23 April 2019

South Africa: China, South Africa and the Middle-Income Trap


China and South Africa seem so distant and so different. Chinese economic growth has been fabulous; over the past decade, South Africa's has been miserable. China is enormous; SA is small... and so on. But in one singular respect, China and South Africa are similar -- they may be both caught in the middle-income trap. If there is such a thing.

Chinese economic growth has become so important for the global economy, and particularly for commodity-rich Africa, that when China sneezes, we all stand a chance of catching a cold. So it is with some foreboding that the world watches Chinese growth slowly subside, even though absolute growth remains very high by global standards.

For the past two quarters, Chinese growth has been 6.4% annualised, year-on-year. SA would hand over the hindquarters of the president's prize buffalo to be anywhere near that. Yet these numbers are worrying not only China, but also its largest trading partner on the African continent.

China has not recorded growth this low in any quarter for the past 25 years, except one when the 2008 global financial crisis hit. Growth has steadily declined almost every quarter from 12% in 2010, to half that now.


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