Developments over the last six months have seen a strong shift in the West towards greater contraction and nationalist agendas. Brexit is aimed at separating the United Kingdom from the European Union in an attempt to among other things, regain control over trade and immigration policy. At the same time, President Trump has shocked the world by following through with many of the plans espoused during his election campaign.
Morne van der Merwe, managing partner and the head of global law firm Baker McKenzie's Corporate and M&A Practice in Johannesburg.
In a stark and surprising contrast, China, the largest developing country in the world and the second largest economy, has opted to take a strong stance in favour of globalisation and in particular, economic globalisation.
This stance is evident in China's approach to investment and was further cemented by China's President Xi during his speech at the World Economic Forum in Davos recently. President Xi acknowledged the controversy which economic globalisation is facing, but stated that “we should adapt to and guide economic globalisation, cushion its negative impact, and deliver its benefits to all countries and all nations.”
President Trump's pro-America policies have included a strong stance taken against China and the import of Chinese goods into the United States. The controversial new president has even gone so far as to call China Public Enemy Number One, sparking fears of a trade war in that tariffs would be introduced for Chinese imports.
However, despite President Trump's strongly expressed anti-China sentiments, his actions since taking office have actually benefitted the Asian economic powerhouse. One of the first things President Trump did was to ensure that the United States formally withdrew from the Trans-Pacific Partnership (TPP) with immediate effect. The TPP was intended to be a trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and the United States. This agreement purposely excludes China and is aimed at, among other things, promoting economic growth, good governance and labour and environmental protection in the member states. The United States pulling out of the TPP is a major blow to the agreement and creates a trade lacuna in Asia that China will no doubt move to fill.
While it is still early days in the Trump regime and a tumultuous period in global economic activity, China's strong supportive stance on economic globalisation and it’s clearly articulated and executed intentions to invest in Africa and, in particular, South Africa, bode well for the future of the local mining industry. Increased investment into the mining sector, beneficiation and manufacturing industries will only improve South Africa's economy in the years to come, provided South Africa is able to create an environment agreeable to such investment.
“We are on the brink of the next commodity boom and if timed right there are huge benefits to gain, however, we must first fix the current state of affairs within the industry. In fact, it may be the fruits won from international instability that aid South Africa to fix certain domestic factors and ensure prosperity and longevity of the mining industry,” Van der Merwe says.