NEWS

Chasing the Chinese Tigers: South Africa Needs To Protect Itself Against Cheap Chinese Subsidised Imports Even From Within Its Own Continent

Safeguard protection is granted whenever an industry is suffering from serious financial injury, caused by an increase in imports, which was because of unforeseen developments stemming out of the 1994 GATT negotiations, to which South Africa was a signatory.

Safeguard measures are enacted to ensure enough breathing room for the domestic manufacturing industry in distress to adjust and become more competitive, usually within a period of 3-6 years.

For this remedial protection to be effective, these safeguard duties need to be monitored and enforced across the board. However, as part of the Safeguard Agreement, the Safeguard Regulations creates an “Exempted Countries” list. This exemption has shown to provide a safeguard duty-free roue for imports from countries which are developing in nature and from where imports did not originate prior to the imposition of the safeguard duties.

The” circumvention” becomes a problem when the bigger importers switch their sources from imports from the traditional exporting countries like China and Russia, to smaller, developing nations, like Taiwan and Indonesia, effectively bypassing the Safeguard duties in their entirety.
Other WTO member countries would normally act quickly against these changes by removing these “developing nations” quickly once its import volume exceeds the established threshold. No further investigation is required.

In South Africa, the remedial action linked to the imposition of safeguard measures are failing because the officer in charge of this administrative action, the Minister of Trade, Industry and Competition, Minister Dave Patel, fails in his duty to authorise these exempted country removals immediately, or at all in some cases. Imports that reduced because of the imposition of the safeguard duties, with a resultant uptick in local production, regained lost ground within a year of the duties being imposed, rendering the safeguard protection completely impotent.

Below is an import chart, providing insight on how imports of Hexagon Nuts, a product protected by safeguard duties have climbed to almost pre-safeguard levels, because of a lack of action by the government to curb imports from developing nations.

It is a known fact that the South African government is reluctant to act against China to protect its industry against subsidised exports. This reluctance was clearly demonstrated in a 2012 decision by ITAC (the last that ITAC made a determinisation) that prima facie evidence exist that subsidised exports of coated fine paper are injuring the South African market. During consultation with its Chinese counterpart the DTIC intervened and asked the South African industry to withdraw its application.

Since then, nothing has changed. As the South African, and African, economies in general are small and as bilateral trade negotiations between China and its African counterparts take centre stage, China is not short of means to retaliate against any unfair trade action aimed against it, specifically countervailing investigations.

China is again flexing its muscle as it exerts its influence through the African Continental Free Trade Area (AfCFTA). Launched in 2021, the AfCFTA is a landmark agreement aimed at creating a single market for goods and services across 54 African nations, with a combined GDP projected to reach $7 trillion by 2035. It seeks to boost intra-African trade, reduce tariffs, and foster regional value chains in sectors like agro-processing, automotive, pharmaceuticals, and logistics.

Because Africa is rich in mineral resources and knowing China’s appetite as a large consumer of these products, it is only natural that China would aggressively protect its interests in Africa and specifically, South Africa as the so-called gateway into Africa.
It is inevitable that China will significantly influence this landscape through trade, investment, and infrastructure development, aligning its strategies with AfCFTA’s goals while pursuing its own economic and geopolitical interests.

China’s Economic Engagement with AfCFTA

• Trade Dynamics: China-Africa trade reached $295 billion in 2024, with China maintaining a trade surplus ($173 billion exports vs. $110 billion imports in 2023).
• Zero-Tariff Policy: In June 2025, China announced duty-free access for all 53 African countries with diplomatic ties (excluding Eswatini), expanding beyond least-developed countries (LDCs) to include middle-income nations like Nigeria, Kenya, and South Africa.
• Investment in Value Chains: AfCFTA encourages regional value chains, and China is positioning itself to invest in priority sectors. Examples include Chinese automotive company BAIC’s plant in South Africa and the DISCO steel mill in Zimbabwe. These investments align with AfCFTA’s goals but often prioritize China’s market access.

China is successful in Africa because they offer the full package to governments:

• Trade relationships, export promotion and development cooperation are all handled by the Ministry of Commerce.
• Its links with the Ministry of Foreign Affairs are well established as are the connections to state owned enterprises and as a result China is more apt to deliver entire “packages” than private funds and donors from the West.

This influence is predominantly being facilitated through China’s Belt and Road Initiative (BRI). The BRI, launched by China in 2013, is a global infrastructure and economic development strategy aimed at enhancing connectivity and trade across Asia, Europe, Africa, and beyond through investments in transport, energy, and digital infrastructure. Its impact on cross-border subsidies and anti-subsidy investigations is significant, as it has reshaped global trade dynamics and prompted responses from major economies like the EU and U.S.

Africa is particularly vulnerable.
• Development vs. Distortion: While BRI subsidies drive infrastructure and economic growth in developing nations, they also create market distortions, challenging the balance between development and fair trade. (Zimbabwe steel plant)
• Risk of Retaliation: Aggressive anti-subsidy measures may lead to retaliatory tariffs or WTO complaints from China or BRI host countries, escalating trade tensions.
• Trade Policy Evolution: The BRI has pushed major economies to adapt trade remedy frameworks, with the EU’s FSR and U.S. regulatory changes signalling a shift toward addressing cross-border subsidies directly.

China’s bi-lateral approach rather than multi-lateral negotiations limits continental co-ordination. This will inevitably lead to African countries launching its own trade measures to protect industries, often funded through BRI.

Africa, through Chinese bi-lateral influence, is adopting the mantra that industrialisation can only happen behind high tariff walls and state interventionism. It will therefore aim to use smart protection” tools such as trade remedies to develop and shape its own industrial policies.

For South Africa, this calls for a new approach by using both policy intervention and anti-subsidy measures to protect its industries in instances where Chinese subsidies directly or through targeted investments on the African continent are causing injury to critical industries.

The AfCFTA offers profound opportunities for trade and investment throughout the continent. However, China’s influence is profound. African countries will often (given the current geopolitical landscape) leverage its partnership with China to advance China’s own resource driven agenda.

A new trade war is looming, that will test the resolve of the noble objectives set out in the AfCFTA.
South Africa needs to be prepared.

-George Geringer