On 9/25/2024 5:08 AM, Charlie wrote:
China's "Socialist" Globalization: Buy Our Exports — Or Else
China does more than offer low-wage labor to Western capitalists. It
/insists/ they take the offer.
From Johannesburg, this is of enormous interest. Also from Buenos Aires
where Claudio Katz is writing about China no longer being in the "global
South" due to its adoption of multilateral-imperial logics:
https://www.counterpunch.org/2024/09/23/the-latin-american-left-amid-china-the-united-states-late-progressivism-and-the-far-right/
Eric Toussaint interprets:
/China is now using the same economic tools that the United States
used systematically – i.e. signing bilateral free-trade treaties
with as many Latin American and Caribbean countries as possible...
Above all, the US is no longer in a position to really benefit from
such agreements, because of competition from China. As a result, it
is China that favours the dogma of free trade and the mutual
benefits to be derived by the various economies if they adopt this
type of agreement. China benefits from this because, as Claudio Katz
rightly points out, its products are much more competitive in Latin
America than the products made by Latin American economies or by the
United States, and the products exported by Latin American economies
to China are essentially raw materials, minerals and transgenic
soybean. As a result, they are not really competitive with Chinese
products. China is reaping the full benefits of the type of
relationship it is developing with Latin American countries, gaining
market share in their domestic markets at the expense of local
production. We are witnessing a re-primarization of economies, and
this can be seen very clearly in the type of products exported from
Latin America to the world market, particularly to China – which is
becoming the biggest trading partner of several Latin American
countries, Argentina and Peru being two examples. Claudio Katz
demonstrates that China derives maximum benefit from Latin America,
because Latin American governments are incapable of devising a
common policy and an integration policy that favours development of
the domestic market and local production for that domestic market./
/ He points out that China does not behave entirely like a
traditional imperialist country; it does not use armed force. Unlike
the United States, China does not accompany its investments with
military bases... Katz has no difficulty in acknowledging that a
major capitalist class has been re-established in China, and he
criticizes those who say that China is at the centre of the
socialist project of our time. He says that this capitalist class
has ambitions to regain power. Katz believes that socialist renewal
is possible; that invites the question of whether it can come from
the CCP leadership. I think we have to make it clear that the answer
is no: socialist renewal will not come from the CCP leadership.
Claudio Katz is also right in saying that China is not part of the
global South. He writes: “All the treaties promoted by China
reinforce economic subordination and dependence. The Asian giant has
consolidated its status as a creditor economy, taking advantage of
unequal trade, capturing surpluses and appropriating revenues. China
does not act as a dominating imperial power; but neither does it
favour Latin America. The current agreements exacerbate
primarization and the flight of surplus value. The external
expansion of the new power is guided by the principles of profit
maximization, not by norms of cooperation. Beijing is not a simple
partner and is not part of the South.”/
***
Here in South Africa it is easy to observe an intra-subimperial rivalry
driving our deindustrialisation process, caused ultimately by the
geographical displacement of China's crisis of over-accumulated capital.
Today's reports, copy/pasted below, are from the SA business pages but,
in part, conform to a critique just published at CADTM:
https://www.cadtm.org/Forum-on-China-Africa-Cooperation-evades-contradictions-at-the-end-of-the-Belt
https://www.news24.com/fin24/economy/sa-manufacturers-fear-they-are-paying-the-price-for-pretorias-cosy-relationship-with-beijing-20240925
25 September 2024
*SA manufacturers fear they are paying the price for Pretoria's cosy
relationship with Beijing
accreditation*
Lisa Steyn
SA's metals and engineering industries say they are facing a crisis
amid low demand.
Adding to its woes, the government often chooses Chinese suppliers
over local manufacturers.
While tariffs help to protect a portion of industry from cheap
imports, it is not a long-term solution.
South Africa's steel and associated industries have called out the
government for how it is approaching its relationship with China, with
some arguing that local manufacturing finds itself on the losing end of
a one-sided contest.
Gathered at the Metals and Engineering Industries Ministerial Conference
held in Johannesburg this week, "China" was a major theme raised by
industry players, though some said Beijing shouldn't be simply used as a
scapegoat for local failures.
The concern is that the government has committed to helping uplift local
industry, but at the same time, major contracts are awarded to Chinese
entities while South African manufacturers continue to bleed.
The metals and engineering sector is in decline amid poor demand due to
slow economic growth. Turning the knife, however, is indecision and long
procurement processes in government, budget cuts across state entities,
lack of maintenance, and proactiveness in general, said Elias Monage,
president of the Steel and Engineering Industries Federation of Southern
Africa (Seifsa).
Echoing the sentiment of other delegates and speakers, Mike Benfield,
CEO of Macsteel, said: "The Chinese are a problem, of course … hot
rolled coil is $440 a tonne … that's not sustainable," he said.
"Yet, South Africa is very dependent on Chinese aid. It's hand in glove.
I think as industrialists in South Africa, we've seen the Chinese threat
and yet the government is looking at China as a benefactor, a supporter,
a funder."
But this isn't for free, Benfield cautioned.
Mervyn Naidoo, CEO of Actom – the largest manufacturer of
electro-mechanical equipment in Africa – pointed to the now notorious
Transnet contracts to procure 1 064 locomotives, many from the China
Railway Rolling Stock Corporation.
He added: "South African companies never really succeeded in those
contracts, because in my mind, there was never intent to localise."
Another glaring example, as was previously reported by local media, is
the Kusile power station, which was constructed with imported structural
steel, while just a few kilometers away, the Highveld Steel plant went
out of business, taking critical local jobs with it.
Tumi Tsehlo, CEO of Dynamic Fluid Control, a valve manufacturer, noted
the recent state visit to China earlier this month, which resulted in an
"all-round strategic cooperative partnership".
"We must be very clear about what the goals of the agreement are and
relentlessly and unapologetically pursue the interests of South Africa
in this relationship," he said, adding: "We, as business, are the pig
that provides the pork on the breakfast table … we are not the chickens
that only contribute the eggs. We are heavily invested in the country
and are committed to being productive partners in addressing the
challenges in this country."
Neels van Niekerk, executive chair of International Steel Fabricators of
South Africa, however, cautioned against using China as a scapegoat. He
pointed to Australia, which is a major exporter of iron ore to China,
having allowed its own steel industry to disappear. "It is up to the
government and us together to work out a plan to protect not only the
steel-making industry but to be competitive," said Van Niekerk, adding:
"Go to Australia and see how you lose something permanently, we must be
wary."
Tariff considerations
South Africa's primary steel industry has been afforded protection
against a flood of cheap Chinese steel through anti-dumping duties,
which have been implemented in recent years.
In June this year, a new, provisional 9% anti-dumping duty has been
applied on imports of hot-rolled steel products for a period of 200
days, with more or higher duties likely to follow.
This is despite outcry from downstream manufacturers about the adverse
impact this has on their businesses, in part due to lack of access to
competitively priced steel locally.
But Naidoo and other participants agreed protectionism is a short-term
measure, and not a solution for the long-term sustainability of the
metals and engineering industries.
Dean Macpherson, Minister of Public Works and Infrastructure, said there
is an equal burden to carry by the industry - with major players having
not invested in upgrading operations despite this being a requirement in
return for previous tariff protections, adding: "There is no one,
including myself, who's saying we should give up on the steel industry.
But there's got to be a workable plan that doesn't solely rely just on
tariff protection. Because tariff protection is not enough for an industry."
"There has to be a greater coming together of the downstream sector and
the actual producing sector of steel to find a long-term sustainable
solution."
Samantha Graham, Deputy Minister of Electricity and Energy, said it is
evident that South Africa does not have the capacity to challenge China
on its own.
"We need economy of scale if we are to make industrialisation a viable
option for South Africa. And for that, we need to create an industrial
base that can challenge China," she said.
"We need to do this as Team Africa, as equal partners to the developed
world, but also driving inter-African trade so that internal African
trade becomes the primary driver of economic growth and job creation on
our continent. Unless we transition from the mindset of competition with
our African neighbours to a mindset of collaboration, our continent will
continue to be treated by the rest of the world as a junior partner."
Benfield said the industry is itching to get moving. But it requires
sincere insights into how the new government plans to proceed. "We would
like a sense of transparency of what South Africa needs to look like and
how it will operate going forward - so that we can invest," he said.
***
https://www.businesslive.co.za/bd/economy/2024-09-24-itac-investigates-alleged-dumping-of-steel-products-from-asia/
Itac investigates alleged dumping of steel products from Asia
Tariff regulator says there is prima facie evidence that warrants
an investigation of steel products from China, Thailand and Japan
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24 September 2024 - 17:55
by Thando Maeko
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SA’s tariff regulator has opened an investigation into the possible
dumping of steel from China, Thailand and Japan to determine whether
the Southern African Customs Union (Sacu) is experiencing material injury.
The International Trade Administration Commission of SA (Itac)
investigation, which covers the period from April 1 2022 to March 30,
also seeks to determine if there is a casual link between the alleged
dumped imports and the material injury experienced by Sacu’s industry.
***
https://www.businesslive.co.za/bd/opinion/columnists/2024-09-10-neva-makgetla-beneficiation-must-consider-opportunity-cost/
Beneficiation must consider opportunity cost
Local beneficiation has stagnated for the past 20 years
10 September 2024 - 05:00
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My five-year-old granddaughter designed a time machine by drawing a
picture of it and labelling it with her robotics class motto:
think/plan/do/review. As so often in SA policy process, she had
envisioned the end state but hadn’t quite figured out the technical
challenges. As a result, we still don’t have a working time machine.
Proponents of beneficiation have mostly pursued a similar approach. They
argue, often passionately, that increased local processing of SA’s
mineral resources should drive industrialisation because it expands
manufacturing and increases local value addition. They have spent less
time coming to grips with the very real obstacles.
In practice, local beneficiation has stagnated for the past 20 years.
For iron ore, the share of local use plummeted from 35% in 1995 to 10%
in 2015, then flattened out. Exports of iron ore nearly tripled in
volume terms from 1995 to 2023, while domestic sales fell by half. For
platinum, data by volume starts later. Still, from 2015 to 2023 the
local share in sales dropped from 11% to 6% as exports climbed 20% in
volume and domestic sales dropped more than 55%. In contrast, most coal
by volume is used locally, at a rate of 70% from 1995 to 2018 and 80%
since then.
Expanding beneficiation faces two key obstacles. Mineral refineries use
huge amounts of electricity but generate few jobs. And, beneficiation
has only worked internationally (and historically in SA) where lower
mining costs are passed on to downstream producers.
According to mineral resources department estimates, in 2023 metal ores
and coal refineries used a quarter of SA’s electricity output, more than
all households put together. Yet they only employ about 100,000 people,
or 1% of all formal employees. The coal refineries include both Eskom,
Sasol and the aluminium plants, which use imported bauxite and were set
up to take advantage of SA’s (then) relatively cheap coal-fired
electricity. All of the refineries now confront a toxic combination,
from the degraded national grid to soaring Eskom prices, escalating
foreign resistance and coal-fuelled production.
The concept of beneficiation can also extend to downstream producers of
final consumer and capital goods that use metals and chemicals — for
instance, basic steel products such as gates and hand tools; machinery
and equipment; and consumer chemicals and plastic products. That
approach vastly improves the economic calculus. These industries use far
less electricity and together directly create 600,000 formal jobs, or 4%
of all formal employment.
More fundamentally though, the economic logic behind beneficiation is
that SA’s mineral riches make it internationally competitive, whether on
export or domestic markets. Downstream manufacturers share in SA’s
comparative advantage in mining only if they get mining-based inputs at
less than the global price.
In practice, the relationship between domestic and international prices
has varied over time. Domestic prices have not kept up with an
international price spike over the past three years. However, from 2010
to 2021 world markets stagnated while domestic prices for industrial
minerals climbed in constant rand terms — by 10% for iron ore, 50% for
coal and 25% for chrome. Sasol and Columbus Steel own their mines,
making it easier for them to maintain competitive refineries.
Since 2008, downstream manufacturing has faced particularly sharp price
increases for coal-fuelled electricity. Eskom more than doubled its
tariffs in real terms over the past 15 years, while its electricity
supply deteriorated. Meanwhile, ArcelorMittal SA has lobbied to increase
costs for competing mini mills by ending restrictions on scrap exports.
That would ultimately raise prices for manufacturers that rely on long
steel. In effect, it would shift the profit from SA’s scrap away from
steel manufacturers and back to recyclers.
In short, a successful beneficiation strategy has to be more clear-eyed
about the opportunity costs and — even more so — the economic and
political viability of measures to restrain domestic prices for ores and
coal. Otherwise, it will remain an attractive picture, not a reality.
/• Makgetla is a senior researcher with Trade & Industrial Policy
Strategies./
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