It indicates that Chinese competition may be one of the reasons South Africa's manufacturing sector has shrunk so sharply since China became a member of the World Trade Organisation in 2001.
A report from the University of East Anglia suggests that South Africa's economy has been hard hit by its trade links with China‚ the country's biggest single trading partner. The research showed 77‚000 factory jobs in South Africa were lost‚ particularly among unskilled workers‚ due to an influx of Chinese products between 2001 and 2010.
"We found that South Africa is facing increased difficulties in competition with China - both domestically and in international markets‚" said Rhys Jenkins‚ the main author of the report.
Manufacturing is still the economy's second-biggest sector‚ but in the past decade its share of output has shrunk from 19% to 15%.
Prof Jenkins said jobs in South Africa were lost directly through layoffs and plant closures‚ and indirectly through companies responding to Chinese competition by shifting to more capital-intensive technologies‚ or moving out of the most labour-intensive product lines in each industry.
The industries most affected ranged from footwear‚ where China has a 46% market share in South Africa‚ to electronic equipment‚ where it has a market share of more than 30%‚ the report said. "While industrial production in South Africa grew by 14% between 2001 and 2010‚ this increase would have been around 5% higher in the absence of increased Chinese import penetration‚" the report said.
South Africa's trade deficit with China has ballooned over the past decade. Exports to China are mainly primary and resource-based products‚ while imports are almost entirely manufactured goods.
The report said South Africa's exports to its 10 main trading partners in Africa would have been almost 10% higher from 2001 to 2010 if it had not lost market share to China. This is a worrying trend‚ as the country regularly posts trade surpluses with the continent‚ which takes a fifth of its manufactured exports.
China's exports to sub-Saharan Africa rocketed from $4.1bn in 2001 to $53.3bn last year.
The East Anglia report said although the value of South African exports to its 10 main African trading partners had risen significantly over the past decade‚ its share of total exports to those countries had declined.
"In contrast‚ China's share of exports increased significantly. Whereas there was relatively little competition between Chinese and South African exports in the late 1990s‚ it increased substantially over the past decade."
The research was sponsored by Britain's Economic and Social Research Council and included work by Lawrence Edwards of the University of Cape Town.
Iraj Abedian‚ MD of Pan African Investment and Research‚ who conducts research for the Manufacturing Circle‚ said South African manufacturers had "lost quite badly" to China in domestic market share and in exports to the rest of Africa. Close collaboration was needed between the government and companies to address the issue‚ he said.
As a member of the Brics group of emerging economies‚ South Africa should "look the Chinese in the eye and stop them from market manipulation"‚ Abedian said.
Most companies in South Africa lacked an "African strategy" and needed to address that issue‚ he said.
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