The small Chinese province that could save South Africa

The small province of Hunan is expected to play a much greater role in South Africa-China trade, as exporters look for alternative markets after increased tariffs were imposed on local exports to the United States. 

Hunan already plays a significant role in trade between China and Africa, but the province has now been tasked by the Chinese government to take the lead on trade with the continent. 

South Africa’s biggest banks already have a significant presence in China and Hunan to facilitate financial flows and trade with the continent. 

The traditional ‘Big Four’ of Standard Bank, Absa, Nedbank, and FirstRand all have offices or subsidiaries operating in China to capture the increasing value of trade and financial flows between Africa and China. 

Standard Bank’s head of trade for business and commercial banking, Philip Myburgh, said Hunan Province in central China has emerged as the country’s strategic hub for expanding trade with Africa. 

Myburgh said the Chinese central government and the Communist Party of China have tasked Hunan with leading on this front. The province is quietly transforming how African goods reach Chinese markets.

It also plays a much greater role in how Chinese businesses expand into Africa and is growing rapidly to eclipse larger players such as Shanghai and Beijing. 

Myburgh explained that Hunan, by itself, is a relatively large economy, with a GDP of approximately $670 billion. This would place it around 20th globally, if it were a country, ahead of economies like Switzerland and Poland. 

In contrast, South Africa’s GDP is around $399 billion, ranking between 33rd and 35th, depending on exchange rates.

“The numbers do not lie, and the trade metrics speak for themselves,” Myburgh said. In 2024, Hunan’s trade with Africa exceeded 50 billion yuan ($6.97 billion) for the third consecutive year, the highest among inland Chinese provinces. 

Trade between Hunan and Africa grew at an average annual rate of 14.3% between 2021 and 2024. 

In the first four months of 2025 alone, bilateral trade reached 16.66 billion yuan ($2.31 billion), with 8.65 billion yuan ($1.20 billion) in exports, a 6.3% increase year-on-year.

South Africa is Hunan’s top African partner, followed by Nigeria, Mozambique, Côte d’Ivoire and Morocco. Trade spans diverse sectors, from agriculture and marine products to electric vehicles and high-tech electronics. 

This trade will be boosted by China’s approach to tariffs on African goods, which starkly contrasts with that of the United States under Donald Trump. 

In late 2024, China began implementing a zero-tariff policy that initially applied to 98% of taxable products from 33 least-developed African countries. This has since evolved to 100% of exports from those countries. 

In June 2025, the Chinese government expanded this policy to include 53 African countries, effectively extending zero-tariff treatment across nearly the entire continent.

In Hunan alone, imports from eligible African countries under the 33-nation policy rose by 27.1%, reaching 3.68 billion yuan in early 2025. That figure is expected to increase further following the recent policy expansion.

China can be South Africa’s saving grace

Stronger economic growth from China, which translates to elevated demand for South African exports, can offset the impact of United States tariffs on local goods exported to the world’s largest economy. 

China already consumes 20% of South Africa’s total exports, more than double that of the United States, and is crucially tariff-free. 

Tariffs on South African exports to the United States will significantly impact the local economy. Standard Bank estimates that a 10% increase in duties will result in a 0.1% reduction in GDP growth. 

This may seem small, but the bank expects South Africa’s economy to only grow by 1.1% in 2025, meaning that a 30% increase in tariffs could shave off a quarter of the country’s desperately needed growth.

However, Old Mutual’s chief economist Johann Els explained that the impact will be offset by China’s improved economic performance. 

China, in particular, is critically important, as it is the world’s largest consumer of commodities. Thus, changes in demand for it will impact prices. 

For a commodity-driven export economy, South Africa is heavily dependent on demand for these commodities for foreign exchange earnings and economic growth.

Standard Bank chief economist Goolam Ballim explained China’s vital role in South Africa’s economy in a recent interview with Daily Investor. 

As the world’s largest consumer of commodities and the driver of commodity prices, any weakness in China will impact South Africa. 

“Lower commodity prices from lower demand in China will result in a balance of payments shock to South Africa and other African economies,” Ballim explained. 

“A reduction in volumes and prices of commodities can result in weaker currencies due to this balance of payment shock. Weaker currencies lead to higher inflation that can trigger higher interest rates.”

“Through that, you get a sense of how low commodity prices and volumes can foster a vicious cycle of reduced exports, a weaker currency, high inflation, tighter monetary policy, weaker consumer spending, weaker investment appetite, and slower growth.”

This can also work in the inverse way, with stronger demand from China driving African currencies higher, resulting in lower inflation and faster economic growth.