Every now and again, I pick up some object and find that, to my astonishment, it is not made in China. It seems that so much is, from cheap clothing to iPhones. So it’s not surprising that China is now South Africa’s biggest trading partner. Perhaps the big increase in trade is behind an assumption that the Chinese have bought into South African resources big time to fuel their seemingly endless expansion.
Some of the participants at a recent Business Journalism Master Class held at Rhodes University and sponsored by Pearson plc, which owns the Financial Times, were surprised to find out that the perception is incorrect.
The figures, from the Reserve Bank Quarterly Bulletin, tell the story. South Africa’s long-term investment in China, its stock of foreign direct investment (FDI), is more than three times what the Chinese have brought into South Africa.
South Africa’s stock of outward FDI in China at the end of December 2009, ie all that has been invested so far, in China stood at about R101 billion. China’s investment stock in South Africa was about $34 billion.
The week-long master class, whose theme was South Africa as an emerging market and the Brics, was rich in news, views and insights.
Since my Rhodes University project, the Centre for Economics Journalism in Africa hosted the master class, I was glad it provided an opportunity to take an in-depth look at this topical subject, as well to provide an opportunity for business journalists to share knowledge and to experience the coaching skills of Graham Watts. Watts is long-time FT journalism coach, an alumnus of Rhodes and once a teacher at what is now the Rhodes School of Journalism and Media Studies.
He, the FT’s economics editor, Chris Giles, the editor of FT Tilt, Stacy-Marie Ishmael, FT managing editor Lisa MacLeod, and Business Day editor Peter Bruce, all came down to Grahamstown to take part, an unusually strong teaching team. The Journ School’s Prof Anthea Garman, Niki Cattaneo, from the economics department, and I, provided the Rhodes University input.
By the end of the course, the 14 senior to mid-level journalists from a range of print publications and private sector broadcasters probably knew a bit about Brics and emerging markets, and a whole lot more about journalism, specifically business journalism, than when they started.
Speaking for myself, I realised that I just had not been thinking enough about emerging markets. Somehow, it hadn’t really sunk in for me how big emerging markets have become on the world stage, and what a big part South Africa still plays on that world economic stage.
Giles presented the IMF figures to show just how the Bric countries stood out when measures by geography, population or economy size. All of them have massive land areas. All have big populations. All have respectably big economies. And two, China and India, have high growth rates.
South Africa, by comparison, comes about 25th on almost all of these measures.
Giles poured cold water on the idea that South Africa belongs in the Bric club of Brazil Russia India and China, despite having accepted the opportunity to join this loose grouping.
Speaking at an evening talk that formed part of the master class, Giles pointed out that so far Bric summits had not resulted in any substantial initiatives. Noting that the Bric concept had been invented by Goldman Sachs chief economist Jim O’Neill, he cautioned journalists not to fall for marketing hype around the Brics group. However, he expected coverage to increase. “Don’t treat Brics as an aligned group,” he warned, “and look at the individual tensions and interests”. He suggested that reporters treat Brics like the G7 or G20 groups, and give them more attention if they actually achieved more.
This is not to say that what the Bric countries represent is unimportant. Ishmael the next evening in her public talk comprehensively depicted emerging markets’ increasingly important role in the global economy, citing forecasts that emerging markets, which account now for one-third of the global economy, would grow to make up nearly half by 2020.
Economists, she said, believe they will become the new engines of the global economy, with growth rates that exceed those of developed economies. Also, They will have an increased competitive edge as there is catch-up in technology. Investors, the forecast is, will allocate up to half of their portfolios exclusively to some kind of emerging market exposure, directly or indirectly. And the dollar’s role as a reserve currency might even be challenged.
Ishmael quoted from a Citi report that China should overtake the US to become the largest economy in the world by 2020, then be overtaken by India by 2050. Nigeria would be among a group of countries with the most promising per capita growth prospects, and developing Asia and Africa would be the fastest growing regions, thanks to population and rising income, with what are today’s advanced nations coming last after all the other regions. Emerging markets’ market capitalisation could surpass that of the developed world, growing from $14 trillion today to $80 trillion in 2030.
Turning to Africa, Ishmael said that though the African consumer market was still small in relation to the other Bric countries, for example, Africa saw greater absolute growth in consumption than Brazil or India between 2000 to 2008. And African per capita GDP has grown from about $2 000 to $3 000 since the year 2000, portending sustained economic growth in future from a middle class with discretionary income.
The online journal Ishmael edits, is designed to reflect this “tilt” in the world economy. It’s also part of the FT’s strategy to move to providing online paid-for content.
One thing that struck me about the way that the FT journalists are thinking is that our relatively unscathed — yet, perhaps — newspaper market may have led us to be a little bit too comfortable. The FT is serious about creating content for the web and making it pay. MacLeod explained how they were doing it with a managed access pay wall. The Economist, also half-owned by the Pearson group, recently published a special feature on the news industry in which pay walls are discussed in detail.
The journalists attending this course found, I have an inkling, the practical tips on reporting and MacLeod’s talk to be the most interesting sessions of the week, along with Bruce’s insight of just what he wants from his own staff. Bruce was also passionate about journalists giving business, which isn’t always big or bad, a break and trying to imagine just what it takes to run one.
As the host, I think the initiative was a model of a certain kind of journalism education intervention that provides topical content and teaching about journalistic practice.
Best of all, the participants met professional journalists from one of the most highly regarded journalistic organisations in the world to discuss journalism. Not some special brand of journalism, however. Anyone on the course unacquainted with the “Pink ‘un” as the salmon-coloured newspaper used to be jocularly known would have been surprised to find that the FT is not concerned solely with stocks and shares and how it tries its utmost not to bludgeon readers to death with jargon and masses of figures.
Moreover, anyone attending the course would have heard how hard it is trying to add value to information, which is the only strategy that will ultimately help professional journalism triumph over the rapid and massive technological changes that threaten the old business models of news organisations.
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