Latin America faces the Chinese Dragon: opportunities, challenges and responses

The perception of China in Latin America has evolved over time. In the United States some commentators have expressed concerns about the growing influence of China in the region seeing it as a threat to US hegemony. However China’s interest in Latin America is primarily economic rather than political and it is the economic aspects that are the focus of this reports, which discusses the findings of a research project that has studied the economic impacts of China’s re-emergence on Latin America. As well as looking at the effects on the trade and investment flows of 18 Latin American countries, more detailed studies were undertaken by local collaborators in Argentina, Brazil, Chile and Mexico involving both overviews of those countries and case studies of key value chains.

The study finds that the pattern of trade and investment relations between China and Latin America is of the classic centre-periphery kind with Latin America specialising in unprocessed primary products and China in manufactured goods including many high and medium-tech products. Thus trade with China is reinforcing the pattern of specialisation which has emerged in the region since the lost decade of the 1980s. In the case of China, this is not the result of a long-standing technological lead over the region, but has been driven by state trade, industrial and technology policies over the past three decades which have sought to integrate China with the global economy, but to do so in ways which contribute to the development of production and technological capabilities and international competitiveness.