South Africa’s Special Economic Zones as Destinations for Chinese Investment: Problems and Possibilities

China increasingly dominates global manufacturing and South Africa, while the largest industrial power in Africa, has lagged with the manufacturing sector’s share of GDP declining in a low growth economy. China’s industrial development has been synonymous with SEZs which operate on a vast scale. Chinese firms are increasingly investing in Africa and a growing share of this investment is in the manufacturing sector and also within SEZs. South Africa has a system of SEZs, which are marginal to overall economic development and have achieved little success in attracting transformative investment. Although firms such as FAW and Hisense do have plants in these zones, Chinese investment in South Africa’s SEZs has been limited although the South African economy, more broadly, is an important recipient of Chinese FDI. In this milieu, the prospect of outward investment from China and also the possible relocation of Chinese firms to South Africa has attracted significant attention. For example, a leading business think tank, the Centre for Development and Enterprise (CDE) has proposed an EPZ at Coega in the Eastern Cape with the explicit aim of attracting Chinese industrial jobs which may be relocating to lower wage countries. The chapter, therefore, sets out to critically assess the performance of South Africa’s SEZs and then goes to consider their potential as bases for Chinese firms. The chapter concludes by suggesting some ways in which this investment could be significantly enhanced.