Chinese are now black--official; Far from calming South Africa's historically choppy racial waters, the decision to officially declare South Africa's Chinese as black has caused a new tempest.

Chinese South Africans at last know where in the Rainbow Nation they belong. After years on a Chinese checkers board, being shunted from the black squares to the white and black squares to the white and back again, they finally have a legal colour status. They're black. But not everybody's happy about it.

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In a landmark Pretoria High Court ruling, Chinese South Africans are now included in the definition of'black people' in legislation designed to benefit previously disadvantaged groups. This means that after more than a decade in no-man's-land they can now, as black people, take full advantage of the Broad-Based Economic Empowerment Act and the Employment Equity Act. The Acts also classify Africans, Indians and coloureds (South Africans of mixed blood) as black. The case was remarkable in that none of the government departments cited as respondents in the case, brought by the Chinese Association of South Africa (CASA), opposed the application and accepted liability to pay the legal costs. The court's finding brings to an end an eight-year struggle by CASA to obtain clarity from government as to whether Chinese South Africans--who were classified as "coloured" during the apartheid era--qualify for the benefits in terms of the two Acts, designed to restore historical injustices in the country.

The ruling means that the Chinese community can now take advantage of BEE (black economic empowerment) and BBBEE (broad-based black economic empowerment) posts and business deals. BUA (the government information service) says the Department of Labour, Trade and Industry and Justice and Constitutional Development initially filed a notice to oppose CASA's application, but conceded to the merits of the case in April this year.

CASA's chairperson, Patrick Chong, was overjoyed at the judgment. He said the community would like to make use of this new-found freedom to create even more jobs for the unemployed. "As Chinese South Africans we were officially classified as 'coloured' during the apartheid era and suffered under the same discriminatory laws prior to 1994. The logical inference was thus that Chinese South Africans would automatically qualify for the same benefits afforded to the 'coloured' group, post 1994. However, this was not the case and the Chinese South Africans have suffered a second round of unfair discrimination by not being sure of their status under the two Acts," he said.

Problem solved? Not really

So, are South Africans happy now that the Chinese identity puzzle has finally been resolved? Not entirely. The court ruling was, in fact, the trigger for an astonishing lash-back by the top echelons in black South African politics and business.

The National African Chamber of Commerce (Nafcoc), a body representing black business, described the ruling as "surprising, irrational, shallow, opportunistic and inexplicable". It was joined by other black business organisations and senior black politicians insisting that only Africans, Indians and coloureds should benefit primarily from black economic empowerment and employment equity. The organisations argue that South African Chinese took no part in the struggle against apartheid and are therefore ineligible for the benefits of BEE.

Since democratic elections in 1994, BEE deals of around R300bn ($41.75bn) have been concluded, to the greater exclusion of the Chinese community. A further R120bn ($16.70) in BEE deals will happen this year and in 2009. That's the cake black empowerment recipients don't want cut into any more slices.

Bhule Mthethwa, Nafcoc's president, worries about the number of Chinese-owned enterprises already in South Africa. "They show a people who, given half a chance, would want to strengthen their foothold in the South African economy," she maintains. "We have always argued that the BEE cake is too small and really only benefits a few." She also worries about the way the ethnic door has been opened. "Where will it end?" she asks. "What about the Italians, and what about the Portuguese? Are we going to broaden the definition to include them?"

CASA's Chong maintains that local businesses are South African and not Chinese. "Their owners have nowhere to go but South Africa. Some Chinese families have been here for more than 150 years."

Most see the issue as a storm in a very small cup of Chinese tea. At most the court ruling will affect some 10,000 South African-born Chinese, less than 0.25% of the country's historically disadvantaged.

BEE no poverty solution

If anything, the racial reclassification has exposed the antipathy of the government towards the South African Chinese, at least that of the South Africa's minister of labour, Membathisi Mdladlana. He was clearly outraged at the court's decision saying the Chinese were guilty of mistreating their mostly black employees, flouted rules and regulations and had only fought for reclassification to take advantage of BEE legislation for enrichment.

The issue seemed all the more sensitive coming in the wake of xenophobic violence that had wracked the country, leaving scores of foreigners dead and maimed.

It is doubtful that he would have made his feelings known quite so forcefully had they not been shared by his cabinet colleagues. And if they were not, they were not officially denied.

The Chinese were content to have their say and retreat into inscrutability. For them the matter seems closed and they now intend to pursue the windfalls they believe are their due now that the BEE doors have been flung open.

The question that remains, however, concerns the degree of 'blackness' that can be ascribed to South African coloureds, Indians and now the Chinese, for the purposes of full economic empowerment. One Indian businesswoman, who should score strongly because of her colour and gender, says for BEE purpose, she is only partially black and appears to score that way in the BEE deals she has been involved with. Speaking to African Business on condition of anonymity, she said she had lost out on empowerment deals for no other reason than for the fact that she was Indian, and not indigenously black, even though she is a third generation South African.

"Our company is successful in only one in 10 bids we make for government contracts," she says. "And yet we know that our financial package was the most attractive and the standard of product and service we could offer was way superior to our competitors. While the government gives the perception that all previously disadvantaged South Africans will compete on an equal footing for government tenders, it is not the reality. Would we stand a better chance if we were to bring black partners onto our board and into our shareholding? Absolutely."

Some academics argue that the ruckus over the Chinese's racial identity is, anyway, a lost cause. Controversial political analyst Moeletsi Mbeki, brother of Thabo, the South African president, maintains that wealth redistribution is no solution to poverty.

"Redistribution can actually accentuate poverty and create social conflict," says the deputy head of the South African Institute of International Affairs. "I was one of the first to oppose Black Economic Empowerment, because if they're going to redistribute wealth, who is going to get what? Where are you going to get that wealth from?"

Mbeki insists that BEE has only benefited top ANC leaders. "It benefits the people in power, but what about the poor? BEE is more of a problem than a solution."

He suggests that the government look at wealth creation rather than "fight the ghosts of the past. The ANC expends a lot of energy with BEE in an attempt to correct the past". In Mbeki's opinion, the only way to go to bridge the gap between rich and poor is to upgrade the education system and concentrate more on developing small and medium businesses. "BEE stops blacks from becoming entrepreneurs," maintains Mbeki. "Black people are not necessarily against capitalism. It is only the model of capitalism promoted by the apartheid National Party that blacks do not like."

He says the ANC has the difficult task of trying to inculcate a capitalist system in South Africa with trade unions and the South African Communist Party as partners in the government.

"The ANC leaders are afraid of the unions--groups like Cosatu and the SACP--they think these groups deliver a huge constituency but they don't," Mbeki says, and points out that while the ANC has been "very good" at establishing a political system and a Constitution, it has not done well in economics. "I never expected them to because they have never run a business."

He says that at least he and his brother, President Thabo Mbeki, had worked in the family's spaza (a small shop) as children. "But when my brother gets kicked out as head of government, you won't have anyone there who has actually managed even a spaza shop."

RELATED ARTICLE: The dreaded 'pencil test'

Aparthied

In apartheid South Africa people were colour classified in white, black and degrees of grey with privilege attaching thereto. Whites were the master race with Indians, Chinese and coloureds somewhat more advantaged than black people.

The problem was in deciding who was pure black, and whose blood was mixed because many coloureds were of very dark complexion. The government got around that problem with the 'pencil test'. This entailed inserting a pencil into the hair, If the pencil stuck in the tightly curly hair, the person was defined Bantu by character, biology and general perception, and their bompas (identification card) would say so. It was often a government-issue pencil that decided where a person could live, whether he sat at the front or the back of the bus, which public amenities he was allowed to use and how he was educated.