Latin America and China—a new dependency?

Abstract

Economic relations between China and Latin America have grown rapidly over the past decade. The paper documents the growth of trade, foreign direct investment (FDI) and other financial flows between China and Latin America and identifies the interests of China in the region as a source of raw materials, a market for exports of manufactured goods and an area of diplomatic competition with Taiwan. It points to the asymmetric nature of the relationship in terms of the relative importance of bilateral trade to each partner, the composition of trade flows, and the balance of FDI flows. It shows that these show many of the characteristics of centre-periphery relations. However China is far from becoming a new hegemonic power in Latin America and the latter's relations with the United States and Europe continue to be more significant than those with China.

The BRICs, US ‘Decline’ and Global Transformations

“…The essential argument of this position is to emphasize both the limitations of China's rise (Brautigam 2011), and to argue that insofar as it is a reality, it is largely one that is self-interested and not motivated by solidarity with the rest of the world. This position shares with the first view the argument that China's aid policy is more concerned with access to raw materials than the development of the periphery (Halper 2010: 99;Jenkins 2012Jenkins : 1352, even if this aid can and does have some positive consequences. This position also does not deny changes in the international order, but essentially argues two points.…”

“…Chapter 4 (Tables 4.11 and 4.12) showed how the trade of the 'other BRICs' with China was more significant than trade between each other, but it is not only trade with the other BRICs that is significant as earlier chapters also showed. The share of China in Latin America's exports increased seven-fold from 2000 to 2010, and by 2009, China was the top export market for Chile and Cuba as well as Brazil, and the second biggest for Colombia, Costa Rica and Peru (Jenkins 2012(Jenkins : 1339. What is particularly clear is that Latin America is a major exporter of primary commodities to China, with copper ore, soybean, soya oil, iron ore, crude oil, and refined copper leading the way in terms of exports.…”

“…In the same year, exports to China increased by 7.5%. This translated into a fall in the value of exports to the world apart from China and Hong Kong of almost $200 billion, and an increase in the value of exports to China and Hong Kong of just $3.6 billion (Jenkins 2012(Jenkins : 1353. This suggests then that there is both an unequal trading relationship between China and the South, but also that the total level of trade is still quite small.…”

“…For instance, Latin America "is much more dependent on the Chinese market than China is on the Latin American market as sources of supply." (Jenkins 2012(Jenkins : 1348 China has promoted its own processing industries, designed to upgrade in terms of climbing the value chain of particular commodities, and relied on imports to supply the basic raw materials. This has left some countries increasingly reliant on a small number of exports, and this concentration tends to increase with trade relations with China (Jenkins 2012(Jenkins : 1351.…”

“…(Jenkins 2012(Jenkins : 1348 China has promoted its own processing industries, designed to upgrade in terms of climbing the value chain of particular commodities, and relied on imports to supply the basic raw materials. This has left some countries increasingly reliant on a small number of exports, and this concentration tends to increase with trade relations with China (Jenkins 2012(Jenkins : 1351. Similarly, in Africa the share of oil, minerals and metals in exports to China increased from 76% of total exports in 2000 to 85% in 2006 (Farooki 2009: 18).…”