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Agoa trade deal talks: South Africa will need to carefully manage relations with the US and China

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South Africa must navigate its economic relationships cautiously amid rising tensions between China and the US, particularly during the 2023 Agoa Summit, to protect its interests and strengthen diplomacy.

South Africa must tread carefully in its economic relationships to avoid being caught in the escalating tension between east and west, and more specifically China and the US. The country’s hosting, and the outcome, of the 2023 Agoa Summit should strengthen its role in diplomatic relations and contribute towards safeguarding the country’s economic interests.

From 2-4 November 2023, the US and 35 sub-Saharan African countries will meet in Johannesburg for the 20th Africa Trade and Economic Cooperation Forum (Agoa Forum). It entails strengthening trade and investment ties between the US and sub-Saharan Africa through the Africa Growth and Opportunity Act (Agoa), US legislation which provides various trade preferences to eligible countries in the region.

Given Russia’s continuing war in Ukraine and its rising tension with Nato, plus the China-US trade war, tensions between east and west are high. South Africa has come under attack for its non-alignment role in the Ukraine war. It refused to support UN resolutions condemning Russia. This resulted in some US congressmen pushing for the forum to be moved out of South Africa.

The country recently hosted the 15th Brics summit, which resolved to expand the Brazil, Russia, India, China and South Africa grouping to 11 member states. The enlargement will bolster Brics’ role as a geopolitical alternative to the west, which is dominated by the US. Might this be a direct challenge to American hegemony?

I have been researching major global economic developments, such as globalisation and the impact of the 2008 global financial crisis, for 20 years. This body of work shows the risks that come with behaviour like South Africa’s. The country could find itself in the middle of a tense situation.

South Africa needs to pull off an exceptional balancing act in managing its international relations in a sensible way that protects and advances its economic interests.

Note that the geopolitical tensions between China and the US are not just about trade disputes. They also include espionage, China’s Belt and Road Initiative, climate change and environmental issues, and tensions over Hong Kong, Taiwan and South China Sea disputes.

As a major source of infrastructure financing to sub-Saharan Africa, China is now the region’s largest bilateral official lender. Its total sub-Saharan African external public debt – what these governments owe to China – rose from less than 2% before 2005 to over 17% in 2021.

Agoa might present a challenge to China as competition for its own interests in Africa. China would like African countries to untie or loosen their agreements with the US. It is thus a good moment to take stock of the actual benefits South Africa has derived from the Agoa agreement with the US.

What Agoa is about

The Agoa agreement was approved as legislation by the US Congress in May 2000 for an initial 15 years. On 29 June 2015 it was extended and signed into law by then president Barack Obama for a further 10 years to 2025.

It will come into review again in 2024, hence the importance of the upcoming summit. Recently, Louisiana senator John Kennedy introduced a bill to the US Congress to extend Agoa by a further 20 years to 2045. This is a bid to counter China’s growing influence in Africa, and to continue to allow sub-Saharan African countries preferential access to US markets.

Agoa’s benefits to South Africa

In 2021, the US was the second most significant destination for South Africa’s exports worldwide, mainly thanks to Agoa. China took the top spot; Germany was third. The US ranked third as a source of South Africa’s imports, following China and Germany. In that year, the total trade volume between South Africa and the US reached its zenith at $24.5 billion, with a trade imbalance of $9.3 billion in South Africa’s favour.

Agoa offers preferential entry for about 20% of South Africa’s exports to the US, or 2% of South Africa’s global exports. The stock of South African investment in the US has more than doubled since 2011, amounting to US$3.5 billion in 2020. American foreign direct investment (FDI) in South Africa increased by over 70% over that period, to US$10 billion. This made the US South Africa’s fifth largest source of FDI in 2019. The US was its third largest destination for outward FDI.

US investment in South Africa is mainly concentrated in manufacturing, finance and insurance, and wholesale trade, which is vital for economic growth. American multinationals doing business in South Africa employ about 148,000 people.

More specifically, Agoa’s benefits include:

duty-free and quota-free access to the US market for a wide range of South African products. This benefits South Africa’s textile and apparel industry in particular. To sub-Saharan African countries, Agoa provides duty-free access to the US market for over 1,800 products. This is in addition to the more than 5,000 products that are eligible for duty-free access under the US Generalised System of Preferences programme

export diversification, especially of items such as agricultural products, textiles, and manufactured goods. This is vital for increasing export earnings, which help to improve South Africa’s balance of payments, particularly its trade account.

capacity building through technical assistance and programmes to help South African businesses meet US standards, thus becoming more competitive in the global marketplace.

economic development and poverty reduction, which aligns with South Africa’s developmental goals.

Balancing economic interests

China is the largest consumer of South African commodity exports, and thus a key influencer of the rand exchange rate. In addition, China and Russia’s planned move towards de-dollarisation (trying to replace the petrodollar system with their own system) puts American interests under threat. This means South Africa needs to carefully navigate its relations with the US and its Brics partners, China and Russia.

It will want to keep strong ties with the US through Agoa without getting into a difficult position between China and the US. The outcome of the November meeting will have serious economic implications.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Data Reveals the Chinese Government’s Popularity is Lower Than State Media Portrays

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List experiments reveal that public support for the CCP and Xi Jinping is lower than official claims, highlighting preference falsification and evolving attitudes, especially during the White Paper protests against COVID-19 policies.


Insights from List Experiments

List experiments offer a nuanced approach to measuring public opinion in China, particularly regarding sensitive issues. Unlike traditional surveys that may prompt self-censorship, these experiments reveal that support for the Chinese Communist Party (CCP) and Xi Jinping may be overstated. Evidence suggests that preference falsification—concealing true opinions to align with perceived norms—is prevalent, indicating a disconnect between official figures and genuine sentiments among the populace.

The Impact of the White Paper Protests

Triggered by a tragic fire incident in November 2022, the White Paper protests marked a significant moment in China’s political landscape. Demonstrators expressed their discontent with the government’s stringent COVID-19 measures, challenging the notion that the CCP enjoys unquestioned popular support. Unlike many protests that tend to target local authorities, these protests specifically criticized the central government and the Party’s overarching rule.

Shifting Public Attitudes and Legitimacy

The legitimacy of the CCP relies heavily on public perception, historically linked to its economic achievements and social stability. However, events like the White Paper protests signal potential shifts in popular attitudes that may affect the regime’s stability and policy-making. With a slowing economy and increased authoritarianism under Xi Jinping, understanding these changing sentiments is critical for researchers and policymakers navigating China’s complex state-society dynamics.

Source : Data shows the Chinese government is less popular than state media makes it seem

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Faurecia Relocates Electronics Headquarters from Japan to China – Automotive News

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Faurecia relocates its electronics business headquarters from Japan to China, signaling a strategic shift to enhance operational efficiency and strengthen its presence in the growing Chinese automotive market.


Faurecia’s Strategic Shift

Faurecia has announced the relocation of its electronics business headquarters from Japan to China. This move is aimed at enhancing the company’s presence in a rapidly growing market for automotive technologies. By shifting its base, Faurecia intends to optimize operations and better serve its clientele across Asia.

Strengthening Market Position

The decision is part of Faurecia’s strategy to consolidate its resources in regions where electric and hybrid vehicle demand is soaring. As China leads the global automotive market in innovative technologies, the relocation will allow Faurecia to align its efforts with industry trends and consumer needs.

Future Aspirations

With this strategic shift, Faurecia aims to drive innovation and expand its production capabilities in China. The company expects this decision to create new growth opportunities and help solidify its competitive edge in the evolving automotive landscape.

Source : Faurecia moves headquarters of electronics business from Japan to China – Automotive News

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China’s FDI Trends for 2024: Major Sources, Destinations, and Industries

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Despite a 13.7% decline in FDI inflows to $163 billion in 2023, China remains a strong magnet for foreign capital, holding a 12.3% global share. Early 2024 shows recovery, with increased foreign investment in high-tech and services sectors.


Despite a challenging environment, including a significant downturn in 2023, where FDI inflows fell by 13.7 percent to US$163 billion following a 4.5 percent growth in 2022, China remains resilient in attracting foreign capital. This decline was attributed to several factors, including an uneven post-COVID economic recovery, ongoing geopolitical tensions, regulatory uncertainties, and stringent capital control measures.

According to the recently released Statistical Bulletin of FDI in China 2024, China’s FDI scale remained stable in 2023, with a 12.3 percent share of global cross-border direct investment, marking the fourth consecutive year exceeding 10 percent.

Encouragingly, the first nine months of 2024 have demonstrated signs of recovery, with China attracting RMB 640.6 billion (US$90.26 billion) in foreign investment. Notably, there has been an 11.4 percent increase in new foreign-invested enterprises (FIEs), with high-tech manufacturing, medical equipment, and professional technical services experiencing substantial growth in foreign capital utilization.

These trends signal a shift towards innovation and services, underscoring ongoing investor interest in China’s dynamic market.

In this article, we explore the key trends and government initiatives shaping China’s FDI landscape, providing insights for businesses seeking to navigate and capitalize on opportunities in the world’s second-largest economy.

In 2023, China’s FDI landscape demonstrated a strong concentration across various industries, underscoring the country’s continued appeal to international investors. The primary sectors attracting foreign capital included:


This article was first published by China Briefing , which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in ChinaHong KongVietnamSingapore, and India . Readers may write to info@dezshira.com for more support.

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