ECLAC Highlights Importance and Opportunity in Strengthening Ties between China and Latin America and the Caribbean

The Economic Commission for Latin America and the Caribbean (ECLAC) reaffirmed its permanent commitment to strengthen the ties between the region and China in all its dimensions, during the Second Ministerial Meeting of the Community of Latin America and Caribbean States (CELAC) and China in Santiago, Chile.

During the meeting, in which representatives from 31 countries of the region and China participated, Alicia Bárcena, ECLAC’s Executive Secretary, underscored the strong commitment by the Asian country to seeking economic growth centered on shared prosperity, the combatting of poverty and inequality, the protection of the environment and the principles held in the 2030 Agenda for Sustainable Development.

Before the authorities present, the United Nations high official presented the document Exploring new forms of cooperation between China and Latin America and the Caribbean in which ECLAC analyzes the joint journey since the first meeting of the China-CELAC Forum held in 2015 in Beijing, and the evolution of trade, finance and investment relations. The report also gives a comparative assessment of macroeconomic, environmental, infrastructure, science and technology and social development policies.

The ECLAC senior representative underscored that the Cooperation Plan (2015-2019) was adopted during the first meeting of the China-CELAC Forum, setting the goal of achieving trade of USD 500 billion by 2025.

“According to our estimates, trade between the region and China multiplied 22 times between 2000 and 2013, and in 2017 reached USD 266 billion. This means progress of 53% toward the goal with seven years to reach it,” emphasized Bárcena.

She added that the second goal for 2025 is to achieve foreign direct investment stock between both parties of USD 250 billion and specified that, as of 2017, Chinese direct investment stock in the region reached around USD 115 billion, representing 46% progress toward that goal.

ECLAC’s Executive Secretary pointed out that in the financial arena, China has provided financing over the past decade for a total in excess of USD 141 billion, an amount surpassing that received through institutions such as the IDB or the World Bank.

However, when it comes to trade, the diversification of the export basket to China continues to be a pending assignment for the region, noted Alicia Bárcena.

“We exported only five basic products in 2017 – soybeans, iron ore, copper ore, refined copper and oil – making up 70% of the total value of shipments,” she remarked.

She added that direct foreign investment from China also shows a strong degree of concentration, both in terms of sectors (with mining and fossil fuels represented at around 80%) as well as countries of destination (with only three countries – Brazil, Peru and Argentina – receiving 81% of said investment between 2005 and 2017). This reinforces the pattern of exchange of raw materials for manufactured goods that has characterized trade between the region and China.

“The good news is that Foreign Direct Investment from China to the region increased in 2017, surpassing USD 25 billion, and began to diversify toward new sectors such as food, telecommunications and renewable energies,” she underlined.

The ECLAC senior representative stressed the importance of the Belt and Road initiative for Latin America and the Caribbean, in the first place because in spurring the economies of Asia and Europe, it will increase aggregate demand and, consequently, exports from the region will benefit.

She added that the Chinese initiative “offers us a unique opportunity to shorten the great territorial distance that separates us through better air, maritime and especially digital connectivity, to tighten our trade, investment, tourism and cultural ties.”

ECLAC’s Executive Secretary underscored that China has become a leader of the digital economy and in innovation, with investments surpassing 2% of GNP in research and development, especially in applied research, which has allowed it to move rapidly toward production and export of highly knowledge-intensive goods and services.

She called upon the region to diversify its trade and foreign investment flows with China; to take advantage of China’s technical and financial skills to reduce the serious infrastructure debt in our region; and for cooperation on social issues to eliminate poverty in all its forms by 2030.

She also urged China to support the countries of the Caribbean to obtain concessional loans in order to restructure their high debt.

Finally, Alicia Bárcena emphasized that “today, as China positions itself for a new era, a strategic association of mutual trust is necessary to build an ecological civilization and together make the goals of the 2030 Agenda for Sustainable Development a reality.”

The purpose of the China-CELAC Forum is to promote the development of the Comprehensive Cooperative Partnership between China and Latin America and the Caribbean, characterized by equality, mutual benefit and shared development. It is composed of China and the 33 CELAC member states.