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CHINA Y AMERICA LATINA: RELACIONES COMERCIALES Y
ECONOMICAS
RHYS JENKINSSCHOOL OF DEVELOPMENT STUDIES
UNIVERSITY OF EAST ANGLIA
Presentación al CECHIMEX, 6 de septiembre 2006
CHINA’S GLOBAL SIGNIFICANCE
GDP growth > 9% p.a since 1980Fourth largest economy in GDPShare of world trade increased from 1% in 1980 to >6% in 2004Approx 7% of world FDI flows since 2000
IMPACTS OF CHINA ON DEVELOPING COUNTRIES
Direct effectsIncreased market for exports to ChinaIncreased competition from China in domestic marketIncreased bilateral FDI flows
Indirect effectsCompetition from China in third marketsDiversion of FDI to ChinaTerms of trade effects
CHINA’S TRADE WITH LATIN AMERICA
China's trade w ith Latin America, 1985-2005
0
5000
10000
15000
20000
25000
30000
1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005
US$
mill
ion
China's Imports from LA China's Exports from LA
MAJOR PRODUCTS IMPORTED BY CHINA FROM LATIN AMERICA
75% primary products and resource-based manufactures
SoyaIron oreCopperWood pulpFishmealLeather
Concentration in a small number of products
DETERMINANTS OF THE GROWTH OF LATIN AMERICAN EXPORTS TO CHINA
Marked acceleration since 1999 – for region as a whole and major countries
Growth of Chinese economyIncreased openness of Chinese economy especially with WTO membershipChinese demand for primary products outstripping domestic demandLow but increasing Chinese elasticity of demand for Latin American exports Increased outward-orientation of Latin America
EXPORTS TO CHINA AS SHARE OF TOTAL EXPORTS, 1995, 2005
0%
2%
4%
6%
8%
10%
12%
14%
Arge
ntina
Boliv
iaBr
azil
Chile
Colom
biaCo
sta R
icaCu
ba
Domi
nican
Rep
.Ec
uado
rEl
Salva
dor
Guate
mala
Hond
uras
Mexic
oNic
aragu
aPa
nama
Parag
uay
Peru
Urug
uay
Vene
zuela
Shar
e of
tota
l exp
orts
1995 2005
INTER-COUNTRY DIFFERENCES IN EXPORTS TO CHINA
Gravity type modelGeography – distance; Pacific Coastline; land-locked – not significantEconomic factors – more open economies export morePolitical factors – recognition of Taiwan lowers exports
LATIN AMERICAN IMPORTS FROM CHINA
Steady growth from late 1980s to early 2000sAcceleration of imports from 200390% of imports manufactures
Almost half low-tech/labour-intensiveTechnology level increasing over time
DETERMINANTS OF THE GROWTH OF LATIN AMERICAN IMPORTS FROM CHINA
Increased competitiveness of ChinaGrowth of Latin American economiesParadox – China’s membership of WTO not significant (or even negative)Increased openness of Latin America not significant (China displacing other imports?)
IMPORTS FROM CHINA AS SHARE OF TOTAL IMPORTS, 1995, 2005
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Arge
ntina
Boliv
iaBr
azil
Chile
Colom
biaCo
sta R
icaCu
ba
Domi
nican
Rep
.Ec
uado
rEl
Salva
dor
Guate
mala
Hond
uras
Mexic
oNic
aragu
aPa
nama
Parag
uay
Peru
Urug
uay
Vene
zuela
Shar
e of
tota
l im
ports
1995 2005
INTER-COUNTRY DIFFERENCES IN IMPORTS FROM CHINA
Differences not so marked as for exports
Gravity modelGeographical factors not significantPolitical factors – unlike for exports, recognition of Taiwan not significantSocial factors – existence of Chinese population increases imports (cf. Rauch and Trindade, 2002)
CHINA’S THREAT TO LATIN AMERICAN EXPORTS
Conventional wisdomSeen as mainly affecting Mexico and Central AmericaSeen as mainly affecting labour-intensive products esp. garments
EXPORT SIMILARITY INDICES BETWEEN LATIN AMERICA AND CHINA, 1990, 2003
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
Mexic
o
Pana
maCo
sta R
icaDo
minic
an R
epub
licEl
Salv
ador
Braz
ilGu
atema
la
Colom
bia
Urug
uay
Arge
ntina
Hond
uras
Peru
Para
guay
Boliv
iaNi
cara
gua
Chile
Ecua
dor
Cuba
Vene
zuela
1990 2003
CRITIQUE OF ESI
Inappropriate where level and concentration of exports differ between countries being comparedMisleading for comparing the threat to different countriesMisleading for looking at changes in competitive threat over time
AN ALTERNATIVE MEASURE OF COMPETITIVE THREAT
Share of country’s exports threatened by China
Static measure – products in which China’s RCA>1Dynamic measure – products in which China’s world market share is increasing
A MEXICAN ILLUSTRATIONMexica n Export s and Compe t it ion wit h China
0.01
0.1
1
10
100
0.01 0.1 1 10 100
C h i n a R C A
COMPETITION FROM CHINA –STATIC MEASURE
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
Domi
nican
Rep
ublic
Pana
ma
Mexic
oCo
sta R
ica
Urug
uay
El S
alvad
orCo
lombia
Nica
ragu
a
Peru
Guate
mala
Braz
ilHo
ndur
as
Ecua
dor
Arge
ntina
Chile
Boliv
iaPa
ragu
ay
Cuba
Vene
zuela
1990 2003
COMPARING ESI AND ALTERNATIVE MEASURE
ESI underestimates the competition faced by small countriesESI shows that most countries face declining competition from China; alternative shows that competition increased in half the countries
IMPACTS ON THE TERMS OF TRADE
China not a “small country”Chinese demand for primary products and current commodity boomFalling prices of manufactured goods exported by ChinaTerms of trade of main Latin American countries improved, 2000-2004
TERMS OF TRADE OF MAJOR LATIN AMERICAN ECONOMIES
TRADE BALANCE OF LATIN AMERICAN COUNTRIES WITH CHINA
Trade Balance of Latin American Countries with China, 2005
-5000 -4000 -3000 -2000 -1000 0 1000 2000 3000 4000 5000
Argentina
Brazil
Colombia
Cuba
Ecuador
Guatemala
Mexico
Panama
Peru
Venezuela
US$ million
LATIN AMERICA’S TRADE BALANCE WITH CHINA
Trade surplus or trade deficit?Five countries have surpluses -Argentina, Brazil, Chile, Costa Rica and PeruAll others have deficits - Mexico and Panama have large deficits
Need to take account of impact on exports to third markets
FUTURE RESEARCH: DIRECT EFFECTS
Latin American exports to China:Why concentrated in so few countries?Why concentrated on so few products?What are the prospects for future export growth?
Imports from ChinaHow far are these displacing other imports or domestic production?What are the implications for employment in Latin America of Chinese competition?
FUTURE RESEARCH:INDIRECT EFFECTS
Exports to Third MarketsMore disaggregated analysis by markets and productsDevelopment of alternatives to ESIEstimating impact of China on level of Latin American exports
FUTURE RESEARCH:CASE STUDIES
Focus on 4 countries:ArgentinaBrazilChileMexico
Studies of 2 value chains in each country
CHINA Y AMERICA LATINA: RELACIONES COMERCIALES Y ECONOMICASCHINA’S GLOBAL SIGNIFICANCEIMPACTS OF CHINA ON DEVELOPING COUNTRIESCHINA’S TRADE WITH LATIN AMERICAMAJOR PRODUCTS IMPORTED BY CHINA FROM LATIN AMERICADETERMINANTS OF THE GROWTH OF LATIN AMERICAN EXPORTS TO CHINAEXPORTS TO CHINA AS SHARE OF TOTAL EXPORTS, 1995, 2005INTER-COUNTRY DIFFERENCES IN EXPORTS TO CHINALATIN AMERICAN IMPORTS FROM CHINADETERMINANTS OF THE GROWTH OF LATIN AMERICAN IMPORTS FROM CHINAIMPORTS FROM CHINA AS SHARE OF TOTAL IMPORTS, 1995, 2005INTER-COUNTRY DIFFERENCES IN IMPORTS FROM CHINACHINA’S THREAT TO LATIN AMERICAN EXPORTSEXPORT SIMILARITY INDICES BETWEEN LATIN AMERICA AND CHINA, 1990, 2003CRITIQUE OF ESIAN ALTERNATIVE MEASURE OF COMPETITIVE THREATA MEXICAN ILLUSTRATIONCOMPETITION FROM CHINA – STATIC MEASURECOMPARING ESI AND ALTERNATIVE MEASUREIMPACTS ON THE TERMS OF TRADETERMS OF TRADE OF MAJOR LATIN AMERICAN ECONOMIESTRADE BALANCE OF LATIN AMERICAN COUNTRIES WITH CHINALATIN AMERICA’S TRADE BALANCE WITH CHINAFUTURE RESEARCH: DIRECT EFFECTSFUTURE RESEARCH:INDIRECT EFFECTSFUTURE RESEARCH:CASE STUDIES
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