South African factories lose ground: Chinese exports to South Africa rose 29% year-on-year

In South Africa, a surge in Chinese products, it is putting the country's already struggling manufacturing sector under renewed pressure. And with factories battling rising costs and weak demand, the consequences could extend beyond businesses to jobs, wages and the wider economy. The numbers, they tell the story. Chinese exports to South Africa, they've more than doubled since the start of the decade, rising by nearly $10 billion in the first eight months of this year, compared with the same period in 2020. And the pace is accelerating. Shipments from China jumped 29% year-on-year in the January to August period, as Chinese manufacturers look for buyers in new markets amid higher U.S. trade barriers. South Africa's manufacturing sector contracted for a third consecutive quarter in the three months through June. Factory capacity utilization, the share of available production capacity actually being used. It stands at around 76 percent, down from 83.2 percent in 2003. In simple terms, factories have the capacity to produce more, but demand and competitiveness are holding them back. Higher electricity costs, weak economic growth and infrastructure problems are only adding to the pressure. For consumers, cheaper Chinese goods can mean more affordable products, but there is a catch here. If local factories lose sales, they may cut working hours too. They may freeze hiring or even shut operations. Now that can hit household incomes and weaken demand further. South Africa also imports more than a third of its manufacturing imports from China, while China accounts for only around 5.9% of South Africa's exports, highlighting the trade imbalance. The pressure of promoting, the pressure of prompting action in South Africa's trade authority is investigating five new applications from businesses seeking relief from rising imports, including steel, plastic packaging material and construction products.