Research On Sino-South African Trade Complementation In Goods

Abstract:As members of the BRICS, both China and South Africa have experienced rapid growth in domestic economy as well as bilateral trade. In Post-Crisis era, the geographic distribution would shift to developing economies to a larger extent. This paper studies the trade complementation between China and South Africa and the cause of it. Then an empirical analysis is done to examine the effect that trade complementation has on bilateral trade volumes in goods. Finally, political advice is given in order to better enhance Sino-South African trade development.The paper starts from measuring the trade complementary level of China and South Africa, by adopting Trade Combined Degrees, Revealed Comparative Index, Intra-Industry Trade Index and Trade Complementary Index. Basing on Theories of Factor Endowment, Competitive Advantage and Intra-Industry Trade,5factors are picked to explain the cause of trade complementation. According to the study, China and South Africa differ a lot in production factors and industry competitiveness, while sharing some similarities in domestic consuming demand, therefore the trade complementary mode is mainly inter-industry trade with a small part of intra-industry trade. For classified products, China has the comparative advantages in export of labor-intensive goods, capital-intensive goods and some technology-intensive goods. On the other hand, South Africa has the comparative advantage in primary products such as raw material and resource. There is also demand for intra-industry trade in products like machinery and transport equipment.Following that, an empirical research is done on the effect which trade complementary has on Sino-South African trade volumes in goods. Picking five trade complementary factors as explanatory variables for linear regression, filtering by backward method, final results are received. It shows that trade complementary facilitate the development of Sino-South African trade volumes in many ways. Inter-industry trade formed by labor resource endowment difference, as well as intra-industry trade formed by market demand similarities and closer manufacturing capabilities, both have positive effect on growth in Sino-South African trade volumes.In conclusion, there is great potential in the development of Sino-South African trade in goods. It is of mutual benefit to play the trade complementary and take actions together, so that cooperation can be reached, trade friction can be reduced, and the development of the two countries can be facilitated.