Brian Hayward
THE slowdown of China's economy is already having a knock-on effect on Eastern Cape businesses and a continued stagnation of one of the region's major trading partners will have dire effects, warn Bay businessmen and analysts.
The Chinese economy has faltered from the 10%-plus growth over the past three decades to just over 7% in the third quarter of this year, performing below market expectations.
China is not only in the process of investing heavily in the Eastern Cape with the construction of, among others, its government-owned First Auto Works plant at the Coega industrial development zone, but it is already a significant importer of Eastern Cape-produced vehicles and automotive components.
The region also exports much of its agricultural products to China, including mohair and citrus.
While analysts say the slowdown is not yet at a point where South African businesses should be concerned, they warn that continued low growth could spell job losses.
Managing director of Uitenhage's kitchenware and household goods seller Tramarco, Ebrahim Moosa, said importing goods from China had become more expensive, as production costs in China were on the rise.
"We have definitely felt an impact. Prices have gone up by more than 10% in a matter of months, and that bears down on our bottom line," Moosa said.
The company employs 600 people in Nelson Mandela Bay.
"If that continues for another six months, we'll have to consider implementing short-time, but I doubt this slowdown will last."
Bay economist Dr Neal Bruton said it seemed as though the slowdown was bottoming out, with a likelihood of the economy growing by 7.5% or above in the fourth quarter.
What would impact on the province was China's slump in demand for export goods from South Africa.
"The slowdown in the Chinese manufacturing sector has impacted our markets. It is reducing the [South African] national income, which ultimately affects poorer provinces like the Eastern Cape when it comes to government spending," Bruton said.
"The impact is magnified because we are a poor province."
But there was opportunity to be made from the slowdown – it just took sharp business sense and entrepreneurial skills.
Eastern Cape Exporter's Club chairman Quintin Levey said China's stagnation meant the vehicle manufacturing sector could miss its targets of growing exports, which would also trickle down into job losses, although that was not the case at present.
"There are rumblings that investors need to look at an alternative market to China, such as leaning more to Africa. China's slowdown is Africa's gain," Levey said.
According to Tradepoint South Africa manager David Hamer, China's economy was far from saturated.
"Though China's economy has slowed, it has not reduced SA's exports," Hamer said.
"The Chinese government is pouring its savings into the economy to stimulate spending at an individual level, so there is opportunity, we just have to be smarter and more entrepreneurial," Hamer said.
