Taking a long-term view
Journalists, analysts, and economists have long been saying that China will get old before it gets rich. During January, this was reiterated when China recorded its first population decline in 60 years, and although it is still a country of around 1.4 billion people, UN population estimates show that it could decline to 800 million by 2100. In terms of age, the Chinese population is skewed towards the older side of the spectrum. It is estimated that by 2035, roughly 400 million people, or almost 30% of the population will be above sixty. This will put immense pressure on (state) pension pools which some policymakers in China already highlight as too little to support the increasing numbers of pensioners. By around 2079, the dependency ratio within China is expected to breach 1. This means that there will be more Chinese citizens that are not of working age than there are in the bracket 15-64 years, resulting in negative effects on disposable income. This is likely to affect demand for non-essential/luxuries such as fruits, nuts, and red meat. China as a destination for South African exports
Over the past two decades, rising income levels and urbanisation have resulted in China becoming the world’s largest agricultural importer. This has also resulted in China being a strong market focus for South African industries such as Red Meat, Table Grapes, Nuts, Beef, and Citrus. Considering the demographical dynamics explained above, combined with current obstacles in our traditional export markets such as the EU, new and fast-growing markets such as India and Sub-Saharan Africa must be developed. Recent experience, with the negotiation of the protocol for lemons into China, has however shown that it can take up to 15 years to gain access to a new market. In our view, traction on the African Continental Free Trade Agreement (AfCFTA) provides opportunities. This and access to fast-growing markets such as India needs to be prioritised. To this end, the table to the right indicates current tariff and non-tariff barriers in selected fast- growing markets. These markets could provide lucrative alternative market opportunities if export requirements into these markets are understood and constraints on exports into these markets are addressed or included in negotiations.
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