

221 BC (unification under the Qin or Ch'in Dynasty 221 BC; Qing or Ch'ing Dynasty replaced by the Republic on 12 February 1912; People's Republic established 1 October 1949)

National holiday

National Day, 1 October (1949)

Constitution

Most recent promulgation 4 December 1982

 

Legal system

  • A complex amalgam of custom and statute, largely criminal law
  • rudimentary civil code in effect since 1 January 1987
  • New legal codes in effect since 1 January 1980
  • Continuing efforts are being made to improve civil, administrative, criminal, and commercial law

Suffrage

18 years of age; universal

Executive branch

Chief of state: President JIANG Zemin (since 27 March 1993)

Vice President HU Jintao (since 16 March 1998)

 

Head of government: Premier ZHU Rongji (since 18 March 1998)

Vice Premiers Alan Aichen (since 29 March 1993)

LI Lanqing (29 March 1993)

Wu Bangguo (since 17 March 1995)

Wen Jiabao (since 18 March 1998)

 

Cabinet: State Council appointed by the National People's Congress (NPC)

 

Elections

  • President and Vice President elected by the National People's Congress for five-year terms
  • Elections last held 16-18 March 1998 (next to be held NA March 2003) Premier nominated by the president, confirmed by the National People's Congress
  • Election results: JIANG Zemin re-elected president by the Ninth National People's Congress with a total of 2,882 votes (36 delegates voted against him, 29 abstained, and 32 did not vote)
  • HU Jintao elected vice president by the Ninth National People's Congress with a total of 2,841 votes (67 delegates voted against him, 39 abstained, and 32 did not vote)

Legislative branch

Unicameral National People's Congress or Quanguo Renmin Oaibiao Oahui (2,979 seats; members elected by municipal, regional, and provincial people's congresses to serve five-year terms)

 

Elections: last held December-February 1998 (next to be held late 2002-March 2003)

Judicial branch

Supreme People's Court, judges appointed by the National People's Congress

Political parties and leaders

Chinese Communist Party or CCP [JIANG Zemin, General Secretary of the Central Committee]; eight registered small parties controlled by CCP

Political pressure groups and leaders

No meaningful political opposition groups exist

International organization participation

AfDB, APEC, AsDB, BIS, CCC, CDB (non- regional), ESCAP, FAO, G-77, IAEA, IBRD, ICAO, ICC, ICFTU, ICRM, IDA, IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO, Inmarsat, Intelsat, Interpol, IOC, ISO, ITU, LAIA (observer), MINURSO, NAM (observer), OPCW, PCA, UN, UN Security Council, UNCTAD, UNESCO, UNHCR, UNIDO, UNIKOM, UNITAR, UNOMSIL, UNTSO, UNU, UPU, WHO, WIPO, WMO, WTOO, WTrO (applicant)

Flag description

Red with a large yellow five- pointed star and four smaller yellow five-pointed stars (arranged in a vertical arc toward the middle of the flag) in the upper hoist-side corner

ECONOMY

Economy-overview

Beginning in late 1978 the Chinese leadership has been trying to move the economy from a sluggish Soviet-style centrally planned economy to a more market- oriented economy but still within a rigid political framework of Communist Party control. To this end the authorities switched to a system of household responsibility in agriculture in place of the old collectivization, increased the authority of local officials and plant managers in industry, permitted a wide variety of small-scale enterprise in services and light manufacturing, and opened the economy to increased foreign trade and investment. The result has been a quadrupling of GDP since 1978. Agricultural output doubled in the 1980s, and industry also posted major gains, especially in coastal areas near Hong Kong and opposite Taiwan, where foreign investment helped spur output of both domestic and export goods. On the darker side, the leadership has often experienced in its hybrid system the worst results of socialism (bureaucracy, lassitude, corruption) and of capitalism (windfall gains and stepped-up inflation) .Beijing thus has periodically backtracked, retightening central controls at intervals.

In late 1993 China's leadership approved additional long-term reforms aimed at giving still more play to market-oriented institutions and at strengthening the center's control over the financial system; state enterprises would continue to dominate many key industries in what was now termed "a socialist market economy". In 1995-97 inflation dropped sharply, reflecting tighter monetary policies and stronger measures to control food prices. At the same time, the government struggled to (a) collect revenues due from provinces, businesses, and individuals; (b) reduce corruption and other economic crimes; and (c) keep afloat the large state-owned enterprises, most of which had not participated in the vigorous expansion of the economy and many of which had been losing the ability to pay full wages and pensions. From 60 to 100 million surplus rural workers are adrift between the villages and the cities, many subsisting through part-time low-paying jobs. Popular resistance, changes in central policy, and loss of authority by rural cadres have weakened China's population control program, which is essential to maintaining growth in living standards. Another long-term threat to continued rapid economic growth is the deterioration in the environment, notably air pollution, soil erosion, and the steady fall of the water table especially in the north. China continues to lose arable land because of erosion and economic development. The next few years may witness increasing tensions between a highly centralized political system and an increasingly decentralized economic system. Economic growth probably will slow to more moderate levels in 1999-2000.

GDP

Purchasing power parity - $4.42 trillion (1998 est.)

GDP-real growth rate

7.8% (1998 est.) (official figures may substantially overstate growth)

GDP-per capita

Purchasing power parity - $3,600 (1998 est.)

GDP-composition by sector

Agriculture: 19%

Industry: 49%

Services: 32% (1997 est.)

Population below poverty line

NA%

Household income or consumption by percentage share

Lowest 10%: 2.2%

Highest 10%: 30.9% (1995)

Inflation rate (consumer prices)

-0.8% (1998)

 

http:/ /www .photius.com/wtb/wtb 1999/china/china

Labor force

696 million (1997 est.)

Labor force-by occupation

Agriculture 50%

Industry 24%

Services 26% (1997)

Unemployment rate

Officially 3% in urban areas; probably 8%-10%; substantial unemployment and underemployment in rural areas (1998 est.)

Industries

Iron and steel, coal, machine building, armaments, textiles and apparel, petroleum, cement, chemical fertilizers, footwear, toys, food processing, autos, consumer electronics, telecommunications

Industrial production growth rate

8.8% (1998 est.)

Electricity-production

1.16 trillion kWh (1998)

Electricity-production by source

Fossil fuel: 93%

Hydro: 6%

Nuclear: 1 %

Other: 0% (1996 est.)

Electricity-consumption

994.921 billion kWh (1996)

Electricity-exports

6.025 billion kWh (1996)

Electricity-imports

755 million kWh (1996)

Agriculture-products

Rice, wheat, potatoes, sorghum, peanuts, tea, millet, barley, cotton, oilseed; pork; fish

Exports

$183.8 billion (f.o.b., 1998)

Exports-commodities

Electrical machinery and equipment, machinery and mechanical appliances, woven apparel, knit apparel, footwear, toys and sporting goods (1998)

http:/ /www .photius.com/wfb/wfb 1999/china/china-ec

Exports-partners

Hong Kong 21 %

US 21 %

Japan 14%

Germany, South Korea, Netherlands, UK, Singapore, Taiwan

Imports

$140.17 billion (c.i.f., 1998)

Imports-commodities

Electrical machinery and equipment, machinery and mechanical appliances, plastics, iron and steel, scientific and photograph equipment, paper and paper board (1998)

Imports-partners

Japan 20%

US 12%

Taiwan 12%

South Korea 11%

Germany, Hong Kong, Singapore, Russia

Debt-external

$159 billion (1998 est.)

Economic aid-recipient

$6.222 billion

Currency

1 yuan (Â¥) = 10 jiao

Exchange rates

yuan (Â¥) per US$1-8.28 (February 1999) , 8.2779 (December 1998) , 8.2790 (1998),8.2898 (1997),8.3142 (1996), 8.3514 (1995),8.6187 (1994) note: beginning 1 January 1994, the People's Bank of China quotes the midpoint rate against the US dollar based on the previous day's prevailing rate in the interbank foreign exchange market

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