Latin America and China: What Do They Mean for Each Other?

Event co-sponsors: the Institute of the Americas, the China Institutes for Contemporary International Studies, and the Wilson Center’s Kissinger Institute on China and the United States

The basic contours of the relationship are well known. The last decade has seen an explosion in trade between China and Latin America, coupled now with an accelerated pace of investment. This has been fueled by growth rates in China of an average of 10 percent a year beginning in the year 2000, and massive, historic reductions of poverty in China that have vastly increased the size of the internal market. The majority of the trade between China and Latin America has consisted of exports from Latin America of primary commodities, food, and energy, while China’s exports to the region consist mainly of manufactured goods. Most analysts agree that Latin America’s economic resilience in the face of the 2008 global recession was due to ongoing and strong Chinese demand.

Nonetheless, the imbalance in the trading relationship has given rise to a host of concerns about exaggerated dependency of many Latin American countries on the Chinese market, such as what happens if Chinese growth slows considerably, and with it, demand for Latin American commodities? Other concerns include the return to patterns of development reminiscent of the 18th and 19th centuries, something that magnifies vulnerabilities to external shocks and unfair trade practices by the Chinese—both the dumping of products such as steel and the discrimination against exports from the region with a higher value added. Others counter, however, that the key issue for Latin American countries is not the structure of trade, but rather, how the surpluses are used,  whether they are channeled into investments in education, infrastructure, research and development or other areas that would contribute to long-term productivity gains.

The debate is here to stay.  Indeed, as the United States and Europe are mired in recession, many scholars argue that we are witnessing nothing less than a major transformation of the international system, a transfer of power from West to East.

Read remarks from the event speakers here: http://www.wilsoncenter.org/publication/Latin-America-and-China-What-Do-They-Mean-for-Each-Other-2011