China's impact on South African trade and inflation
Development Southern Africa
South African Reserve Bank, Pretoria, and Graduate School of Business, University of the North-West, Mafikeng Campus, South Africa; Economist, Research Department logan, South Africa
There has been much controversy about the impact of Chinese growth on the rest of the world. It is generally accepted that China has a dampening effect on global inflation through the supply of cheap products. On the other hand, imports from China could displace domestic production and hence have adverse effects on economic growth and employment. Thus, the question of whether a country benefits from trading with China is a country-specific issue. The results in this paper indicate that limited short-term costs have resulted from the strengthening of trade relations between South Africa and China. As far as inflation is concerned, the paper does not find convincing empirical evidence at the aggregate level for inflation in China leading to domestic price changes. At the disaggregate level, however, there appear to be stronger sector-specific linkages between prices in China and South Africa. ©2011 Development Bank of Southern Africa.
economic growth; employment; inflation; international trade; trade flow; trade performance; trade relations; China; South Africa