An Empirical Analysis Of China 's Trade Effect On Direct Investment In South Africa

As the basic forms of the international division of labor, international trade and foreign direct investment has become the two most important international economic activity 。 Especially after the 1960 s,International direct investment plays important role in national economies with the situation of economic globalization and regionalization trends.Both developed and developing countries are actively involved in foreign direct investment.In recent years, emerging markets and developing economies have prominent performance in foreign direct investment, especially the size of "BRICS" s foreign direct investment which including Brazil, Russia, India, China and South Africa continue to increase in the world. And, the "BRICS" play an increasingly important role in foreign direct investment of the world. In particular,China’s foreign direct investment is very outstanding.This is because with the development of economic globalization,the growth of foreign exchange reserves,as well as the growing strength of Chinese enterprises,Chinese companies continue to expand the scale of foreign direct investment.Facing complex and volatile international situation, the Chinese Government is actively promoting the construction of “One Belt One Road ”to accelerate the outward foreign direct investment.The inside power of Chinese enterprises "going out" is strengthening.2014, China’s foreign direct investment hit a high record of $ 123.12 billion, and the value of two-way direct investment close to balance for the first time.But with China’s economic development has entered a new normal, and the reform of the economic structure are deepening, the development of China’s foreign trade is facing great risks and challenges.So,we need to develop and expand the overseas trade market urgently.China and South Africa have great complementarity in bilateral trade.In oder to implemnt tade diversification,South Africa which has the fast pace of development and the most development potential has become an important choice of us.And,as the most important countries Sub-Saharan Africa,South Africa which has abundant natural resources and vast market potential plays an important role in Africa.In recent years, China’s direct investment in South Africa has maintained rapid growth.And the field of foreign direct investment has become widely which has expanded from resources and energy to other industries slowly.At the same time,bilateral trade ofChina and Africa developing fastly. In the view of theory, the Outward Foreign Direct Investment can affect the trade between China and Africa. In order to provide valuable advice and guidance to China’s development of outward foreign direct investment and expanding market of investment,this paper study the trade effect and the investment strategy of China’s outward foreign direct investment to Africa based on the current situation of Chinese direct investment and trade in South Africa.Firstly,sort out the materials of the theory Foreign Direct Investment and Trade Effect based on referencing domestic and foreign literature.Secondly,Overview of the development of Chinese direct investment and trade in South Africa.And then,subdivided the trade between China and South Africa into primary products and manufactured goods trade,comprehensive study the primary products and industrial product’s trade effects of direct investment of China to South Africa.The results shows:Either in terms of primary products or industrial products,there is a positive correlation between Chinese direct investment in South Africa and the import and export trade volume significantly.As well as,Chinese direct investment in South Africa can improve the imports and exports of primary and industrial products.And,the creation effects of import is bigger than export.So,we can repute that there is trade complementarity effect between China’s direct investment in South Africa and China’s trade with South Africa.At last,According to our empirical results and the current economic situation, we put forward reasonable countermeasures and suggestions at macro and micro level to promote the development of China’s direct investment in South Africa.