Latin America pays for China ties
By Daniela Estrada
SANTIAGO - Exports from Latin America and the Caribbean will grow again this
year, driven largely by demand from China. The high proportion of commodities
may increase dependency on China, and Asia as a region, according to a report
by a United Nations agency for the region.
"Clearly, trade relations between the region and China could give rise to
center-periphery dynamics. We supply it with raw materials, with little added
value, and it sends back manufactured goods," Claudia Casal, a researcher at
the non-governmental National Center for Alternative Development Studies
(CENDA) in
Chile and a contributor to an earlier non-UN report related to China, told IPS.
Casal was one of the authors of "Las relaciones economicas y geopoliticas entre
China y America Latina. Alianza estrategica o interdependencia asimetrica?"
(Economic and geopolitical relations between China and Latin America: Strategic
alliance or asymmetric interdependence?), published in 2009 by the Latin
American Network of Research on Multinational Corporations (RedLat), which is
made up of labor research institutions and trade unions in seven countries in
the region.
This specific issue was examined by the latest report by the UN's Economic
Commission for Latin America and the Caribbean (ECLAC) about the region's
international insertion, presented last week at the agency's Santiago
headquarters.
"Trade relations between the region and Asia offer opportunities as well as
challenges," says the 216-page document.
Among the challenges, it says, it is particularly important to prevent the
increasing trade between the two regions from reproducing and reinforcing a
center-periphery pattern of trade in which Asia (and particularly China) would
be the new center, with the countries of the region as the new periphery.
The ECLAC report, "Latin America and the Caribbean in the World Economy
2009-2010: A crisis generated in the center and a recovery driven by the
emerging economies," forecasts 21.4% growth in exports in the region this year,
mainly driven by exports of commodities from South America.
Making up for the fall of 22.6% in 2009 compared with the previous year, the
rise in exports will be fueled by demand in Asia, and particularly China, the
study says.
The growth rate of exports from the region to China went from a decline of 2.2%
in the first six months of 2009, compared with the same period the previous
year, to plus 44.8% in the first six months of 2010.
According to ECLAC, China could displace the European Union as the region's
second-biggest trading partner by the middle of this decade.
The Asian giant is already the top purchaser of exports from Brazil and Chile,
the second for Argentina, Costa Rica, Cuba and Peru, and the third for
Venezuela. In 2008, China was the second largest source of imports for Brazil,
Chile, Colombia, Peru and Cuba, and the third source for Argentina, Costa Rica,
Mexico and Venezuela.
However, looking at exports over the last decade, ECLAC found that Latin
America "has reverted to an export structure based on prime materials, similar
to that of 20 years ago."
While in 1999, commodities made up 26.7% of total exports, in 2009 they were
38.8% of the total.
Due to high international commodity prices, South America doubled the value of
its exports, which were mainly natural resources. In contrast, exports from
Mexico and Central America fell in value by over 50%.
Mexico's share of the region's total exports fell from 40% in 2000 to 30% in
2009, while Brazil's rose to nearly 20% from 13% over the same period.
"The region has been unable to improve the quality of its international
insertion and the expansion of natural resource-related sectors does not seem
to have contributed sufficiently to the creation of new technological
capacities," states the report.
ECLAC executive secretary Alicia Barcena stressed that the region needs to
strengthen three things - "diversification, innovation and cooperation".
The RedLat study in which Casal took part also points out that nowadays,
"Chinese-Latin American relations are asymmetrical, defined by China's needs
and reinforced by the limited export structure of countries" in the region.
"An unequal economic relationship is taking shape - although it takes different
forms in different countries - that could lead to a further limiting of the
maneuvering room of Latin American countries," says the study, carried out with
contributions from Argentina, Brazil, Chile, Colombia, Mexico, Peru and
Uruguay.
According to ECLAC, governments in Latin America should help bolster the
competitiveness of small and medium enterprises, improve workers' skills,
develop chains to link export sectors with the rest of the economy, and make
the most of advances in areas like biotechnology, among others.
ECLAC also recommended the development of joint efforts to forge closer ties
with China and the Asia-Pacific region. One example is the Latin America
Pacific Arc initiative, made up of Chile, Colombia, Costa Rica, Ecuador, El
Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama and Peru.
According to ECLAC projections, exports from the Southern Common Market
(Mercosur), comprising Argentina, Brazil, Paraguay and Uruguay, will grow this
year by 23.4% and those of the Andean countries by 29.5%. However, those of the
Central American Common Market will increase only by 10.8%, they predicted.
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