WHILE South Africa’s economy is directly exposed to lower Chinese’s growth through declining demand for minerals and metals, the indirect and less obvious implications pose graver threats still.
Whether China slows or stumbles, it will substantially adjust its policies and economic model in ways which will demonstrate that a new economic era has begun.
The deck is being reshuffled and the dealer has announced a new game. It’s not that SA has been dealt weak hands in the past but rather it has played them poorly.
A new round is beginning and careless play has left this country with too few chips to benefit from bluffing at the Brics table or heading up the African Union parlour. Rather the nation’s policy makers must rapidly grasp how the game has changed.
For many years China’s impressive growth rates have refuted analysts’ predictions of a coming downfall. With recent data making clear that the country’s growth is slowing, the gloomy scenarios now being concocted seem less far-fetched. Each of the world’s dynamic economies has its own unique characteristics but they have all used aggressive strategies to spur growth. China has proven the most resilient of major economies but now that the economies of North America and Europe which drive global consumption are slowing further, China’s export-reliant growth model will lose at least some of its vigour.