China's presence in Latin America: Too big to fail?
- By Guo Jie
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E-mail China.org.cn, January 9, 2015
In the current trade relationship between China and Latin America, there are static comparative advantages but the situation also means that Latin American countries only have profit in several categories with potential. In addition, due to China's strong demand, the trade with China will enhance Latin American countries in those domains, but it has naturally led to voices in recent years saying that Latin America may make the same mistakes which happened before in history, like the "raw materials trap" and the Dutch disease. When China needs too much of a particular bulk stock and there are not enough sources of imports, this clearly is "non-traditional and insecure."
When I talked to Latin American academics and officials, I found that there was no resonance for "mutual complementarity in trade." Some even questioned it or rebutted it. The reason, simply put, is that both sides interpret "complementarity" in their own way. In fact, considering the regional and international professional differences, for those that export bulk stock and mid- and low-end products and have traditional trade protectionism policies (such as Brazil and Argentina) and those that export mainly labor-intensive products and have supplementary exports of natural resources (such as Mexico) or those that are short of natural resources (such as economies in Central America and Caribbean regions), China, as a trade partner, does not just bring all good news. Especially for the latter, China may bring the opposite. When facing competition from China, they will face more restrictions.
This tension partly explains why in recent years Latin American countries initiated trade remedy investigations against China's export products, and more anti-dumping policies were issued. According to statistics from the World Trade Organization (WTO), from 1995 to the first half of 2013, among the top 10 countries which have most anti-dumping investigations against China, four are in Latin America - Brazil, Argentina, Colombia and Mexico. Peru sits at 13th on the list if counted. The number of anti-dumping cases against China from those five countries made up a quarter of the total number of anti-dumping cases around the world in the same period.
Structural issues like this in the China-Latin American trade relationship can no longer be ignored. Now the common issue for both sides to address is not how to simply increase the trade volume, but how to optimize the trade structure, explore new territories in trade, and strengthen the mutual sense of trade security. At the same time, trade is just part of the China-Latin American economic relationship. As China's economic growth is slowing, the skepticism about the future rapid growth of Chinese and Latin American trade has increased. Another closely related dimension is drawing more and more intense attention and discussion, and that is investment.
(To be continued)
The writer is an associate professor at the School of International Studies, Peking University.
This part of the article was translated by Zhang Rui. Its original version was published in Chinese.
Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.
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