Seifsa issues warning over Chinese loans and investments


Chinese investments and loans need to be better managed in order to achieve the Manufacturing Circle’s aim of creating a million jobs in the manufacturing sector by 2027.

This according to Steel and Engineering Industries Federation of Southern Africa chief economist, Michael Ade, who noted that the association’s “Map to a Million Jobs in a Decade” plan did not take into account China’s increasing significance in shaping economic development.

“The Chinese loans are often shrouded in secrecy, raising fears that local politicians may benefit more than their people,” he said. “Chinese projects often make use of lots of Chinese workers – even on menial jobs – increasing their productive efficiency to the detriment of indigenous labour.”

Additionally, Ade said that recipients of huge Chinese loans or investments risked piling up dangerous amounts of debt, providing a strategic hold by China over the indebted countries.

To mitigate this effect, Ade proposed that Chinese state-owned entities, development banks and investors partner with South African businesses on all fronts in new projects.

“A win-win collaboration should be pursued with the intention of creating jobs and ensuring that locals are given first preference for jobs - and where skills are lacking or unspecialised, efforts should be made to transfer skills to the locals,” he added.

The Manufacturing Circle’s million jobs plan was launched last year as its previous chairman, André Ruyter, had noted that expanding manufacturing’s contribution to the country’s GDP to 30% would create around 800 000 to one million direct jobs, along with another five to eight times that number in indirect jobs.

However, the association’s CEO, Philippa Rodseth, said that business and government needed to work together to increase demand for locally manufactured products in order to realise this goal as without demand, the sector was unable to produce at full capacity.

“We therefore need to increase aggregate demand by buying locally manufactured goods, replacing imports where possible and increasing local producers’ exports to markets outside South Africa,” she said.


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