In-Market Insights - China 2025: Politics, policies and powerplays
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Jeremy Stevens and Simon Freemantle delve into China's geopolitics and the potential impact on Africa.
Audio transcript
00:00:
China, Africa's most important single investor since 2000,
00:04:
is undergoing deep structural change that has left it on the edge of deflation for
00:10:
the first time in almost a decade.
00:12:
At the heart of the world's number two economy's troubles is weak domestic
00:17:
demand, now likely to be worsened by external factors,
00:19:
including the looming shadow of U.S.
00:19:
President-elect Donald Trump.
00:22:
You are listening to the fourth episode of the In-Market Insights podcast, brought to
00:27:
you by StandardBand CIB.
00:29:
I'm Godfrey Mutsizwa.
00:31:
My guests today, let me introduce them.
00:33:
Jeremy Stevens, Asia Economist for the Standard Bank Group, who joins me from
00:37:
Beijing in China.
00:39:
And Simon Fremantle, Senior Political Economist, who joins me from Cape Town.
00:42:
Gentlemen, welcome.
00:44:
I want to start with you, Jeremy, perhaps situate, if you can,
00:49:
where China is in terms of its economic development journey.
00:53:
Well, hi, Godfrey.
00:53:
Yes, and I'm really looking forward to this discussion with you and with Simon.
00:58:
There's certainly a lot of misunderstandings around China and China's
01:03:
economic trajectory.
01:05:
And these ideas seem to thrive and time and time again I see markets seem to
01:11:
misinterpret what Beijing is trying to do,
01:13:
making it increasingly difficult to make heads or tails from China's ongoing
01:17:
transformation.
01:19:
The obvious starting point has to be that China is in the midst of an adjustment or
01:23:
a transition phase.
01:25:
And this has really been underway for a number of years now.
01:27:
and will continue for a number of years to come.
01:29:
And this has changed in a profound way how China connects to the rest of the world,
01:34:
including Africa.
01:36:
To be honest, this adjustment was pretty clearly signaled to us back in 2013.
01:40:
President Xi Jinping at the time basically said that China's entering a stage where
01:46:
it's a new normal,
01:48:
which envisioned a Chinese economy that was going to grow much more slowly, that
01:54:
would be less credit intensive, that would be less investment driven.
01:56:
and instead be buoyed by the growth in services and consumption and propelled by
02:00:
innovation.
02:02:
Another key event that sort of anchors the outlook is that in 2015,
02:05:
we saw a sort of dramatic boom bust in the stock market.
02:09:
We saw currency depreciation, we saw massive capital outflows,
02:12:
and I think China ended up burning about a trillion dollars of FX reserves at the
02:19:
time facing four years of deflation.
02:21:
And that really led to China sort of pivoting towards de-risking the financial
02:25:
system and what they called
02:27:
clamping down on the disorderly expansion of capital.
02:29:
Later then in 2017, the Chinese economy made it pretty clear that they'd entered a
02:34:
new era,
02:35:
writing into the constitution that the sort of central concern for domestic
02:41:
policy was unbalanced and
02:43:
inadequate development.
02:45:
And they were going to shift from sort of focusing on the quantity of economic
02:47:
growth to the quality.
02:49:
And that's really where we saw the first sort of mention of houses are for living
02:53:
and not for speculation.
02:55:
And quite frankly, the issue is that most people don't seem to fully comprehend how
03:01:
much China has changed in the past decade.
03:03:
And they certainly ignore how the goals of macroeconomic policy has changed.
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And so what we've seen is we've seen massive amounts of uncertainty as it
03:10:
relates to China.
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Many people sort of thought that maybe this was about an exodus of senior
03:16:
leadership.
03:18:
Others worried that it was an emphasis over ideological purity over...
03:20:
And pragmatism, others saw it as just the difficulty of trying to balance innovation
03:26:
with greater
03:28:
party control over the economy and society.
03:29:
But at least to me, as it sits right now, it looks to me that over the past 18
03:34:
months,
03:34:
the sort of all important mobilization goal that serves for a sort of anchor or
03:40:
the fulcrum for
03:42:
macroeconomic policy has come into sharper focus.
03:43:
And what that is, is it's what they've called the new productive forces, which is
03:49:
basically them trying to push.
03:51:
move up the value chain in terms of advanced and high-tech industries, pushing
03:56:
very forcefully in terms of clean energy.
03:58:
And this is just an adjustment away from fast economic growth, which is, as I said,
04:02:
what they signaled many years ago to us.
04:04:
Yeah.
04:05:
And what's your general sense, Jeremy, when you look at the situation at the
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moment?
04:08:
I mean, we have seen many policy responses from the authorities.
04:11:
Do you still get the sense that they are in control or they are really just trying
04:17:
to find solutions and are not totally
04:19:
in charge?
04:21:
offer, how they can turn this thing around.
04:23:
You're totally right.
04:25:
I mean, and I spend a lot of time talking to clients exactly about where they are in
04:26:
terms of the cycle and how that marries with the structural agenda that's upfront.
04:31:
Obviously, a lot of the structural issues that they're trying to resolve don't
04:36:
necessarily resolve the cyclical matters.
04:38:
So you mentioned in your introduction that, you know, they're struggling with
04:42:
domestic demand that's relatively soft.
04:44:
They're also obviously as a result of...
04:45:
de-emphasizing the role of the real estate sector that's such a profoundly important
04:51:
part of the economy and as that
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part of the economy suffers that drags the rest of the economy down now in september
04:58:
there was a lot of
05:00:
speculation around found more monetary and fiscal stimulus coming.
05:04:
The PBOC, the central bank, and the financial regulator basically signaled
05:10:
that monetary policy was going to ease.
05:12:
They cut the rates, they cut the triple R ratio, they introduced new lending
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facilities.
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And when I was talking to clients at the time, sort of late September, early
05:21:
November,
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The message was to them that this is really a relief package rather than a
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stimulus,
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and it's really about preparing the financial sector to absorb what was going
05:33:
to be a sort of surge in local
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government bond issuance.
05:37:
We saw two days after that PBOC meeting,
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the Politburo hosted their sort of typical monthly meeting where they focused on the
05:43:
economy,
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which they don't normally do in September.
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And they announced basically that they're going to increase the intensity of
05:51:
monetary and fiscal policy.
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And ever since then, there's been a sort of buildup of speculation that a big
05:56:
bazooka is coming.
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Markets get excited.
06:00:
A number of agencies met subsequently in the sort of lead up to the NPC meeting in
06:05:
November.
06:07:
And there was a lot of speculation that they're going to stimulate, stimulate,
06:10:
stimulate.
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Commodity prices rallied as a result.
06:13:
And what we've seen consistently is that markets are disappointed by what actually
06:18:
comes out.
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So there's a the ratio between talk, talk, the talk and walk, the walk doesn't seem
06:24:
to align.
06:26:
The latest move to kind of absorb some of the local government financing vehicle
06:30:
debts.
06:32:
I think it's about two trillion a year that they're now going to issue to convert
06:35:
onto local government balance sheets.
06:37:
That's.
06:39:
You know, it staves off defaults, but it will do nothing to alter the fact that
06:42:
local governments have seen revenues
06:44:
collapse as land sales have fallen.
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And that's led to significant austerity measures by the local authorities who play
06:51:
a profoundly important role in
06:53:
the economics in their geographies.
06:54:
Yeah, we'll come back and talk about some of the interventions.
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Let's bring in Simon here.
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Simon, Jeremy was talking in part to Marcus reacting to the policy measures
07:04:
that have been taken by the authorities,
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some of them underwhelming.
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But let's perhaps look at China's place in the new geopolitical reality that we have
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at the moment.
07:14:
Just take us through how China sees its role in the world at the moment,
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considering the economic reconfiguration that we've just spoken about with Jeremy.
07:20:
Yeah, thanks, Godfrey.
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There's a part of China's new era that is certainly a reconfiguration of China's
07:26:
global role.
07:28:
You know, as we all know, as all the listeners on this podcast will know,
07:31:
China's economic influence has surged since the turn of the century.
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And there is, together with that, in addition to various other countries
07:42:
demanding a louder voice in global
07:44:
multilateral fora,
07:46:
there is a clear need for the developing world generally to have a greater say in
07:51:
the reform of
07:53:
global financial architecture, global governance systems.
07:54:
That's becoming particularly relevant when it comes to climate finance, in particular
08:00:
development finance more broadly.
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And so China certainly sees itself as a key agent in driving that change.
08:07:
I mean, China has typically played a dual role in a sense.
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I mean, you know, on the one hand,
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representing and leading the global south and as an advocate for that kind of change
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and arguing
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on behalf of many developing economies.
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But there is an open debate as to whether China can be classified as a developing
08:26:
economy.
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Of course, it's far more advanced.
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And then on the other side,
08:32:
there's this relatively new agreement in Beijing to emphasize big
08:36:
power diplomacy, but with its own Chinese characteristics and holding up the China
08:42:
model more
08:44:
assertively for others to emulate.
08:46:
So there's an assertiveness on that side.
08:48:
There's a desire to emphasize the need for governance reconfiguration,
08:52:
which should benefit the global south more broadly.
08:54:
And the language of the government work report that they released in March, which
08:58:
is very deliberate,
09:00:
they inserted a specific sentence where they said they demand a multipolar world
09:05:
and that they're
09:07:
requesting a new type of international relations and oppose all bullying tactics.
09:11:
And now China doesn't do anything by accident.
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And the reality is that.
09:16:
They are defending the sort of aspects of the liberal order that's benefited them
09:20:
most.
09:21:
So, for example, trade, globalization, and that was something that President Xi
09:28:
started doing in sort of 2017 already.
09:30:
But now they're also positioning themselves in the sort of driving
09:35:
sustainable developments in renewable
09:37:
energy and the energy transition because they want to juxtapose their role in
09:42:
global affairs to the U.S.'s
09:44:
more sort of inward looking stance.
09:44:
So, yeah.
09:45:
This is really quite a profoundly important topic that Simon's mentioned.
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And I just wanted to sort of echo what he had to say.
09:52:
Yeah.
09:53:
So while we're still on geopolitics, we might as well bring in Donald Trump 2.0,
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right?
09:58:
And how China sees itself playing Donald the second time around.
10:01:
Let's begin with perhaps with you, Simon, and then we'll come to Jeremy.
10:03:
Yeah, I think, you know,
10:05:
perhaps the central characteristic of Donald Trump is his unpredictability to a
10:11:
great extent.
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And there is, in that sense...
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Much less certainty around how his second term may play out.
10:19:
We're having our own conversations in South Africa and every country in the
10:26:
world is now having to configure
10:28:
around the kind of risks that could emerge during Trump's second term.
10:32:
There are some things that I think we can be fairly sure of.
10:36:
We know that Donald Trump is quite averse to the U.S.
10:39:
playing as leading a role in multilateral institutions as it.
10:43:
it has typically played.
10:45:
So there is likely to be a more assertive stance in terms of protecting American
10:51:
interests and
10:53:
withdrawing from certain multilateral frameworks.
10:56:
It is widely expected, although perhaps not certain, that the US will again
11:02:
withdraw from the
11:04:
Paris Agreement on climate change, as Donald Trump withdrew from that agreement
11:09:
when he was first in power and
11:11:
Joe Biden then.
11:13:
reinstated America's commitment to it.
11:15:
So certainly there are some of those aspects.
11:17:
We know that Donald Trump has already been saying many things about tariffs and
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imposing very
11:26:
stringent tariffs on China.
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And Jeremy can talk about how that's perceived in China and whether that's
11:30:
plausible.
11:32:
As well as Canada and Mexico,
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he's also spoken of the possibility of a BRICS currency.
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and how he would perceive that as a direct threat to the dollar,
11:43:
and that the US government would then look to take action against countries that are
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participating in that.
11:50:
So, you know, certain things we can be quite sure of is that the US will be
11:53:
looking to preserve
11:55:
and protect its own interests above all else, and that there will be a shift
12:00:
backwards again in the US commitment to
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multilateralism generally and various agreements that play a part within that.
12:06:
Certainly, going back to what Jeremy said earlier, I mean,
12:09:
China has benefited enormously from certain aspects of, you know, free market
12:16:
or at least,
12:18:
you know, the expansion of global trade.
12:18:
China doesn't have an interest in reducing the extent of globalization, whereas, you
12:25:
know,
12:25:
under Trump 1.0, there was certainly an implication that the U.S.
12:29:
wants to be less involved in these global trade agreements and wants bilateral
12:36:
agreements that protect and preserve American interests.
12:38:
So that'll be an interesting dynamic and to see how that plays out during the next
12:43:
four years or so.
12:45:
But I would say just as a final point,
12:47:
when you go back to China's ambition to play a more assertive role globally,
12:54:
befitting of its economic status,
12:56:
the U.S.'s retreat under Donald Trump in his first administration, and if that
13:01:
continues in his second,
13:03:
retreat from these global commitments, it's increasing.
13:05:
Narrow nationalism that epitomizes much of what Donald Trump has spoken of in terms
13:11:
of his policy approach
13:13:
would quite likely accelerate China's influence relative to the U.S.'s influence
13:19:
in places like Africa and
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elsewhere.
13:23:
So the rebalancing one could expect in the next four years could favor China if the
13:25:
U.S.
13:25:
in that period of time is looking to withdraw and China is looking to become
13:29:
more assertive.
13:31:
And we're certainly going to talk about the Africa impact in terms of China's
13:36:
position in the world, as well as, of course, the coming of Donald Trump.
13:38:
But Jeremy, I wanted you to come in and perhaps talk a little bit about how you
13:40:
see
13:40:
China playing Donald in his second term and also whether you see the assertiveness
13:47:
that we were talking about
13:49:
continuing, particularly given the way we know Donald Trump conducts his foreign
13:53:
affairs, his domestic affairs.
13:55:
Yeah, I think I think I fully.
13:57:
wholeheartedly agree with Simon's opinion.
14:00:
I think that China knows that
14:03:
Trump's presidency does add a great deal of uncertainty, certainly on trade,
14:09:
potentially on investment.
14:12:
The big potential tripwire is obviously Taiwan and a number of other areas where
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sort of the volatility around Donald Trump is potentially problematic in the short
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term, medium term.
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And they're sort of enabling a policy framework in play or
14:34:
positioning a policy framework so that they can respond in kind to some of the
14:42:
decisions that might cascade from the White House and that they've built up over
14:48:
the past five, six years in preparation for this.
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And the reality is, I mean, Trump even mentioned that he might go cold turkey as
14:55:
it relates to trade between
14:57:
China and the United States.
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But it's also worth remembering that from an export point of view, I think China's
15:05:
exports to the United States are basically where they were in
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2014.
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And like I've mentioned,
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China's worked quite hard to diversify its relationships and try and pivot away from
15:15:
a
15:15:
dependence on the United States.
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That said.
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you know, the truth is that China has doubled down on its economic and political
15:23:
model,
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and it's done so unapologetically.
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And so the consequence of that is that irrespective of whether it's Harris or
15:33:
Biden or Trump,
15:35:
it knows that ideologically China and the United States are in a contest and they
15:40:
aren't likely to be friends.
15:42:
I think that deep down...
15:43:
There's still a part of the Chinese bureaucracy that thinks that Trump's the
15:49:
kind of person that they can make deals with.
15:51:
They did make a deal around Huawei.
15:53:
during Trump's first presidency.
15:56:
And like Simon has very clearly articulated, Trump leaves the U.S.
16:01:
more divided, probably.
16:02:
He certainly undermines potentially U.S.-EU relations.
16:07:
He makes it less likely that China will be encircled by U.S.
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allies.
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And it will make it easier for China to position itself as a partner favoring
16:19:
openness and
16:21:
trade and multilateralism and green energy transition.
16:23:
And it's certainly easier for China to foster a sort of Beijing-centric world
16:30:
order with the global south.
16:32:
I would argue that it's much easier for them to develop closer ties with President
16:37:
Ramaphosa under a Trump
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presidency than under a different U.S. president.
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So I think long term, China will be able to make the best out of this.
16:47:
And the truth is that that's probably...
16:50:
aligned with what Simon has outlined previously.
16:53:
Yeah, so we bring in then the Africa question, right?
16:57:
Now, of course, there's a risk here that Africa could well end up being a
17:02:
battleground for this
17:04:
US-China rivalry that we are talking about.
17:05:
So I wanted to ask Simon, what can and perhaps what should African countries do
17:11:
to try to shield themselves
17:13:
from this risk?
17:15:
How do they play this game?
17:17:
Yeah, so we've mentioned in various reports over the years that in the context
17:19:
of great
17:21:
power rivalry for smaller economies, there is enormous amounts of risk in picking a
17:25:
side.
17:26:
Look, there's risk generally.
17:27:
I mean, the IMF has spoken about the risks of geoeconomic fragmentation.
17:31:
Arguably, those become more pronounced with Donald Trump coming back into the
17:36:
office in the US.
17:38:
And those could lead to up to 2% loss of global GDP.
17:41:
There's another report suggesting that geoeconomic fragmentation could lead to
17:48:
permanent economic loss in sub-Saharan Africa.
17:50:
So the risks are real.
17:52:
I mean, these are related to things like French shoring and investment deals being
17:55:
struck
17:55:
along geopolitical lines.
17:56:
So if you're seen as an ally, then you'll secure beneficial access to large
18:02:
economies.
18:04:
If you're not, then you get excluded.
18:06:
So the risks are there.
18:08:
And in- In light of those risks and also pragmatically understanding that we're in
18:10:
an enormously fluid time, we don't know how this new era is going to unfold,
18:16:
what the new rules of the game will be once they're scripted.
18:19:
And so it is sensible and pragmatic for countries across Africa to adopt a
18:26:
position of non-alignment.
18:28:
Now, South Africa has been very assertive in its non-alignment, arguably has not
18:32:
communicated that non-alignment.
18:34:
coherently enough in the past.
18:35:
I think government has done a lot better job over the last
18:38:
12 to 18 months in communicating non-alignment sensibly and coherently and
18:44:
consistently,
18:46:
but not just non-alignment because non-alignment could project some degree of
18:51:
non-interest.
18:53:
You know, we're out of this fight.
18:55:
But what has been conceptualized as active non-alignment,
18:57:
so some Latin American scholars came up with this concept some time back.
19:01:
And what it implies is that you're not picking a side in a geopolitical rivalry,
19:06:
say, between the U.S.
19:08:
and China or between Russia and the U.S.
19:10:
But so you're non-aligned, you're seeking an outcome that is beneficial for the
19:15:
global economy and the like,
19:17:
but you are actively pursuing your own strategic interests within that
19:21:
geopolitical framework.
19:23:
So if you look at it in the African context, if the U.S.
19:25:
and China are in contestation, Africa is there's a threat, as you say, Godfrey,
19:31:
that it could be a battleground as it was during the Cold War.
19:35:
But there's an opportunity implicit in that.
19:37:
If you take something like critical minerals, that China has an enormous
19:44:
dominance over critical mineral supply chains.
19:46:
The U.S.
19:48:
is clearly concerned about that dominance and is looking to diversify, as is Europe.
19:49:
And there's pieces of legislation that have come through from both countries
19:56:
designed to reduce their reliance on China
19:58:
in that field.
20:00:
Africa has an abundance of critical minerals.
20:02:
So instead of porous and perhaps institutionally fragile African economies
20:07:
being used as footballs in this geopolitical rivalry,
20:09:
they need to assert the value that they have and take advantage of this rivalry to
20:14:
get the best possible
20:16:
price for what they're able to provide.
20:18:
And I think it's in that realm that we would suggest African countries should
20:21:
position.
20:21:
And some have done, I would argue, or we would argue, a very good job thus far.
20:25:
Kenya.
20:26:
has perhaps been a standout in being able to balance these various international
20:33:
geopolitical pressures and
20:35:
position itself very well as a partner to China, as a valued partner to the United
20:40:
States in East Africa, strong relations with
20:42:
Europe as well as with other countries in the Gulf states and so on.
20:45:
South Africa, I would say, after some teething issues, after Russia invaded
20:51:
Ukraine, has started to do a far better job in that space.
20:53:
The central tenet of it is...
20:53:
that you have to be clear-eyed around your strategic interests, your economic
20:57:
interests,
20:59:
and emphasize those in order to extract as much as possible in this fluid
21:04:
geopolitical rivalry that we're
21:06:
seeing unfold.
21:08:
Absolutely.
21:10:
And Jeremy, I want you to come in and perhaps you can add what you might have in
21:12:
terms of how Africa can play this one.
21:14:
But I also wanted to talk to a little bit about the potential areas of interest for
21:19:
Africa in terms of exploiting the
21:21:
relationship with China, where perhaps we could tap in.
21:23:
into China's expertise.
21:24:
We know, of course, their expertise in manufacturing, agriculture, in services,
21:28:
etc.
21:30:
Beijing's made it quite clear that as far as they're concerned,
21:32:
Africa is a strategic exterior line for China to geopolitically contain the US,
21:37:
whilst providing a backbone of support for China on its issues that are considered
21:41:
core.
21:44:
You know, when you look at a map of where a sitting U.S.
21:47:
president has visited at any point during their leadership era,
21:54:
the countries where no U.S.
21:55:
president has visited are almost all in Africa, whereas obviously from a
22:02:
geopolitical point of view,
22:04:
Africa plays a rather important role from a foreign policy point of view for the
22:09:
Chinese.
22:11:
Africa is also an ally in many respects for China to play a...
22:13:
greater role in global governance.
22:15:
I think, you know, one of the things on the renewable energy transition is, you
22:21:
know, they want to be the standard setters.
22:23:
They're picking nascent global technologies that there hasn't been a
22:26:
leader that's been established.
22:28:
And they're trying to then dominate that and set standards and then make countries
22:32:
that trade with the
22:34:
Chinese reliance on Chinese standards and Chinese systems.
22:36:
And so Africa is obviously an important player in that.
22:39:
So let's come now to it.
22:40:
the G20.
22:41:
So South Africa has got this big opportunity in 2025.
22:44:
It's assuming the chairmanship of the G20.
22:47:
Now, what opportunities potentially are we talking about here?
22:50:
And what's also what are the risks from this in terms of South Africa and Africa?
22:56:
I just wanted to mention, you know, South Africa, we all know in the past has tended
23:03:
to have a disconnect between foreign policy and
23:05:
its trade policies.
23:07:
Simon?
23:09:
Yeah, thanks.
23:11:
So there's a number of points within that.
23:13:
Let me start with your final line on South Africa's misalignment.
23:15:
I totally agree that has been a central concern or misalignment in that we have
23:21:
never really
23:23:
emphasized economic diplomacy as a central tenet to our foreign policy.
23:25:
But that's changing.
23:26:
In the last six or seven months, we've seen a very clear shift from DERCO,
23:32:
the Department of International Relations and Corporation, amongst...
23:36:
and by the President in emphasizing the centrality of economic diplomacy.
23:40:
We're now seeing greater conversations taking place between DERCO and DTIC,
23:46:
Department of Trade,
23:48:
Industry and Competition,
23:50:
around how our foreign positioning integrates with our domestic economic
23:54:
imperatives.
23:56:
So the timing is good in the sense that this economic diplomacy angle is now very
24:01:
central to our foreign policy
24:03:
positioning, which we've been arguing.
24:04:
is necessary for a very long time at the moment in which we assume the G20
24:09:
presidency.
24:11:
I think that that approach also will resonate with the U.S.
24:14:
government under Donald Trump, a more transactional commercial relationship
24:19:
rather than one based on ideology,
24:21:
where we are very misaligned with the U.S.
24:22:
in certain key areas.
24:24:
So I think that puts us in a better position to extract more from the G20.
24:31:
It is a historic opportunity, I would say.
24:34:
Because it not only comes at a time, as I said, when South Africa has asserted
24:40:
economic diplomacy as a central tenet,
24:42:
but also when there is an increasing call and a more generally supported call for
24:47:
reform of global governance and financial institutions to better protect and shield
24:53:
developing economies,
24:55:
and particularly those in Africa, from the adverse effects of climate change.
24:57:
And also to resolve growing debt inequality that was compounded.
25:03:
by the COVID-19 crisis, where the global response to the crisis emphasized the
25:09:
extent of these global
25:11:
inequities, particularly in vaccine distribution and supply.
25:13:
And South African government, and particularly President Ramaphosa, have
25:18:
been very assertive on those matters.
25:20:
During COVID, he was one of the most outspoken statesmen in the global south
25:25:
against vaccine inequity.
25:27:
The president has also spoken very assertively on the need for a different
25:31:
approach to climate finance.
25:33:
At the UN Summit of the Future recently, there was at least a global commitment to
25:37:
address some of these concerns.
25:39:
And related to them all is the fact that many of our global multilateral systems
25:45:
are still designed
25:47:
to reflect a balance of power that prevailed at the end of World War II.
25:50:
The UN Security Council has been unreformed since then.
25:53:
You still have the same five permanent members.
25:55:
So there's a very loud call for change to the UN Security Council.
26:00:
And Africa has demanded two permanent seats.
26:03:
Now, how you decide who gets those seats is, of course, going to be a challenge.
26:08:
But I think South Africa takes the G20 presidency at an important time in
26:14:
advocating for these changes and trying to
26:16:
capitalize on the momentum that seemed to be achieved at the UN Summit of the Future
26:20:
a couple of months ago.
26:22:
South Africa's priorities, I think,
26:23:
are very well articulated to place Africa at the center of its G20 presidency.
26:28:
First of all, reforms to global financing, as I've spoken about,
26:32:
to better support climate change adaptation and mitigation, as well as
26:38:
general development across Africa.
26:40:
The just transition, which we know is essential,
26:41:
in which Jeremy has spoken about how clear an area of synergy exists between China
26:47:
and Africa in
26:49:
stimulating and supporting the just transition across the continent.
26:52:
Beneficiation of natural resources, that's been a consistent theme across African
26:57:
economies for a long time.
26:59:
Most have not achieved that, but it is a central ambition of South Africa during
27:04:
the G20 to at least make
27:06:
some progress in that area.
27:08:
And then...
27:10:
The final two, I mean, there are others, but that I extracted from the statement
27:14:
recently released was using critical
27:16:
minerals as an engine for growth across Africa.
27:17:
We know that Africa has an abundant supply of critical minerals.
27:20:
These are essential for the energy transition that is underway.
27:24:
China has a vast dominance, even a monopoly,
27:28:
one where some could argue on global supply chains of critical minerals.
27:32:
The US and Europe are seeking to diversify.
27:34:
They've implemented legislation to try and help with that.
27:37:
So Africa can really use this geopolitical environment now around critical minerals
27:43:
to gain
27:45:
additional value.
27:47:
And South Africa is placing critical minerals in its G20 priority set, I would
27:50:
argue,
27:51:
does present opportunities in that area.
27:53:
And then there's lastly, there is a focus on speaking about AI,
27:57:
the risks that emerge from it from a security and governance perspective.
28:01:
And I'm pleased to see South Africa seeking to play a leading role in that
28:06:
very important conversation as well.
28:08:
So it'll be an intense year.
28:09:
I can tell you, Simon, that there will certainly be loads of stories for people
28:12:
like me.
28:13:
There's no question about that.
28:14:
Absolutely.
28:15:
And we're looking forward to it.
28:16:
As we wrap, Jeremy, I wanted you to come in and perhaps a little bit reflect on how
28:22:
China perceives
28:24:
Africa as it, number one,
28:25:
comes to terms with Donald Trump's second presidency and also it seeks to solve its
28:31:
own problems at home.
28:33:
Yeah, I think that the crux of it is that there's sort of.
28:35:
decision makers in China are going to use
28:39:
Africa potentially as a partner in trying to further its foreign policy
28:45:
objectives.
28:47:
You know, I think from a geopolitical point of view, like I've mentioned, Africa
28:53:
really matters a great deal now.
28:55:
I just did a presentation a week ago, and the sort of professor at the developments,
28:59:
the Global South Development at Peking University was saying, you know,
29:04:
part of the reason why we sort of have a partnership and a brotherhood with Africa
29:11:
and that we're going to always be a developing
29:13:
country because we're sort of partners of the global south and a voice for the
29:17:
global south is, you know,
29:19:
one of the things that they'll say is they'll say, well, it's because we don't
29:22:
sort of have political strings attached.
29:24:
But in the same slide, she did go on to say, you know,
29:27:
what they want is voting solidarity in the United Nations.
29:31:
really, when it comes to sort of China's core interests, whether that's Taiwan,
29:38:
whether that's Hong Kong, whether that's Xinjiang, whatever it may be,
29:40:
they expect Africa's support for those core interests.
29:45:
At the same time,
29:47:
they understand that they need to sort of give a little bit to earn that support
29:53:
from the
29:55:
African side.
29:57:
And so there's a lot of space for negotiation when it comes to the Chinese.
30:00:
geopolitical point of view.
30:01:
And so I think what they've done is they've said, look, Africa doesn't want to
30:06:
be patronized.
30:08:
We're going to negotiate with you as equals, and we're going to try to get the
30:11:
best we can for ourselves.
30:13:
And we expect you to do the same.
30:15:
And I would argue that often when it comes to our preparedness for that engagement,
30:20:
we're sometimes underprepared and they're very much overprepared.
30:24:
And so they've tended to make sure that they're getting at least what they want
30:29:
from that relationship.
30:31:
And we just need to make sure that we're being as clear and consistent in
30:36:
expressing what our
30:38:
objectives are from that partnership.
30:39:
Because I do think that China recognizes that as a brand, they need to deliver.
30:44:
They've made it pretty clear that, you know, from their point of view, they
30:50:
deliver growth, they deliver development,
30:52:
they deliver infrastructure.
30:53:
That's what you get from partnering with China.
30:56:
And so we need to make sure that we're getting the most out of that relationship.
31:01:
Where I worry, to be quite honest, is because of the sort of, you know,
31:07:
we're 54 individual African countries,
31:09:
and I do worry that China's able to leverage that to its advantage and make
31:16:
sure that it's getting the best it can from a
31:18:
partner.
31:20:
And if, you know, if one of the partners is too difficult, then they'll just pivot
31:21:
to another partner.
31:23:
And there's a risk, you know, as it relates to, say, intra-Africa trade, for
31:26:
example.
31:28:
You know, China's selling a significant amount of stuff to Africa.
31:30:
I mean, make no mistake, I think 50% of Ghana's imports are coming from China.
31:35:
It's about 45% of Tanzania's, up about 40% of Kenya's.
31:40:
So, you know, China's doing pretty well selling into Africa and basically meeting
31:44:
any of our
31:46:
income gains with rising demand for their products.
31:49:
We need to find ways to get some of that production into Africa so that we can
31:56:
produce for Africa, for intra-Africa trade.
31:58:
The risk for South Africa, for example, is that if China sets up, you know, at scale
32:02:
in Nigeria,
32:04:
then Nigeria and its partnerships with China are going to be the ones that are
32:09:
selling into the continent rather than South African companies.
32:11:
So there's a pressure on us to make sure that we're being quite strategic and smart
32:16:
around our engagements with Africa,
32:18:
because in the end, you know.
32:20:
in 20 years time, the landscape of the continent could look very different.
32:22:
And I wouldn't like to be in a situation where South Africa is not participating in
32:29:
that upward
32:31:
trajectory for the continent.
32:33:
Absolutely.
32:35:
A lot of challenges, a lot of opportunities, and I dare say a lot of
32:37:
stories for us all as well.
32:39:
Gentlemen, thank you very much indeed for your insights today.
32:41:
You've been listening there to Jeremy Stevens.
32:44:
He is an Asia economist for the Standard Bank Group, chatting to us from Beijing,
32:48:
and Simon Fremantle,
32:50:
a senior political economist at the Standard Bank Group from Cape Town.
32:53:
From me, Godfrey Mutizwa, until next time, thank you for listening and goodbye.
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