Rapid growth of bilateral trade will put China in place to influence the value of the currency of South Africa, an economic powerhouse of Africa, a market analyst said on Tuesday.

China will in future have a greater role to play in the value of the South African rand because of rapidly shrinking trade with South Africa's traditional trading partners, said James Robertson, Standard Chartered Bank's Head of Global Markets in South Africa.

South Africa's trade with China is growing at an annual compound rate of 26 percent, compared with the compound annual decline of 26 percent in trade between South Africa and the United States and the 4 percent drop between South Africa and Britain, Robertson said, quoted by local online business news service I-Net Bridge.

He noted that the current composition of the trade weighted rand basket was still primarily made up of the euro (36.38 percent) , U.S. dollar (15.47 percent), British pound (15.37 percent), the Japanese yen (10.43 percent) and 22.35 percent in other currencies.

Given the febrile rate of increase in trade with China, the South African Reserve Bank (SARB), the country's central bank, could start re-looking at adding the Chinese yuan into this mix very soon, Robertson said.

"As the trading band of the yuan is widened, and eventually becomes a true floating currency, we would then probably see it contributing a larger portion of the basket," he said.

Robertson said what happens in China will probably set the course for South Africa for at least the next two decades, as the 1.3 billion Chinese consumers enter a material-intensive consumption phase similar to the one western Europe went through in the 1950s and 1960s.

South Africa is China's top trading partner in Africa and its exports to China, mainly resources products, have increased four- fold in the first nine months of 2005 to 22 billion rand (3.6 billion dollars) from only 5 billion rand in the first nine months of 2004.

Source: Xinhua