gE Blog Series: Latin America Outlook Part 5 - China's Relations With Latin America
In recent years, the Chinese and Latin American business relationship has done very well, especially in the South American countries. China is now the main market for most of the exports for Latin American countries, along with being a big source of imports as well. There has been much greater investment in Latin America by Chinese companies such as mining in Argentina, Brazil and Peru, manufacturing in Brazil and Uruguay, and tourism in the Bahamas. With all of these influences from China taking place, there have been some major imbalances of different kinds.
To start, there has been more expansion in the trade flows bilaterally than the investment flows, and then the trans-pacific trade flows created a surplus in favor of China. Also, their bi-regional trade is inter-industry, meaning the Latin America exports mainly commodities while China exports mainly manufactured goods. This creates little technology transfers between the two and little development of the inter-regional value chains. As these disadvantages became more prevalent, China proposed a few ideas to improve the success of bilateral economic relations.
China proposed to get better cooperation by setting up regular meetings between China foreign ministers and the troika of the Community of Latin America and Caribbean States. China also aims to import more diverse goods such as manufactured and high value-added goods from Latin America in order to balance and sustain the trading success. The Chinese would like to strengthen agricultural cooperation and work to use each regions advantage to maximize profit and satisfy the demand. Along with all of these goals, China would finally like to enhance the friendship between Latin America and the Chinese to promote tourism and more cooperation. If all of these proposals can be met, there is a bright future for these countries in their business relations. Without it there could be slow growth along with the rest of the industrialized world, but with proper trading strategies and cooperation, this could stimulate growth in new areas.