China’s trade and investment in South Africa: impacts on economic growth and development

Abstract

This study investigates the impact of China’s trade and investment on South Africa’s economic growth and development. Over recent decades, China has become one of South Africa’s most significant trading and investment partners, influencing key sectors such as mining, manufacturing, and infrastructure. Using a qualitative research approach based solely on secondary data, this study explores the nature, patterns, and implications of Chinese economic engagement within the South African context. Dunning’s Eclectic Paradigm (OLI Framework) forms the theoretical foundation of the analysis, providing a lens through which to understand the ownership, location, and internalisation advantages that motivate Chinese firms to invest in South Africa. The study finds that Chinese trade and investment have contributed positively to infrastructure development, employment creation and economic expansion. However, these benefits are often accompanied by challenges such as limited local value addition, competitive pressures on domestic industries and concerns about longterm sustainability. The research concludes that South Africa can maximise the developmental potential of Chinese engagement by strengthening its regulatory frameworks, promoting skills development and prioritising industrial diversification. Such measures are essential to ensuring that foreign investment aligns with the country’s broader goals of inclusive and sustainable economic growth.