CEPAL
CEPAL Review 2013
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  • China and Latin America and the Caribbean: building a strategic economic and trade relationship

  • Osvaldo Rosales; Mikio Kuwayama
  • 2012
  • Signature: LC/G.2519-P
  • 235 pp.
  • Sale N.:E.12.II.G.12
  • ECLAC books
  • ECLAC books No.114
  • ISBN: 978-92-1-021082-9
  • CEPAL
  • E-ISBN: 978-92-1-055362-9
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The economies of China and of the Latin American and Caribbean region are the current global growth poles and, over the coming years, will grow twice or three times as quickly as the industrialized economies, which will have to adjust to slower growth and higher unemployment.

The present juncture offers an opportunity to rethink global and regional partnership strategies and to put greater emphasis on South- South ties in trade, foreign direct investment (FDI) and cooperation.

In this document, the Economic Commission for Latin America and the Caribbean (ECLAC) posits that China and the Latin American and Caribbean region now enjoy a sufficiently mature relationship and are poised to make a qualitative leap towards a mutually beneficial strategic alliance.

The Latin American and Caribbean countries must redouble their efforts to diversify sales to China, embedding more value and knowledge into their exports, and to stimulate business, trade and technological ties with their Chinese counterparts. They must also promote Latin American investments in the Asia-Pacific region in order to build the region's presence in Asian value chains, focusing on China.

Trade and investment ties between China and Latin America and the Caribbean have continued to multiply. In 2010, the value of bilateral trade amounted to some US$ 200 billion and, during the last decade, the region was China's most dynamic trading partner.

Now a key trading partner for the region, China is already the largest importer of goods from Brazil and Chile, and the second largest in the case of Costa Rica, Cuba and Peru. It is also the third-largest source of goods imports for Latin America and the Caribbean, accounting for 13% of the region's imports. At the same time, the Latin American and Caribbean region has become a major destination for Chinese FDI.

This publication looks at recent developments in trade between China and the Latin American and Caribbean region with respect to countries, sectors and goods, as well as Chinese FDI in the region.

The analysis shows that while Chinese exports are composed principally of manufactured goods, Latin America and the Caribbean primarily exports raw materials.

The Asia-Pacific region has entered a second stage of economic integration in which it is seeking a greater synergy between the de facto (market-driven) and de jure (government-driven) dimensions of this process. This integration process, based on trade and investment ties, and now also bolstered by trade agreements, would put Latin America and the Caribbean at a disadvantage if those recent trade agreements diverted trade flows away from the region, taking a toll on exports. The countries of the region must without delay adopt a strategy —incorporating trade agreements— for integration with Asia-Pacific.

Despite the region's closer trade and investment ties with China, the quality of its trade integration into the global economy has not improved. The expansion of the sectors associated with natural resources has not boosted the development of new technological capacities in the region and the productivity gap with the countries that are considered to be at the forefront in that regard has widened.

The region's trade relationship with China therefore presents both opportunities and challenges. One major challenge is to prevent the growing trade with China from reproducing and entrenching a centreperiphery trade pattern in which China emerges as a new centre and the countries of the Latin American and Caribbean region as a new periphery. What is required, then, is progress towards trade relations that are more in keeping with the economic and social development patterns that this region needs.

The region must tap this historic opportunity to make the investments in infrastructure, innovation and human resources needed to convert the gains derived from natural resources into human capital and international competitiveness. Higher levels of innovation and the endogenous development of technological capabilities should be promoted as a matter of urgency.

The political dialogue between Latin America and the Caribbean, the Asia-Pacific region and China must be institutionalized. The region's countries must recognize the importance of biregional trade and investment and adopt coordinated strategies, either between individual countries or as regional groupings, to strengthen trade and investment ties with the Asia-Pacific region. There is, however, a need for a more coordinated strategy among countries or groups of countries to create a link with China to invigorate trade and investment, and foster a variety of business and technological partnerships, using the impetus of Asian growth to stimulate the diversification of exports and spur the region to close the gap in relation to innovation and competitiveness.

For years, ECLAC, through the Division of International Trade and Integration, has been monitoring and supporting activities aimed at strengthening economic relations between the two regions. ECLAC has participated in the five China-Latin America business summits that have been held and in various academic activities both in China and in Latin America and the Caribbean.

This publication, which it is my pleasure to introduce, is an updated and more detailed version of several reports that ECLAC has prepared on the trade and investment ties between the Latin American and Caribbean region and the Asia-Pacific region.

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