Whatever the merits or demerits of the Brics grouping might be, South Africa can at least count on a friend in China – with deep pockets. The $14.7bn (R193bn) promised to President Cyril Ramaphosa by Chinese leader Xi Jinping is a substantial windfall for the beleaguered economy and as a result, the rand reacted with a degree of enthusiasm not seen for many months.
Given South Africa’s enthusiastic participation in Brics – an acronym for the grouping of the world's leading emerging economies, namely Brazil, Russia, India, China and South Africa – the country is certainly punching above its weight by playing in the same field at China and India. A closer relationship with China – both economically and potentially diplomatically – is likely to cement the broader Brics relationship too along with continued co-operation to a lesser extent with Russia and India.
For South Africa though, the promised package of funds looks more like a rescue package to offset the disastrous state of Eskom’s finances to the tune of almost R35bn. Given the ability of the Eskom meltdown to possibly create either a debt (or currency) crisis – or both – China has come to something akin to a rescue.
By Daniel Silke.
Full story at Fin24.
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