Minister Davies and other cabinet ministers are part of a delegation with President Jacob Zuma on a state visit to China.
The new competitiveness incentive scheme, which Davies said would be formally launched in the near term, will focus particularly on the textiles industry.
Trade unions have often expressed their disapproval of Chinese clothing flooding the local market, undermining locally produced clothes and negatively affecting jobs in the textiles industry.
"We have increased the tariff on clothing textile products to the maximum and we have other measures which we can use and have used. We know that there are competitive challenges in some of those industries," he said.
Davies said government also hopes that the Comprehensive Strategic Partnership Agreement (CSPA) signed between President Zuma and his Chinese counterpart Hu Jintao would help in this regard.
China, the world's second biggest economy, has become South Africa's largest trading partner, with total trade amounting to 120 billion rand. But trade is still skewed in favour of China and the CSPA is aimed at addressing this imbalance.
"We're working with China to address the structural imbalance between South Africa and China. We need greater balance in the trade structure," Davies said.
Addressing the South Africa-China business seminar in Shanghai, President Zuma said the structure of trade had to be addressed if "a sustainable economic relationship" was to be ensured.
"An exchange of commodities for manufactured goods cannot be sustained in the longer term," he added.
Zuma referred to the CSPA as an economic blueprint for strengthening South Africa and China's cooperation to respond to the African development challenge.
Zuma added that South Africa aims to accelerate growth to the levels present in the brIC - Brazil, Russia, India and China - countries.
This is considered as somewhat optimistic, considering that brIC countries are growing at levels higher than those of South Africa.
Brazil's economy is expected to grow by 5% this year, while South Africa's is seen growing by about 3%.
Zuma told the seminar that growth in South Africa was underpinned by a few factors, including rising levels of fixed capital investments.
The local economy grew 4.6% in the first quarter but growth slowed to 3.2% in the second quarter, in line with what is happening globally.
Zuma said that while the country's main trading partners have remained countries in the European Union and the United States, trade was growing fastest with countries in the South, particularly those in Asia and Africa.
On trade issues, Business Unity South Africa (BUSA) president Futhi Mtoba said that they were aware South African businesses were still experiencing non-tariff barriers to doing business.
She called on authorities to address matters such as regulatory regimes and intellectual property.
"We have a forum where we can discuss those questions. We will want to hear from BUSA about the particular kinds of non-tariff barriers which they are encountering," Davies noted.
Another important area of the CSPA, as Davies explained, was the agreement to cooperate on areas such as beneficiation.
"It [the agreement] talks about Chinese companies helping us in beneficiation," he stated.
On the public sector national wage strike currently gripping the country, Davies said that although government respected the constitutional right of workers to strike, it would like to see a settlement as soon as possible.
