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The impact of chinese import penetration on the south african manufacturing sector

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  • Lawrence Edwards

    ()
    (School of Economics, University of Cape Town)

  • Rhys Jenkins

    ()
    (School of International Development, University of East Anglia)

Abstract

The rapid growth in imports from China over the past decade is seen as a key factor contributing towards the relatively slow growth in output and the decline in employment in South African manufacturing during this period. Yet the effects of Chinese trade may be complex and differentiated across sectors. To account for these differential effects, this analysis draws on a database of 44 manufacturing industries covering the period 1992-2010. Two approaches – a Chenery-type decomposition and econometric estimation – are used to evaluate the impact of Chinese trade on prices, production and employment in South African manufacturing. Chinese penetration of the South African market is shown to have increased rapidly over the past decade, in part due to displacement of imports from other countries, but more importantly at the expense of local production. Exports of manufactures to China did not add significantly to industrial growth in South Africa, whereas labour-intensive industries were particularly badly affected by Chinese imports implying that the negative impact on employment was more than proportional to the output displacement. However, we also find evidence that Chinese imports contributed towards lower producer price inflation in South Africa, which in turn will have moderated increases in consumer prices and helped to curtail production cost increases.

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File URL: http://www.opensaldru.uct.ac.za/bitstream/handle/11090/618/2013_102.pdf?sequence=1
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Paper provided by Southern Africa Labour and Development Research Unit, University of Cape Town in its series SALDRU Working Papers with number 102.

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Date of creation: 2013
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Handle: RePEc:ldr:wpaper:102

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Cited by:
  1. Jenkins, Rhys & Edwards, Lawrence, 2013. "Is China "crowding out" South African exports of manufacturers," SALDRU Working Papers 107, Southern Africa Labour and Development Research Unit, University of Cape Town.

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