Jaya Josie, Advisor, China Africa Center, Zhejiang University International Business School (ZIBS), Adjunct Professor University of the Western Cape and University of Venda
The year 2023 started off with celebrating the 25th Anniversary of official diplomatic relations between China and South Africa in January. It was also the year of multilateralism in practice in the times of global conflict.
Multilateralism is an approach that seeks to avoid political disputes among countries and seeks to ensure a better utilization of global resources. In 2023 the world was faced with the threat of another world war and global conflagration with the ongoing conflict in Ukraine and the war in the Gaza and the West Bank in Palestine.
In both instances China and South Africa have sought to reassert the principles of multilateralism in an attempt to end both conflicts. Using the multilateral platforms of the United Nations, the African Union (AU), BRICS group, other fora China and South Africa have worked to promote the idea of peace negotiations using a multilateral approach to development and global governance.
Both countries have sought to build a more equitable and just architecture to meet the common aspirations of all countries. Over the past year China has worked tirelessly to promote development, peace, cooperation and collaboration in the Middle East, Southeast Asia, Eurasia, and Africa through dialogue and initiatives such as the BRICS and the Belt and Road Initiative (BRI).
In Africa South Africa has played a key role in promoting and coordinating peace initiatives, the African Continental Free Trade Area (AfCFTA) and, even participating in peace initiatives in resolving the devastating conflict between Israel and Palestine.
In an interview in the Wall Street Journal in 2015, President Xi Jinping pointed to the necessity for a multilateral approach to development and global governance “to build a more equitable and just architecture that meets the common aspirations of all countries.” (Wall Street Journal, 22.09.2015).
He went on to say that, “The dreams of various peoples,…, are sources of inspiration for them, and all these dreams create important opportunities for China. He highlighted China’s inextricable integration in the world economy as an important element in this new path and China’s commitment to a more multilateral approach to development.
“In today’s world, it is impossible for China to develop on its own; only when the world thrives can China prosper. China has never been absent in efforts to promote world economic recovery, seek political settlement of international and regional hotspots and respond to various global problems and challenges. This is what the international community expects of China, and to do so is China’s responsibility”.
It has been a momentous year in many respects for both China and South Africa with both countries trying to ensure their commitment to multilateralism in the midst of geopolitical conflicts in Europe and the Middle East.
The year was also a year that saw major economic and political changes in Africa, Europe, Latin America, and Asia. Following the 15th BRICS Summit in August 2023 held in South Africa, the BRICS group became a strong contender for leading a new multipolar group that could promote multilateralism.
The original five members of the BRICS group invited Egypt, Ethiopia, the United Arab Emirates, Saudi Arabia, Iran and, Argentina to join the group in January 2024. Another major outcome of the 15th BRICS Summit was the resolution for BRICS member states to reduce their vulnerability and dependence on the US$ as the dominant reserve currency for trade and, rather use own currencies for trade and investment.
The BRICS New Development Bank immediately accepted and adopted the policy so that member states may use own currencies for raising debt and investments. Today many countries in the Global South and some BRICS countries feel exposed because the US$ is being used as an instrument to exert political pressure on countries through sanctions.
The year also saw China and South Africa consolidate their relationship from a strategic partnership, to a higher level comprehensive strategic partnership. Both countries are currently working towards a stage of building a high-level China-South Africa community with a shared future.
Through this partnership the countries will move towards cooperating on key issues of trade and investment to address some of the major mutual challenges. For South Africa and Africa the challenge of sustainable development with high unemployment, inequality and poverty remains top of the agenda.
The BRICS group provides a multilateral alternative that many states see as a viable alternative to the current world order. Although Argentina has subsequently declined membership of the group following the election of its new President, there are at least fourteen other countries that have submitted applications to join the group.
Reports in 2023 by the IMF and the World Bank both projected that the BRICS collective economic performance and geopolitical relevance surpassed the G7 and other western dominated groups. South Africa, asserting its leadership role, led an African Union delegation on a peace mission to Ukraine and Russia in 2023 following China’s and Brazil’s initial attempts to promote peace talks and seek a negotiated settlement.
In the Middle East China played a key role in negotiating peace between Iran and Saudi Arabia and is negotiating an end to the conflict between Yemen and Saudi Arabia. In the Sahel region of Africa western influence is diminishing as countries there seek new alliances and partners to extricate themselves from extreme underdevelopment and poverty.
Further to the East of Africa on 7 October, the Palestinian struggle for self-determination exploded in the Gaza and the West Bank with devastating consequences for the Palestinian and Israeli populations with over 21000 Palestinians and almost 1300 Israelis killed so far.
South Africa has brought a case of genocide against the Israeli government for its attacks on civilians, especially children and women. At the United Nations General assembly there was a majority vote against Israel’s bombardment and attacks on Palestinians.
In the UN Security Council China has registered its opposition to killing and displacement of innocent Palestinian civilians. Both countries are providing crucial humanitarian aid and support for the affected Palestinian population. Both countries are urgently pushing for a ceasefire and an end to hostilities.
On the economic front both China and South have taken their comprehensive partnership to a new level with increased two-way trade and investment. In particular 2023 saw China commit to support South Africa overcome its challenges of electricity blackouts or loadshedding that has been plaguing the country. New trade agreements were signed and the countries are exploring the expanded use of own currencies to move away from dependence on the US$.
Over the past year SWIFT, the financial messaging service, reported in November 2023 that the Chinese Renminbi has become the fourth most active currency for international payments by value. The Renminbi was used in 4.61% of transactions and overtook the Japanese yen’s share that has decreased from 3.41% from 3.91%.
In the meantime, according to IMF data, the share of US$ in central bank reserves has continued to decrease and, dropped to 59.2% in the third quarter of 2023. This drop seems to come in the midst of a fearful trend, especially among emerging and developing countries, of over-dependence and vulnerability to the US$ and the Euro in the light of the US and EU sanctions against Russia in 2022 and 2023.
The SWIFT report also revealed that other top currencies declined in keeping with the US$’s slide from 47. 25% in October 2023 to 47.08% with the euro’s share falling from 23.36% to 22.95%, and the UK pound dropping to 7.15% from 7.33%. Alarm is rearing its head amongst Western financial institutions as many countries move towards using own currencies.
In 2023 the European Bank for Reconstruction and Development (EBRD) warned that Russia’s increasing trade using the Renminbi in response to Western sanctions may erode the strength of the US$. This is a real concern for financial institutions whose bond holdings and investments are in the US$.
The South African Reserve Bank (SARB) is one of the 30 central banks that holds a bilateral currency swap agreement with the People’s Bank of China (PBC). Such agreements facilitates the use of cross-border payments and borrowing using own currencies.
While 2023 was indeed a difficult year with many global conflicts and other upheavals, South Africa and China sought to find ways through the BRICS and the BRI to create conditions for a more multilateral approach that avoids political disputes but creates conditions for a common and shared prosperity for developing and emerging economies.
The new comprehensive strategic partnerships between China and South Africa and, between China and other countries in Asia, Africa and Latin America provides the opportunity in 2024 for the world to witness that the international relations can overcome challenges through the peaceful use of multilateralism as a better way to use global resources in the interests of humanity in general.