Xi Jinping Inks Million-Dollar South African Deal on Eve of BRICS Summit

South African President Cyril Ramaphosa, right, shakes hand with Chinese President Xi Jinp
AP Photo/Themba Hadebe

Chinese Communist Party head Xi Jinping landed in South Africa Monday night for the third leg of his regional trip and spent Tuesday negotiating with President Cyril Ramaphosa, ultimately signing a million-dollar investment deal with his country.

Xi is on a trip to promote Chinese investment and the One Belt, One Road (OBOR) Chinese infrastructure program that began in the United Arab Emirates (UAE) and hit Senegal and Rwanda before arriving in South Africa. Xi and wife Peng Liyuan were the first head of state guests that Ramaphosa received as president and he “rolled out the red carpet” for the pair, according to Chinese state outlet Xinhua.

South Africa and China are celebrating twenty years of diplomatic relations. South Africa’s News24 outlet notes that South Africa established ties with China in 1998, during the era of Nelson Mandela, after years of friendly ties with Taiwan. Mandela chose first to attempt to establish ties with both countries and accept them as peers, but under heavy pressure from communist Beijing, South Africa chose China as a more economically and geopolitically valuable partner.

Today, China is South Africa’s largest trading partner, giving Xi significant leverage in negotiations with the country.

“I look forward to having an in-depth exchange of views with President Ramaphosa on bilateral relations, the Beijing Summit of the Forum on China-Africa Cooperation, as well as international and regional issues of common concern, so as to jointly elevate China-South Africa relations to a new high in the new era and bring greater benefits to our two peoples,” Xi reportedly said upon landing in Pretoria.

Following their bilateral meeting, Xi and Ramaphosa signed a memorandum of understanding that would pour over one million dollars (14.7 million South African rand) into South Africa’s economy. The nation’s Daily Sun noted the significant amount of investment but did not specify what that money would be going into.

China’s Development Bank signed another agreement with South Africa’s Eskom public utility company loaning it $2.5 billion to build a new power station.

“This is a normal loan, effective as from the day of the signing … the loan would help us ease some of the liquidity challenges we are facing,” Eskom Chief Executive Phakamani Hadebe said.

The loan has raised some alarm, however, as Eskom has repeatedly loss revenue and, due to its continued use of conventional fuels, lost some international fundraising sources that have shifted to only funding clean energy. In South Africa’s the Times, columnist Bongani Fuzile warns that “Eskom’s financial problems will hit already- under-strain South African consumers hard – even more so as those consumers are currently faced with escalating fuel hikes.” Citing financial analysts, he warns that South Africans should “prepare for the worst.”

The nature of the loan provisions in question appears to have remained private. Such a loan is not uncommon for China, however, and a big part of how the OBOR, also known as Belt and Road Initiative (BRI), works. China lends a huge sum of money to a developing country at a steep interest rate, knowing the country will not be able to pay it off. When the country or corporation inevitably defaults on the loan, the Chinese government can take control of the infrastructure built with its own money. The plan has caused alarm all over the world, from Sri Lanka – where China recently took over a key port – to Kenya, where China’s efforts in building a major railway project have resulted in the exploitation and abuse of Kenyan workers.

Xi will remain in South Africa, but move to Johannesburg, tomorrow for the beginning of the tenth BRICS summit, which brings together the governments of Brazil, Russia, India, China and South Africa.

“I hope to discuss cooperation and development with the leaders of other BRICS members, African countries, and other emerging-market countries and developing countries, in order to lift the solidarity and cooperation between developing countries to a new level and make greater contributions to promoting world peace and development,” Xi said upon arriving in South Africa, according to Xinhua.

The summit will officially address “global hotspot issues, international peace, and security, global governance, trade issues,” according to an official statement. Many observers expect that the continued struggle for fair trade between China and the United States will be at the center of economic negotiations. Russian Economy Minister Maxim Oreshkin noted last week, “this summit is about the context — we are at a time when the US and China announce new measures almost every week.”

“This is a trade war, so leaders’ discussions are particularly important in coordinating our positions,” he added.

An unnamed “diplomat involved in drafting the summit’s final statement” told Reuters on Tuesday that “BRICS leaders will staunchly defend multilateralism and organizations including the World Trade Organisation.”

The BRICS summit may also discuss Middle East issues, with the bizarre expected presence of Turkish President Recep Tayyip Erdogan, invited as the head of the Organization of Islamic Cooperation, scheduled.


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