Lin Songtian. File photo: SUPPLIED
Lin Songtian. File photo: SUPPLIED

President Cyril Ramaphosa is the “last hope” for Africa’s most advanced economy, but his government must turn incentive policies into laws to secure more Chinese investment, China’s ambassador to SA says.

China is SA’s largest trading partner and has pledged more investment than any other country since Ramaphosa embarked on a drive in 2018 to attract about R1.4-trillion of new investment to lift the economy out of a slump. While it has attracted R779.9bn in total pledges, including from Saudi Arabia and the United Arab Emirates, the drive has so far done little to ease crippling unemployment or boost economic growth.

“President Cyril Ramaphosa is the last hope of this country,” diplomat Lin Songtian said.

While African nations have seen a boom in infrastructure development over the past decade, he said projects proposed by the South African authorities had lacked feasibility studies capable of reassuring the Chinese government and banks of their profitability and sustainability.

Policies of extending incentives, including tax breaks, to attract foreign capital also did not do enough for Chinese investors, who Lin said wanted to see favourable conditions enshrined in an investment law approved by parliament.

“To date there are no major infrastructure projects from China here. Why? Because we don’t only need the concept of a project,” Lin said.

Upgrading SA’s antiquated railway network, modernising the port of Durban  and reforming power utility Eskom would also help bring in Chinese money.

The heavily indebted state-owned utility has been forced to implement blackouts as it struggles to meet demand. It has been kept afloat by government bailouts but is regularly cited by ratings agencies as one of the main threats to SA’s creditworthiness and economic growth. China Development Bank agreed to lend Eskom $2.5bn during President Xi Jinping’s visit to SA in 2018.

“Eskom is a debt trap. China gave them some loans before. And now they become very cautious. Eskom is not an issue of money. It’s the issue of operation mechanisms, management, capacity,” Lin said.

Earlier in July Ramaphosa came out in defence of Chinese telecommunications company Huawei, which is helping to bring its 5G technology to SA but is a favourite target of US President Donald Trump.

With around 80% of the continent’s communications infrastructure already built by Huawei and fellow Chinese firm ZTE, Lin said the kind of pressure the US was exerting on its European allies not to sign deals with Huawei could never work in Africa.

“This continent is poor, but they are independent. And they will not compromise to the Americans,” said Lin, who previously headed China’s foreign ministry’s African affairs department.

He also shot back at US accusations that Chinese lending for large-scale infrastructure projects was leaving Africa with unsustainable debt.

China agreed to restructure a portion of the Congo Republic’s debt, allowing it to secure a bailout from the IMF earlier in July.

With a number of African countries facing unsustainable debt expected to turn to the IMF for help in coming years, Congo was seen as a test case for how Beijing would interact with the IMF.

While Lin said China was always open to working with the IMF, he said a boom in African Eurobond issues in recent years was more to blame for the continent’s debt woes.

“If it goes for electricity, roads, industrial parks and follows the concept of intensive development, temporary debt is okay and will be paid back when the country gets developed,” he said.

Reuters