China – Latin America and Caribbean relations look forward to a new chapter


Latin America is looking towards China and Asia—and China and Asia are looking right back. This is a major shift: for the first time in its history, Latin America can benefit from not one but three major engines of world growth. Until the 1980s, the United States was Latin America’s major trade partner. In the 1990s, a second growth engine emerged with the European investment boom in the region. Now, at the dawn of the new century, the emergence of Asia, and in particular China, has the potential to act as a third engine of growth.
Trade between LAC and China took off decisively in 2003 and continues to grow dynamically, experiencing only a minor dip during the 2009 global crisis. Total trade reached US$ 292 billion in 2013, increasing nearly ten-fold from its level in 2003. The result has been a widening trade deficit for LAC, due mainly to subdued Chinese demand for the commodities that make up the bulk of the region’s exports to China.
In January 8th 2015, the first ministerial meeting of the China-CELAC forum opens in Beijing with members expected to discuss cooperation between Latin America and the Caribbean and China as well as the creation of institutions between the 33-member bloc and China. Chinese President Xi Jinping hailed growing ties with Latin America, pledging to use his country's economic clout to support billions of dollars in regional projects and almost double two-way trade to US$500 billion over the next 10 years.
Xi held talks with officials from left-leaning nations in the Western Hemisphere a day after meeting Venezuelan President Nicolas Maduro, who said he received pledges of US$20 billion in Chinese investment in his country's beleaguered economy. Xi emphasised the potential for future growth in ties between China and the grouping of more than 30 nations known as the Community of Latin American and Caribbean States, which together account for one-eighth of the global economy. Along with the targeted increase in two-way trade, Xi said he wants to increase direct investment in the region to US$250 billion over the next five years.
China, the world's second-largest economy, has established itself as a key trading partner with Latin America, buying oil from Venezuela, iron ore and soybean from Brazil, and copper from Chile and Peru. In return, it has provided access to credit and invested in a series of infrastructure projects, including the construction of roads and ports. With China’s manufacturing sector in decline, foreign investment may be the country’s quickest path to economic recovery. In addition to Africa and East Asia, Beijing is pouring big money into Latin America. Chinese projects and investments have been popping up all over the continent, from oil drilling to infrastructure construction. But the payoff that China is seeking isn’t always a financial one.
The new partnerships raise pressure on the United States, which has traditionally enjoyed close economic, cultural and political ties with Latin American countries. While the United States, with $41.5 billion in 2012, is still the biggest foreign investor in Latin America, its level of investment is declining while China’s is rising. China has particularly strong ties with several Latin American nations that have clashed diplomatically with the United States, especially Venezuela. China is Venezuela's largest creditor and has loaned it more than US$40 billion over the past five years, some of which has been paid back in the form of oil deliveries.
China presents both a threat and an opportunity for Latin American emerging markets. On average and despite some exceptions, Latin America is a clear trade winner from Chinese global integration. Almost analyses generally confirm that there is no relevant trade competition between China and Latin America products in the US market. Not surprisingly, countries that export mainly commodities face lower competition, because China is a net importer of raw materials and an exporter of manufacturing products. At the same time, China is a wake-up call for other trade champions like Mexico, as the country has emerged as a major exporter at both the labour-intensive, low technology and, increasingly, at the knowledge-intensive, higher technology end of the product spectrum.
Despite risks and challenges, China’s economic presence in LAC countries augurs more opportunity for regional and global prosperity than would be possible without it.  China’s continued demand for commodities helped many LAC countries survive the financial crisis centered in Europe and the U.S.  China’s increasing FDI in energy and infrastructure can serve to make the region wealthier and thus provide more and better opportunities for U.S. trade and investments./.
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All comments [ 10 ]

Hùng Quân 26/1/15 21:03

China just tries to get all benefits they could, no good for any partner, that's why they can't build a strong coalion like US.

Huy Quốc 26/1/15 21:08

Since the turn of the century, China’s trade with Latin America has boomed, going from $10 billion in 2000 to $257 billion in 2013.

Vân Nhàn 26/1/15 21:11

Latin's countries should be alert with China, One day, they will use economic interests to take political influence.

Lê Tín 26/1/15 21:13

Damn China brings no good at all!

Phạm Hiếu 26/1/15 21:15

China presents both a threat and an opportunity for Latin American emerging markets. And I think threats and challenges will be much more than good things.

Quân Hoàng 26/1/15 21:17

Currently, China’s Latin American play is purely about economics. With time, this will certainly change. Economic integration has proved to gradually affect culture and politics.

Quốc Cường 26/1/15 21:21

China-LAC engagement in the coming years will largely be shaped by China’s domestic demand, as it has been for more than a decade. The region’s commodities and export markets still drive the economic relationship.

Hoàng Lân 26/1/15 21:25

I don't believe in future of these relations. China today is a slowing economy whose leaders will be focused primarily on domestic growth and employment.

Quốc Kiên 26/1/15 21:33

Hope Latin America's countries will soon recognize the China's true face.

Huy Lâm 26/1/15 21:38

While the bulwark against Taiwan’s influence may no longer be needed, Chinese interests align with those of some Latin American countries in a common desire to try to keep the United States in check.

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