Economic Growth Effect Of Chinese Direct Investment In South Africa

With China’s economic strength, China’s economy position in the world is getting more and more improved, and China’s foreign direct investment also grows rapidly,especially for the African region. As the largest economy in Africa, South Africa becomes the first choice of Chinese investment in Africa naturally. 20 years after political reform in South Africa, Economic structure has made revolutionary improvement, and national macroeconomic data has got long-term stable growth. South Africa has become Africa’s biggest economy, and one of the world’s largest emerging economies. But because of a series of political and economic factors at home and abroad in recent years, South Africa’s economic growth slowed down gradually. South Africa has fallen into the plight of low growth, high unemployment, increasing poverty gap, the international credit rating downgrades, the currency depreciating currently. As the most important part in Africa’s economic system, in response to the severe economic situation at home and abroad, the South African government hopes to attract more foreign enterprises to invest in South Africa. As the largest developing countries and emerging markets, China’s direct investment in South Africa not only brings economic vitality into South Africa, but also maintains long-term friendly relations between China and South Africa better, and promotes the healthy development of bilateral economic prosperity, and strengthens the mutually beneficial cooperation between China and other African countries.This paper described the basic concepts and the theory and development of economic growth, and then separately analyzed the overall situation of the South African economy growth and China’s direct investment in South Africa, and introduced the advantages and problems of what South Africa attracts Chinese investment, which paving the way for giving policy recommendations on the paper. Then the paper theoretically analyzed the influence mechanism of Chinese direct investment in South Africa to the South Africa’s economic growth. Through empirical analysis, the paper selected China’s direct investment in South Africa and South Africa GDP from 2003 to 2014 as the data, used statistical analysis and econometric model test, proved influence China’s direct investment in South Africa has no significant effect to South Africa’s economic growth, on the other hand, SouthAfrican economic growth has pulled Chinese direct investment in South Africa, and the paper gave wide range of analysis based on the empirical analysis results. Finally, the policy recommendations were gave for South Africa and China.