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Journal of Developing Societies

DOI: 10.1177/0169796X07023004042007; 23; 467Journal of Developing Societies

Alex E. Fernndez Jilberto and Barbara HogenboomLatin America and China Under Global Neoliberalism

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Latin America and ChinaUnder Global Neoliberalism

Alex E. Fernndez JilbertoUniversity of Amsterdam, The Netherlands

Barbara HogenboomCentre for Latin American Research and Documentation, The Netherlands

ABSTRACT

While China and Latin America simultaneously implemented neoliberal policies aspart of a profound economic restructuring process, there are important differences

in the results of their policies and economic performance. This article discusses thedifferent development paths of Latin America and China, including their startingpoints, economic policies and political processes. Chinas expansion and LatinAmericas liberalization have brought the two in much closer contact. Several LatinAmerican countries are now important providers of commodities (for example,minerals, energy and soy) that China needs to keep up with the rising levels of

production and consumption. As a result China is also starting to invest in theseproducts. Some other Latin American countries have lost rather than gained fromthe rise of China, especially the countries that sought economic integration in theworld market through the growth of maquiladoras (assembly factories for export to

the United States). However, their attempts to slow down Chinas entry into the WorldTrade Organization (WTO) did not succeed. The article discusses the causes, effectsand prospects of these different experiences with Chinas global expansion.

Keywords: Latin America, China, trade, foreign direct investment, South-Southrelations

The rapid globalization of neoliberalism in the 1980s and 1990s has notonly had a major impact on the economies, societies and politics of devel-

oping countries, but has also profoundly changed South-South relations.The relations between China and the region of Latin America and theCaribbean serve as an interesting case of the complex shifts within theglobal South due to global neoliberalism. Politically, the end of theglobal Cold War and Chinas Maoism has eased the relations betweenLatin America and the Peoples Republic of China as well as the lattersrelations with other developing countries. Especially the joint efforts of

Copyright 2007 SAGE Publications www.sagepublications.com

(Los Angeles, London, New Delhi and Singapore)Vol 23(4): 467501. DOI: 10.1177/0169796X0702300404

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468 Journal of Developing Societies 23, 4 (2007): 467501

Brazil, China, India, South Africa and the other members of the G20

on the 2003 Cancun summit of the World Trade Organization (WTO)were remarkable. For the first time since the start of the debt crisis inthe 1980s there was a genuine South-South cooperation changing globalpolitics and policies. Economically, Latin America and China overall gainsubstantially from one another in the form of South-South trade andinvestment. However, depending on the type of insertion in the globaleconomy, to some Latin American countries the losses from Chinesecompetition are bigger than the gains from this new export destiny andsource of foreign investment.

In Latin America a broad debate on the effects of China on the eco-nomy and the form of insertion of Latin America in the global economyhas started. The main incentives for this debate are Chinas successes inthe global competition among developing countries for foreign directinvestment (FDI); its transformation into a decisive (f)actor in fixinginternational prices for commodities; its role as global point of reference inthe productive strategies of large multinational companies (MNCs); andits rise as an essential component of the macroeconomic equilibriumin global markets. Various studies consider China a threat to Latin

American strategies of transforming into an exporter of products ofhigher technological sophistication and added value. The growing so-phistication of Chinese export products, together with exports from therest of Southeast Asia, have been crowding-out Latin American andCaribbean exports in the market global (CEPAL, 2004a; Gitli and Arce,2001; Mesquita Moreira, 2004; Oliva, 2003). According to other LatinAmerican contributions, the competition for FDI may be tempered bydeepening the deregulation of Latin Americas economies as to improvethe hospitality for transnational capital, and by further stimulating anactive role of the state in facilitating linkages between this foreign capitaland local companies (cf. Lora, 2005). Finally, in this debate there are alsomore moderate and pragmatic inputs that stress the inevitability ofChinas position in the global economy and that therefore Latin Americahas to establish a strategy to improve the competitiveness of its regionaleconomy in the global markets (CEPAL, 2004b, 2003; Gonzlez Garca,2003). Using Chinas experience as an example, this last approach empha-sizes the crucial role of the state in Latin American countries to maintainor broaden their economies position in global markets, and to competesuccessfully with Asia in general and China in particular.



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Journal of Developing Societies 23, 4 (2007): 467501

Fernndez Jilberto and Hogenboom: Latin America and China 469

Evidently, the China Effect on Latin America and the Caribbean

does not exist. Instead, this article deals with a range of effects, differingfrom country to country, from one economic sector to another, and withnumerous (sometimes swift) changes over time. The first part comparesthe process of neoliberalization of Latin America with that of China,followed by an assessment of the main economic relations between Chinaand several Latin American countries and an analysis of the main fields ofcompetition. The second part assesses Latin Americas involvement withChinas entry into the WTO, including the bilateral negotiations andChinas recognition as market economy. The final part discusses the pro-

spects for the relations between Latin America and China under globalneoliberalism, and implications for South-South relations.

China effects on Latin America

At first glance, Chinas expansion is a very positive development forLatin America and the Caribbean as trade figures show steep rise andresource-rich Latin American countries greatly benefit from Chinasenormous demand for energy, minerals and other primary commodities.Yet, to several countries, the China effects also include trade competition

in local and global markets, depending on their economic specializationand development strategies. With respect to FDI the effects of Chinasexpansion are diverse too, involving competition for MNC investment,but also new Chinese (joint) investments, especially in the exploitationof Latin Americas natural resources.

In trade relations with Latin America and the Caribbean, in the 1990sChina superseded Japan, Taiwan and Hong Kong. Chinas type of exportindustrialization based on its traditional comparative advantages (naturalresources and cheap labour) has created problems as well as opportunities

for the region. While Latin America attempted to raise the added value byextending the manufacturing of its exported natural resources, the motorof Chinas growth has been in assembling intermediate products or partsimported from Asia, which are then exported to US and EU markets andalso to Latin America. This regional division of productive processes (andthus labour) with other Asian economies has permitted China to rapidlydiversify its manufacturing exports. China also transfers part of productionto other Asian countries, thereby contributing to the regionalization of theChinese economy and the restructuring of Asias industrial production.For MNCs, Chinas rapidly growing regional and international trade



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plays a crucial role in their global investment strategies. As part of their

activities within regional industrial production in Asia, MNCs have madeimportant technology transfers as part of their operations in China. Thisneutralizes much of the Latin American efforts to increase the addedvalue of its exports, especially in the manufacturing sectors segments inwhich they compete with China. Moreover the practice of MNCs movingproduction facilities to China is harmful to other (newly) industrializingeconomies, such as Mexico in the case of Latin America (Gaulier et al.,2005; Lemoine and nal-Kesenci, 2002).

The expanding economic relations and production networks between

Latin America, China and the rest of East Asia have stimulated cross-Pacific cooperation and exchange. In 1989 the Asia-Pacific EconomicCooperation (APEC) was created that integrates 21 countries with ajoint population of 2.5 billion inhabitants, representing almost 60 percent of the worlds GDP and 50 per cent of international trade. AmongAPECs members are several Asian countries including China, HongKong, Japan, Singapore, South Korea and Taiwan; from Latin America(only) Chile, Mexico and Peru; and the United States and Russia. In1994, APEC announced that it aimed to achieve free trade between its

developed economies by 2010, and between all its economies by 2020.Because most Latin American and a number of Asian countries are notin the APEC, in 1998 Singapore initiated the Forum for East Asia-LatinAmerica Cooperation (FEALAC), involving 17 Latin American and 15East Asian countries. FEALAC holds regular meetings of governmentofficials, politicians, business leaders and academics, and various eco-nomic, cultural, educational, political and scientific projects have beenundertaken. With respect to bilateral relations between East Asia andLatin America, apart from China it is primarily Japan that is activelyrelating to Latin America. Japan and Latin America hold a long historyof trade relations, investment and migration, although the Latin Americancrisis of the 1980s and Japans crisis in the 1990s harmed these trade andinvestment relations (Yeo, 2005). As a result of these trends and Chinasexpansion, in the 1990s China replaced Japan as the leading Asian tradepartner of Latin America and the Caribbean. Recent initiatives show thatLatin America is becoming more of a priority to Japan, maybe to keepup with Chinas closer ties to the region. In September 2004, for instance,Japans Prime Minister Koizumi visited Brazil and Mexico and signed theJapan-Mexico free trade agreement.



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Styles of Neoliberalization

The regionalization of Chinas economy shows from the ASEAN(Association of South-East Asian Nations) countries and Japan beingits principal trade partners. In 2003, 54 per cent of Chinas imports and44 per cent of its exports were from and to these countries, and 95 percent of these consisted of manufactured products. With Latin Americaand rest of the global South, China maintains complementary trade rela-tions. As shown in Figure 1, Latin American economies represent onlysome 3 per cent of Chinas total exports and 4 per cent of its imports, re-

sulting in a Chinese trade deficit of $11 billion in 2004 (CEPAL, 2005b).These trade patterns have given way to a debate in Latin America andthe Caribbean about the possibilities to compensate for the negativeeffects. How can this region profit from structural (economic or policy)weaknesses of China as well as from its own comparative advantages? Acritical comparative analysis of the neoliberal restructuring that startedin China as well as Latin America in the late 1970s and early 1980s mayhelp to start answering this question.

Like in China, in the more orthodox Latin American cases as Chile,Argentina and Mexico, policies of economic opening were implemented

by an authoritarian state that excluded any form of participation of civilsociety, or of an independently operating political society. In Latin America,neoliberal restructuring was either implemented by the state bureaucracyunder a model of state-party authoritarianism as in Mexico by the PRI(Institutional Revolutionary Party), or under military dictatorships as inChile (197389) and Argentina (197683). Through these bureaucraciesthe authoritarian state started a passive revolution in order to achievethe substitution of Keynesianism by neoliberalism, while in China Maoisteconomic socialism was substituted by market socialism and later on

neoliberalism. The violence and thoroughness with which these economicreforms were pushed through stemmed from the idea of the necessity ofrefounding capitalism in an era that was polarized by social inequalityand by the political and ideological dimensions of the Cold War.

In Latin America, the economic liberalization reforms were largelyof exogenous origin: US government pressures related to the struggleagainst international communism, followed by IMF and World Bankconditionalities during the debt crisis, and eventually the so-calledWashington Consensus involving joint post-Cold War efforts of all threeinstitutions. Since the late 1980s, processes of democratization allowed



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Figure 1.

Composition of Chinas exports and imports, 2004 (percentages)

Source: CEPAL (2005b).



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for the compatibility of neoliberalism with democratic political regimes.

For this shift it was necessary to neoliberalize the ideologies of the oldpopulist parties that from the 1940s to the 1970s had applied Keynesianprinciples for economic development (Demmers, Fernndez Jilberto andHogenboom, 2001).

In the case of China, on the contrary, the implementation of neoliberalreforms was of an endogenous nature. The aim was to gradually (in timeand space) restructure the economy under the control of the state party.The partial and regulated introduction of market mechanisms was toenergize the planned economy and end the economic stagnation. In the

first phase (197885) this involved the association of Chinese companieswith multinational conglomerates (joint ventures). In the second phase(198691) this also included an end to many restrictions to foreign cap-ital, which from then on were authorized to participate for more than50 per cent in associations with local companies. Starting in 1992, thecentrally planned economy became subordinated to market mechanismsas instrument for assigning productive resources in the economic process.With these last reforms the political class of the Chinese state has hopedto maintain its position, thus using the economic successes of Chinascapitalism to legitimize its monopolized control over the state and politicalprocesses (see the introductory article in this issue).

These different trajectories of neoliberalization show that while theChinese state still maintains the capacity to regulate and control the processof globalization of Chinas economy, Latin Americas exogenous modelof refoundation of capitalism has basically left the state as subsidiaryto economic globalization. Several Latin American analysts claim thatthe larger intervention capacity of the Chinese state in its economysglobalization is a weakness. According to this view it expresses a lack ofseparation between the state and the market, of which the latter is the

principal agent in economic decisions and the main source of employment.Compared to countries like Chile, Mexico and Argentina, current policiesin China hinder corporate governance and market discipline while itslimited deregulation of the financial sector is negative for its access tocredit. Indeed, the banking system of China is dominated by only four largebanks (the Bank of China, the Bank of Construction of China, the Bankof Industry and Commerce of China and the Agricultural Bank of China)since there are major restrictions on the operations of foreign banks. Chinahas tried to deal with some of the problems with its large banks, such as

in 1998 when Chinese banks were given a capital injection of $33 billion,



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of global economic reinsertion. It uses MERCOSUR as regional platform

to globally launch its economy, which may be seen as an alternative to theFree Trade Agreement of the Americas that the United States had hopedto realize by 2005 (but failed due to clashing economic interests and views,in particular between Brazil and the United States). Simultaneously, Brazilfurthers its economic relations with other large upcoming markets, suchas China and India. For Brazil, China and India are not only counterpartsin bilateral economic negotiations but also supporters in internationaleconomic negotiations such as in the WTO (Sader, 2004, 2005).

Economic Relations

Although to China the trade relations with Latin America and theCaribbean are relatively modest compared to those with Asia or theUnited States (see Figure 1), Chinas imports from Latin America havegrown substantially, as shown in Figure 2. The increase of these importsfrom $5.4 billion in 2000 to $21.7 billion in 2004 implies an average annualgrowth of 42 per cent. Most of the imports come from Brazil, which with

Figure 2.

Chinas import from Latin America and the Caribbean,19902004 (in millions of US$)

Source: CEPAL (2005b).



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$8.7 billion represented 40 per cent of the regions total in 2004. Other

important countries are Chile (17 per cent), Argentina (15 per cent),Mexico (10 per cent) and Peru (7 per cent) (CEPAL, 2005b).

The most direct competitors of Latin America and the Caribbean onthe Chinese market are ASEAN countries, although the Asian exports toChina differ substantially. Of the ASEAN countries exports to China, onlyabout one-third of the products compete with Latin American exports,while another half involves high technology products. Latin Americaexports consist mainly of primary products and manufactures based onnatural resources, which represent respectively 46 and 30 per cent of the

exports in 2004. China depends on Latin America for products like sugarand fruits, soya oil (for example, from Argentina), minerals (Brazil) andcopper (Chile). In fact, Brazil, Mexico, Argentina and Chile concentratemore than 70 per cent of the regions commerce with China (see Table 1).While Latin America is providing mostly raw materials, Chinas exportsto Latin America are strong in low technology products (for example,clothing and footwear). These Chinese imports threaten local production,especially in Mexico, Central America and the Caribbean. Moreover, lowChinese production costs in these sectors are harming Latin Americas

chances for export production for the US and European markets, as will bediscussed further along (Carrillo and Gomis, 2003; CEPAL, 2005b; Cornejo,2005a, 2005b; Cruz Zamorano, 2005; Dussel Peters, 2003, 2004).

Mexico is the country with the largest trade deficit with China. Thenegative China effect on Mexico one of the most open economies in

Table 1.Total trade (imports plus exports) of Mexico, Brazil, Chileand Argentina with China, 19952004 (in millions of US$)

Year Mexico Brazil Chile Argentina

1995 542 1,621 678 8941996 798 2,369 888 1,3051997 1,293 2,380 1,094 1,8771998 1,722 2,052 1,229 1,8491999 2,047 1,619 1,016 1,5002000 3,083 2,436 1,815 1,9542001 4,309 3,370 2,040 2,1912002 6,730 4,218 2,326 1,4242003 9,864 6,863 3,105 3,1992004 15,446 9,491 5,057 4,031

Source: Cornejo (2005a).



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the region has been particularly clear in Mexicos production of manu-

factured (assembly) goods for the local market and for export to theUnited States. Whereas China became Mexicos second largest tradepartner in 2003 (due to massive Mexican imports of Chinese goods), in2002 it replaced Mexico as the second largest exporter to the US market. Inboth cases Mexico has to compete with cheap Chinese imports. Intimatelylinked to this is Mexicos competition with China for foreign investment inexport production (Cornejo, 2005a). In addition, Mexicos manufacturingindustry has to deal with problems of illegal Chinese trade and dumping.Its economic position vis--vis China has shown Mexicos lack of an effect-

ive competitiveness strategy in a globalizing world.While in 2000 Brazil had a trade deficit with China of $266 million,in the following years Brazilian exports to China increased with 60 percent or more, resulting in a high trade surplus. Although considerably lessthan its exports to the United States (over 20 per cent), in 2004 Brazilsexports to China valued $5.4 billion (6 per cent). Already in 2002 Brazilexported more soy (31 per cent) and iron (22 per cent) to China than toany other country. Chinese imports in Brazil are mainly electronic (mediaand high technology) and chemical products. The dominance of electronicand communication technologies in these imports has to do with the global

production strategies of vertical specialization that are used by MNCs inthis sector. Companies like Philips have some of their production pro-cesses in China, then send parts for assembly to their Brazilian factories,and either sell the end products in Brazil, or re-export them to othermarkets in the region. Generally, the rising trend of Brazils exports since2000 has coincided with the devaluation of its currency, the real(Des,2002; Lemoine and nal-Kesenci, 2002; Len, 2005; Mesquita Machadoand Tinoco Ferraz, 2005; Pimentel Puga et al., 2004).

Chile has basically a complementary economy to China and it is the first

Latin American country that has a free trade agreement with China. Whileimporting Chinese manufactures like textiles, cloths, footwear, toys andelectronic products, Chile exports primary commodities like agro products,cellulose, marine products, chemicals and most of all copper to China. Dueto this complementarity, the Chile-China economic and political relationsare friendly and the two countries have cooperated in internationalinstitutions such as the UN, the APEC and the FEALAC. Since the 1990s,trade between Chile and China increased at an enormous speed, from$91 million in 1990 to $5.1 billion in 2004. After the United States, Chinahas become Chiles second trade associate, above traditionally important



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trade partners like Argentina, Japan and Brazil. With Chiles exports to

China of $3.3 billion and Chinas exports to Chile of $1.9 billion, in 2004Chiles trade surplus with China equalled $1.4 billion, which is rathersubstantial relative to the size of Chiles economy (DIRECON, 2005). Thistrade surplus has much to do with China being the worlds largest copperimporter, consuming 20 per cent of this minerals global trade, and Chilebeing the worlds main producer and exporter. The National Corporationof Copper (CODELCO) and the National Mining Company (ENAMI)are responsible for one-third of the Chilean exports to China. With 80 percent of the Chilean exports to China being minerals, Chile has benefited

greatly from Chinas growing demand as well as from the related rise ofworld prices (Len, 2005). Because of the importance and complementarityof their trade, in 2002 China proposed to Chile to extend their economicrelations. From then onwards, the countries worked on preparing a so-called third generation agreement, including not only trade and investmentbut also educational, environmental and cultural accords. In Novemberof 2004, during the APEC conference in Chile, the presidents of the twocountries announced the official start of the free trade negotiations. Oneyear later, during the APEC conference in Korea, the free trade agreementbetween Chile and China was signed.

To Argentina, trade with China has shown instabilities, partly becauseof the sort of goods that China imports and partly because of Argentinaseconomic and financial crisis of 2001 and 2002. In the 1990s, Argentina hada trade deficit with China, but this changed with the crisis and Chinas rapidlygrowing import of Argentine products such as soya oil. For Argentina,the export of soya products to China is important, valuing $2.6 billion in2004 (CEPAL, 2005b), while Chinese products account for 8 per cent ofArgentinas imports. Since the official visit of President Ernesto Kirchnerto China in the summer of 2004 and the visit of the Chinese trade mission

to Argentina a few months later, Argentina aims to strengthen its traderelations with China. Argentina would like to increase its export of auto-parts, meat, chemical products, wines, software and information technology,while buying more capital goods and industrial products from China(Cornejo, 2005a; Oviedo, 2005).

In the economic relations between the Bolivarian Republic ofVenezuela and the Peoples Republic of China, oil is the main commodity.To President Hugo Chvez (since 1999) China forms an alternative toits dependency on the United States for the sales and investments inthe energy sector, and between 1999 and 2004 he visited China three



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times. In 2005, China provided Venezuela a credit of $4 billion for the

development of energy projects, and agreements on energy, agriculture,railroads, telecom, mining and financial and technical assistance wereratified. Venezuelas promise to daily export 600,000 barrels of fuel oil and1.8 metric tonnes of orimulsion for the production of electricity (CEPAL,2005a), however, is way above the 2005 level of 68,800 barrels per day.According to Corrales (2005), there are economic, political and technicalreasons for which it is unlikely that China will soon end Venezuelas de-pendency on exports to the United States. Economically, China seemssomewhat concerned about Venezuelas stability and the changing pol-

icies on (foreign) property rights. Politically, it does not seem in Chinasinterest to support Chvezs anti-US policies since they could be causingserious energy problems to its primary export market, with all kinds ofimplications. Technically, China lacks the type of refineries that are neces-sary to refine the heavy crude of Venezuela, while the transport costs wouldbe relatively high since these shipments have to go via Africa, takingsome 40 days. On the other hand, in its search for energy, China is makingplans and investments in order to solve this transport obstacle. China andVenezuela want to jointly build an oil pipeline from Venezuela to thePacific Ocean and China has recently been heavily investing in refineries.

China has also favoured the rapprochement between Colombia andVenezuela. Recent Chinese investments in the future exploitation of un-touched oil reserves in Colombia by the Chinese PETROCHEM haveenhanced the decision to construct an oil pipeline between Colombiaand Venezuela and the construction of gas pipeline from the north ofColombia to the Pacific that will be essential for the export of Venezuelanand Colombian combustibles to China. In 2005, President Chvez and hisColombian colleague lvaro Uribe signed accords to construct the gaspipeline Transguajiro that will connect Venezuelan refineries with the gas

fields of Puerto Ballenas, in the Colombian Caribbean, which should beready by the middle of 2008.These kind of Chinese direct investments are part of the overall trans-

formation of China into the worlds sixth foreign investor in developingcountries, especially to sectors of natural resources. Although mostlydirected towards industrialized countries, to Latin America and theCaribbean Chinese FDI is also relevant (see the examples in Table 2).Important Chinese investments (joint ventures) were agreed on in thecontext of bilateral negotiations on Chinas entry into WTO, which willbe reviewed further along. In general, South-South investments are



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Table2.

ChineseFDIin(Seeking)L

atinAmericanrawmaterials:

Some

examplesofalliancesandcooperation,20042006(inmillionsofUS$)

Chinesefirm

Fo

reigncompanies

Type

S

ector

Country

Stake/projectdescription

Amou

nt

C

hinaMinmetalsNon-ferrous

M

etalsCo.(2004)

Noranda(DoaIns

de

Collahuasiand

Lo

maBayas)

M&A

C

opper

CanadaandChile

5,000

C

hinaMinmetalsNon-ferrous

M

etalsCo.(2005)

CO

DELCO

Alliance

C

opper

Chile

Investmentand

supplyagreement

2,000

C

hinaNationalPetroleum

(2

005)

En

Cana

M&A

P

etroleum

Ecuador

Oilreservesandpipelines

1,420

B

aoshanIronandSteel

(2

004)

Co

mpaiaValedo

RioDoce

Alliance

S

teel

Brazil

Newplantconstruction

1,400

G

overnmentofChina

(2

004)(CNOOC)

Credit

P

etroleumand

n

aturalgas

Venezuela

Explorationof

naturalgasand

crudeoilreserves

400

Sinopec(2004)

Pe

trobras

Alliance

P

etroleum

Brazil,China

andothers

Oildrillinginseveral

countries

G

overnmentofChina

(2

0042006)

Loans

Infrastructure

Brazil

Naturalgaspipeline

andexportcorridor

YanguangGroup(2005)

Va

ledoRioDoce/

Ito

chuCorporation

Alliance

C

oal

Brazil

NewCompany

S

ource:CEPAL(2005b,2006).



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to create new industrial zones, linked to centres for research on nationaldevelopment (Daz Vzquez, 2003).

Contrary to Chinas broad policy spectrum, in Latin America privat-ization was central to neoliberal restructuring. This gave way to a processof substantial economic concentration in economic groups and conglom-erates. While temporarily attracting large sums of FDI and being profitableto both Latin American and transnational companies, privatizationtogether with policies of liberalization and deregulation did not bring

about the envisioned development and modernization of the region.Aimed at helping major private companies to take over the role of statecompanies as the motor for economic growth, this strategy failed becauselittle was done to deal with Latin Americas weaknesses in infrastructure,human resources and technological development. Moreover, rather thanstimulating entrepreneurship, the massive support of the public sector forbig business and the close relations between technocrats and importantentrepreneurs during as well as after privatization gave way to thecreation of a new oligarchy. With their globalized assets and capital, this

Figure 3.

Distribution of net FDI inflows in China and Latin Americanand the Caribbean, 19902004 (in billions of US$)

Source: CEPAL (2005a) and UNCTAD (2005).Note: *Annual averages.



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new oligarchy has limited interest in the development of the domestic

economy (Fernndez Jilberto and Hogenboom, 2004, 2007).Although the economies of Latin America and the Caribbean have

recovered since 2004, there is a general fear in the region that the Chinaeffect is causing the displacement of foreign investment. While this fearhas been partly refuted by several studies showing that most flows to Chinaare differently motivated than those to Latin America (IDB, 2005; Lora,2005), in the case of Colombia and Mexico there has been a significantnegative China effect from 1995 to 2001 time of a global FDI boom andthe nearing of Chinas WTO membership. These two countries would have

attracted more foreign investment if it were not for China to suck awayglobal capital: a $100 million increase of Chinese inward FDI reducedColombian and Mexican inward FDI by $84 and $29 million, respectively(Garca-Herrero and Santabrbara, 2005).

Mexicos experience since 2000 demonstrates that the reason for thisnegative China effect is competition in similar sectors of manufacturing.Between 2000 and 2003, Mexicos maquiladora sector, one of its most im-portant export manufacturing sectors since the 1990s, experienced a crisisresulting in a loss of almost 230,000 jobs. One-third of the production thatleft Mexico moved to China. Like Central America and the Caribbean

have done more recently (and contrary to Argentina, Brazil and Chile),since the 1980s Mexico has concentrated its exports in chains of globalsubcontracting (outsourcing) for the US market. Since the late 1990s, how-ever, China is swiftly replacing Mexico on several points of these globalproduction chains. For instance, in 2003, China took over Mexicos primaryposition in the US market of processors, equalling a loss of 21,000 jobsand $500 million investments. As many as 12 of Mexicos main 20 exportsectors to the United States compete with China, such as textiles, footwearand clothing as well as industrial machinery, televisions and video players.

Chinas WTO membership reduced the NAFTA-based preferentialadvantages of Mexico in the US market, and in 2003 China replaced Mexicoas the second largest source of US imports (after Canada) a positionthat Mexico had taken over two years earlier from Japan. Cheap Chineseproducts and aggressive Chinese policies to attract foreign investmentscaused a process of industrial South-South delocalization that harmedMexicos maquiladora industry and several large MNCs moved productionfacilities away, including technological plants of NEC, ON Semiconductor,Sony and Kodak. Further restructuring of Mexicos participation in



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of the infrastructure and services used by the export sector, but its

sustainability has been negatively affected by the economic crisis of Braziland Argentina. Due to the effects of the Asian crisis that materializedin Latin America in 1998, China was able to recover more effectively asits countercyclical policies permitted a rapid macroeconomic stability(CEPAL, 1998; IDB, 2005).

The shifts in FDI and export production have affected the world marketshare of exports from China vis--vis those from Latin American and theCaribbean. From 1990 to 2002, Chinas world market shares in all productsrose, increasing its total share from 2 to 6 per cent. Above all, rises were

seen in the share of China in low technology (from 5 to 15 per cent) andhigh technology (from less than 1 to 7 per cent) manufacturing. Meanwhilethe world market share of Latin American exports did increase from 4 to6 per cent, but mainly as a catch-up from the lost decade of the 1980s. Itsworld market share in primary products was surprisingly stable for such aresource-rich region: 12.4 per cent in 1990 and 12.7 per cent in 2002. Mostof Latin Americas growing world market share in medium technology(from 1.8 to 5.2 per cent) and high technology (from 0.6 to 3.7 per cent)manufacturing was due to the expansion of Mexico, which in 2002 wasa larger exporter of manufactured products than the rest of the regions

17 countries all together (respectively 3 and 1.9 per cent of world marketshare). Simultaneously, as we have seen, the similarities between Mexicosand Chinas technological trade development have a very negative Chinaeffect on Mexicos maquila sector (Lall and Weiss, 2004).

A real revaluation of the Yuan (compared to the dollar) would helpLatin America in its competition for markets and investment with China,but apart from China this also depends more on an international resolutionof the financial disequilibrium of the global economy and in particularthe current trade deficit of United States. However, the devaluation of

the Yuan in July of 2005 from 8.30 to 8.11 Yuan to the dollar had littleeffect on Latin Americas competitiveness, partly because Latin Americahas a marginal position in the asymmetry created by the new monetarysystem, Bretton Wood II. This system has helped the United States tobecome the largest consumer of Chinese products and China to becomethe first provider of finance to the United States. Asian economies usean artificially fixed exchange rate to the dollar, stimulating investmentsin their region and exports towards industrialized countries. As a result,the current account deficit of the industrialized countries is growing, asare the colossal financial reserves of China and other Asian economies.



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The international reserves of China in 2004 valued $610 billion, equalling

37 per cent of the countrys GDP. The fact that China has been in particularacquiring massive amounts of US treasury bonds has provoked a largeglobal supply of dollars. By doing so, China contributes to processes thatnegatively affects the rentability of these bonds, and in turn to low interestrate in the United States and the global economy (CEPII, 2003, 2004a,2004b).

All in all, to Latin America Chinas economic expansion is, thus, a mixedblessing. The transformation of China into a determining factor for the riseof international prices of primary commodities and natural resource-based

manufactures has favoured the income from imports of Latin America.According to the World Bank (2004), the combination of the low dollarand Chinese demand pushing up prices has in the total of developing coun-tries added an extra 1.1 per cent growth of GDP from 2001 to 2004. Never-theless, in the Chinese market of primary and manufactured products,which represent 70 per cent of Latin America exports to China, this regionis competing with the ASEAN countries. Meanwhile, Chinese imports toLatin America create unfavourable conditions for Latin American pro-ducers of manufactures. Given the low costs of production in China, LatinAmerican products are replaced by Chinese products both in local and

global markets. While the massive Chinese demand especially of LatinAmerican minerals and food products have so far resulted in a tradebalance that is favourable to Latin America, the competitiveness ofmanufacturing in Latin America and the Caribbean vis--vis China isin great need of improvement. In addition, the competitiveness of LatinAmerica may be favoured if China is to comply rigorously with all WTOcompromises, which would translate into higher prices of its products.

Latin America and Chinas Entry into WTO

In 1986, the Peoples Republic of China solicited admission to GeneralAgreement on Tariffs and Trade (GATT). This started a 15-year process ofmultilateral and bilateral negotiations that ended in 2001 with the entry ofChina into GATTs successor: the WTO. In the multilateral negotiationsthe totality of the GATT/WTO members, including the Latin Americanand Caribbean countries, determined the terms and conditions of theaccession of China. In the bilateral negotiations China had to negotiatethe conditions and compromises of mutual market access with each ofthe members. Government officials discussed the tariffs on industrial and



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agricultural products, and the obligations that China had to meet with

respect to its internal market and access of foreign providers of services.Later on the bilateral negotiations were protocolized and multilaterized,enabling China to be recognized as most favoured nation. This wholeprocess culminated in the WTO Ministerial Conference in Doha, Qatar,on 10 November 2001, when the member states approved the terms ofChinas accession.

In the context of these GATT/WTO negotiations, since the early 1990sChina has been actively intensifying its diplomatic relations with LatinAmerica. This is a politically interesting development as it contrasts with

Chinas previous international isolation, while taking place in a time of USand EU embargos on weapon sales to China because of the repression ofthe Tiananmen Square protests in 1989. Since 1990, China has attendedthe annual meetings with foreign affairs ministers of the countries of theGroup of Rio (a permanent regional consultation mechanism), mainlyto search for joint positions in international institutions. In 1991, Chinabecame a permanent observer of the Interamerican Development Bankand in 1994 of the Latin American Integration Association ALADI. In1998, the Peoples Bank of China became a member of the CaribbeanDevelopment Bank. Moreover, China has established mechanisms of

permanent dialogue with MERCOSUR and with the Caribbean Com-munity and Common Market (CARICOM), and in 2004 it became apermanent observer of the Organization of American States (OAS) andof the Latin American Parliament. In addition, China signed more thanone hundred agreements with Latin American countries on scientific andtechnological cooperation, ranging from satellites industry to agriculture(Cornejo, 2005b; Gutirrez, 2003: 23).

Bilateral Negotiations with China

For Latin America and the Caribbean, the bilateral negotiations with Chinawere heterogeneous, contradictory and polemic because of the variouspotential economic effects of Chinas full membership of WTO. Generally,to Latin American countries the Chinese entry into WTO (as its rise inthe global economy) meant a confrontation with three inevitable tradeprocesses: the possibility to benefit from new export opportunities to theChinese market; the necessity to deal with the competition with moreChinese imports; and the Chinese competition in segments of the inter-national market to which they are exporting similar products. Although



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the region as a whole accepted to grant China the status of most favoured

nation, especially Mexico and Argentina resisted this. Mexico negotiatedwith China until September of 2001 and was the last Latin Americancountry to put terms on its entry. Together with Mexico, the last LatinAmerican countries that signed the accords for Chinas accession to WTOwere Venezuela, Bolivia, Costa Rica, Guatemala and Ecuador.

The long negotiations of Mexico with China had to do with the strongChinese competition on the US market of labour intensive products. Mexicanexports for a long time have been predominantly directed towards theUS, and this trade dependency has only increased with Mexicos entry

into the NAFTA in 1994, so that almost 90 per cent of Mexican exportsare to the US market. Mexican entrepreneurs were very critical of thebilateral negotiations with China and feared for major problems withunfair Chinese trade competition. They therefore demanded the inclusionof a clause that for two decades would deny China the right to call forWTO mechanisms of dispute settlement in case Mexico was to apply com-pensatory and protective tariffs against Chinese products. In the finalbilateral accords their demand for such a guarantee against unfair com-petition was watered down to a moratorium until 2008. Indeed Mexico hasused this clause to apply compensation tariffs ranging from 800 to 1000 per

cent on Chinese products in the sectors of tools, toys and textiles (CEPAL,2004a; Cornejo, 2005a; Dussel Peters, 2003; Len, 2005).

Argentina bilaterally negotiated Chinas entry into WTO from 1994 to2000. One of the reasons of this long process was the Chinese resistanceagainst Argentine tariffs on agro products from China. In the end Chinaallowed Argentina to apply tariffs on 60 products of which 36 were agri-cultural, including meat, fish, fruit, vegetable oil, soy and grains (CARI,2004). Argentina also benefited from a series of worldwide quotas thatChina accepted in negotiations with other countries on products like wheat,

corn and wool. With the export of manufactures and natural resourcesArgentina expected significant benefits (the service sector was excludedfrom the Argentine-Chinese negotiations), but like Brazil and Chile itforesaw serious problems with its agricultural exports due to Chinasstringent (phyto-) sanitary controls, and to the tariffs, quotas or non-tariffbarriers related to its policy of food security. Other issues were the likelydisplacement of Argentine production due to Chinese competition andChinas relations with MERCOSUR that might erode the preferentialtariffs for Argentine products to the Brazilian market. Like Mexico,Argentina used a defensive policy in its negotiations with China as shows



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from its rigorous antidumping policy to Chinese imports, particularly

in machineries, metal industry and transport. Between 1995 and 2004,Argentina made 31 antidumping investigations against China of which24 concluded that sanctions should be applied, although not all were nec-essarily materialized (Girado, 2003; Gutirrez, 2001; IDB, 2005).

Chinas most privileged Latin American associate is Brazil. During thevisit of Li Ruihuans (chairman of the National Committee of the ChinesePeoples Political Consultative Conference, CPPCC) to Brazil in 1993the Chinese government defined its relations with Brazil as a strategicalliance. In Chinas classification of diplomatic relation this implies that

the two countries can form the basis of an international alliance to achievemore than just global trade rules, in particular to improve developing econ-omies access to the US and EU markets. Of all Latin America countriesBrazil has also put the most efforts in intensifying its economic relationswith China and the two countries have been cooperating in several hightechnology projects. Already in 1988 the countries started preparationsthat resulted in the creation of the China-Brazil company Earth ResourcesSatellites Projects (CBERS), which in 1999 and 2003 constructed two satel-lites that provide information on (new sources of) natural resources andthe environment. An alliance between Brazils AVIBRAS and Chinas

Great Wall Industrial Corporation materialized in the InternationalSatellite Communication (INSCOM) company. In 2002, the Brazilianaeronautic company Embraer and the Chinese Air Company (aviation)established a joint programme. In addition, there is extensive cooperationin the fields of biotechnology, information technology, pharmaceuticalsand new materials, and Brazil has promised to export uranium to Chinain return for Chinese funding for its nuclear programme, including theenrichment of uranium (CEPAL, 2004b; Gutirrez, 2003; Lei, 2004;Mesquita Machado and Tinoco Ferraz, 2005).

Brazil supported Chinas entry into WTO from early onwards becauseit was convinced that the economic benefits would not only involve invest-ments but even more so the opening of an important alternative marketthat could compensate for the negative effects of US and European pro-tectionism. Recently, under President Lula da Silva (since 2003), Brazil hasextended its international political project by strengthening its relationswith China, India and Russia. In May 2004, Lula visited China in order toconsolidate their strategic alliance on trade, technological developmentand defence. As a result of this visit the National Development Bank ofBrazil reached an accord with the Chinese investment agency CTIC on



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easing the finance of mixed Chinese-Brazilian companies from the two

countries. Also the mining company Vale do Rio Doce signed associationagreements with Baoshan Iron and Steel and other the Chinese companiesto produce iron and aluminium in the North East of Brazil (see Table 2).With the Chinese firm Yanguang this Brazilian company agreed to investin oil products for export to third markets. And the state companies Petro-bras and Sinopec started to jointly explore and produce oil in Africa andthe Middle East (Cornejo, 2005a; Mesquita Machado and Tinoco Ferraz,2005).

Chile accepted the accession of China to WTO in 1999. This early yes

stemmed from Chiles strategy of a dynamic open regionalism mentionedearlier. Interestingly, Chile was also the first South American countryto establish diplomatic relations with the Peoples Republic of China,shortly after the start of Salvador Allendes presidency in 1970 (in LatinAmerica as a whole this was only preceded by Cuba in 1960). Currently,with its accumulated experience in establishing trade agreements, Chilerealizes that good relations and especially a trade agreement with Chinawould not only increase its access to the Chinese market but wouldequally provide benefits in the economies with which China has alreadyestablished accords. Even more so, Chile aims to achieve a privileged

position in attracting Chinese FDI, in particular in its mining sector. Chile(like Peru) has benefited substantially from the rising Chinese demandof copper, which has provoked higher prices. In 2005, a leading Chinesemetal company, Minmetals Non-ferrous Metal Co., and the worlds largestproducer of copper, Chiles CODELCO, established a strategic alliance tomeet the growing Chinese need for this mineral and exploit the Chileanreserves (see Table 2).

Latin American Recognition of China as Market Economy

The first years of Chinas WTO membership (since the end of 2001) havenot been without disputes and differences with Latin America. Many ofthe problems have surged from the competition for third markets, aboveall the United States, and from the competition of Chinese products inthe internal Latin American markets, while also the protection of Chinasinternal market has been an issue. Not only Argentina presented importantantidumping claims against China; even Brazil Chinas strategic allyin the region had presented 11 claims for antidumping against Chineseproducts by mid 2005. Essentially these claims concern Chinas failure



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to comply with its promise to eliminate the different treatment and dual

pricing of goods produced for the internal market compared to goodsdestined for exportation. This policy is considered as the major source ofChinese dumping, which harms the competitiveness of Latin Americaneconomies. To protect their economy from this unfair competition fromChina, until 2016 members of WTO are entitled to use the so-called non-market economy (NME) methodology towards Chinese products. Thisis not a new phenomenon in the global economic relations with China:since 1995 this country has seen the highest number of claims on notfollowing the international economic norms, mainly due to its complex

economic transition from socialism to neoliberalism. In the agriculturalsector, Chinas market socialism still allows for many state companies,subsidies and import tariffs. In the WTO accords on agriculture and cattlethat China signed it agreed to limit the subsidies on agricultural exportsto 8.5 per cent, while the import tariffs would be lowered to 15.6 per centin 2004. Whereas countries such as Argentina and Chile have experienceddifficulties in exporting agricultural products to China (largely due todubious non-tariffs barriers like sanitary and phytosanitary rules), LatinAmericas agro exports to China more than quintupled between 1999and 2003, increasing from $495 million to almost $2.8 billion (CEPAL,

2005b; OMC, 2004).Since 2005, China has to follow all WTO commitments as established

in the multilateral and bilateral accords, and despite some trade conflictsChina has insisted on its compliance and on the WTO principles of equaltrade, free competition and unprejudiced trade. China aims to soonbecome officially recognized as market economy (instead of NME) byas many countries as possible, but especially by its main export partner:the United States (US-China trade flows reached $219 billion in 2004).While to China this recognition should help to reduce the number of

antidumping claims, it could also be in the interest of Latin America as itwould probably raise the prices of Chinese products, thus improving thecompetitiveness of Latin American products. Chinas advantages haveto do with international antidumping rules: Article VI authorizes WTOmembers to use prices in so-called surrogate markets in order to determinethe normal value of the goods and service of economies like China thatdo not follow market rules (usually Mexico, Turkey and India are usedas referee countries). To the United States and the European Union,this article provides a means (of power) to diminish the competitivenessof the Chinese economy. The United States has established a series of



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criteria to determine the market condition of an economy including the

convertibility of ones currency, rights of association between local andforeign capital, state control on companies and freedom of the market.The European Union decided to apply the condition of transition eco-nomy to China, stating that China has not yet sufficiently limited theinfluence of the government in the functioning of state companies, whileit lacks an effective legal framework for corporate activities, such as onbankruptcies, the protection of private property, and the convertibilityof capital (CEPAL, 2005b).

A large share of Latin America and the Caribbean has chosen a more

pragmatic approach, and in 2004 Brazil, Chile, Argentina, Venezuela,Peru and several Caribbean countries decided to grant China the statusof market economy. Important for this decision was that such recognitiondoes not impede the application of a flexible mechanism of anti-dumpingclaims. Another reason was the ASEAN countries recognition of Chinaas market economy, which was improving the trade possibilities of theseAsian countries with China. Other countries, however, have acted withless pragmatism. For example, MERCOSUR was unable to reach a jointconsensus on the recognition of China as market economy because of theopposition of Paraguay. As a result of its anti-communist stand duringthe dictatorship of Alfredo Stroessner (195489), in 1957 Paraguay hadrecognized Taiwan, Republic of China, which has been unacceptable toChina. One of the priorities of President Hu Jintaos visit to the regionin 2004 was to achieve the recognition of China as market economy byMERCOSUR as a whole, but in the end China only signed bilateral accordson this with Argentina, Brazil and Chile, whereas Uruguay postponed adecision because of its presidential elections (Oviedo, 2005).

Apart from Paraguay also the diplomatic relations of some CentralAmerican and Caribbean countries with Taiwan complicate the relations

with the Peoples Republic of China. Since the early 1970s, when Chinawas accepted and Taiwan was expelled as member of the United Nations,and as part of its One China policy, China demands from countries to enddiplomatic relations with Taiwan before establishing economic relationsof any sort with China. In the 1990s, this requirement has been softened inthe case of developing countries and turned into an approach that Chinacalls economic diplomacy. Yet China and Taiwan continue their com-petition for diplomatic relations with as many countries as possible, whichhas had some curious effects. In return for $100 million Taiwanese support,



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in 1990 Nicaragua ended its diplomatic relations with China, and in

2006 Nicaragua even signed a free trade agreement with Taiwan. Alsothe Central American countries of Guatemala, El Salvador, Honduras,Panama and Belize, as well as the Dominican Republic, diplomaticallyrecognize Taiwan. Between 1998 and 2004, Taiwan supported CentralAmerica with $240 million for various development projects (Cornejo,2005a, 2005b; Domnguez, 2006). Costa Rica, however, decided in June2007 to swap its friendship with Taiwan for relations with the PeoplesRepublic of China.

The acceptance of China as market economy by Chinas main Latin

American markets Brazil, Chile and Argentina was awarded withadditional deals. Agreements were signed with Brazil on investmentsby China Southern Airlines in the joint fabrication of aeroplanes andvarious agreements on information technology and the financial sector,and investments in infrastructure, energy, natural gas, biotechnology andminerals. For Chile, recognizing China as market economy was beneficialfor its tourist sector, for solving phytosanitary conflicts over Chileanexports to China, and in particular for Chiles copper exports. Chinasspectacularly increasing demand pushed the international copper price

up, helping the Chilean economy to achieve a growth rate of close to6 per cent in the year 2005. And to Argentina China promised that itsArgentine imports were to rise from the $2.5 billion in 2004 to as muchas $6.5 billion in 2009 (Oviedo, 2005).

Concluding Remarks

With the neoliberal reforms implemented by Deng Xiaoping, as of 1978,China started to strengthen its relations with Latin America and theCaribbean. In the beginning, due to the political situation of the region,

relations were established with several neoliberal military dictatorships.China abandoned its political strategy of expanding Maoism to LatinAmerica, as was previously done by creating Red Flag or RevolutionaryCommunist Parties, the most sad and infamous expression of which wasthe Sendero Luminoso (Shining Path) in Peru. The Latin American ver-sion of Maoism had clearly expressed the ideological influence of thecultural revolution and Chinas critique on social imperialism, Sovietcommunism and communist parties, thereby contributing to ideologicaland political division of Latin American during the Cold War.



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Chinas neoliberalization, however, brought a definite end to its inter-

national ideological agenda. Central to Chinas modern foreign policiesis the strategy of the Four Nos. Light years away from its internationalMaoist policies, Chinas doctrine is nowadays based on: no hegemonism,no power politics, no arms races and no military alliances. This strategicdoctrine proclaimed by the Chinese President Hu Jintao (since 2003)forms part of Chinas global policy to favour its economic developmentand integration in global neoliberalism. In Latin America, this doctrineis seen as positive for improving international cooperation, strengtheningmutual confidence, preventing international confrontations and thereby

being positive for multilateralism. The strategy of the Four Nos has alsobeen at the basis Chinas so-called asymmetric diplomacy, which privilegescertain bilateral relations while China is simultaneously participatingactively in processes of economic regionalization and globalization. Thisapproach has some parallels with Latin American strategies of openregionalism, involving a broad economic opening and new bilateral freetrade agreements together with forms of economic regionalization likeNAFTA or MERCOSUR. The fact that Brazil deepened its relations withChina without waiting for a joint MERCOSUR agenda towards Chinaillustrates that the new South-South relations may come at a cost for re-gionalization processes.

As part of the new South-South relations in a (postCold War) multi-polar world, Brazil and China, together with India and Russia, have be-come strategic allies. This was enabled by the changes that President LulaDa Silva made in Brazils foreign policies. Both Brazil and China aim toimprove their economies added value and the international prices forprimary and manufactured products, prioritizing investments that involvetechnology transfers. Their new collaboration in the Group of 20 withinthe WTO has had important results in the trade negotiations of the Doha

Round. In this group of developing countries, Brazil, India and Chinaplayed key roles in the degree of influence achieved by the Group of 20,especially on agricultural issues. In the fifth ministerial summit of the WTOin Cancun, Mexico in September of 2003, the Group of 20 rejected the jointproposal of the European Union and the United States, proposing insteadto eliminate US and EU agro-subsidies. Also in the WTO negotiationson services, intellectual property and investments Brazil and Chinahave by and large had coinciding agendas, following from several similarinterests.



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Although these new South-South relations are an unexpected develop-

ment in the era of global neoliberalism, evidently the other side of thecoin of similar economic interests is competition. Even Latin Americancountries that so far have not been threatened by the China effect, likeBrazil, in the longer term may well face some serious problems as fu-ture efforts for technological upgrading are likely to meet a major com-petitive threat by China. Compared to China, Latin America and theCaribbean will remain a high wage region, which can only be offset by highlevels of technological competence or skill. Together with the relativelyweak position of Latin Americas global production networks (except

for Mexico and Central America) there is thus reason for concern aboutthe regions competitive position in the world economy. Lall and Weiss(2004) stress the striking tendency in the bilateral trade between Chinaand Latin America and the Caribbean (LAC) of the latter specializing inexporting primary products and importing manufactures. The patternsof the two regions are almost a classic textbook illustration of trade be-tween developing and industrialized regions, in which Latin Americastrengthens its specialization in primary products and processes resourceswhile China does the reverse.

What is surprising is that LAC is the richer region, with a longer history ofmodern industrialization, higher human resources, more FDI per capita andwith more liberal trade and investment regimes. The result is arguably a massivedowngrading of comparative advantage in a dynamic sense, surprising for sucha relatively industrialized region (Lall and Weiss, 2004: 23).

In the end, then, the rise of China is forcing Latin America and theCaribbean to once again reconsider its two main models of development:that of Mexico and Central America, focussing on assembly industries forthe US market that create low-wage, unskilled labour; and that of countries

like Brazil, Chile and Argentina, expanding resource-based industry thatmake these activities more capital intensive yet provide little jobs. Despitethe differences, [b]oth types of activity have relatively low domestic-value-added content, and neither provides the kind of transformation ofthe domestic production and export pattern that would allow trade tobecome an engine of growth (UNCTAD, 2003: 141). From Mexicos recentproblems one might easily conclude that maquiladoras are not the roadto modernization, at least not in a liberalized world economy in whichChina is able to offer massive amounts of similar products at a lower price.



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However, the economic growth achieved by some other Latin American

countries largely based on providing primary products to industrializedas well as rapidly industrializing countries may not bring about much pro-poor development either. Since the years of economic wonders in this re-gion (the 1940s to 1960s), the puzzle of how to end dependency and achievesustainable high growth rates has not been solved. Rather than bringingquick and easy solutions to this puzzle, Chinas current and ongoing eco-nomic wonder is triggering new regional debates on the possibilities fordevelopment under global neoliberalism and on how to reform economicpolicies, regional integration and the global economic system

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Alex E. Fernndez Jilberto is senior lecturer in International Relations

at the University of Amsterdam. He has published various articles andbooks on the political economy of Latin America and developing countriesin general. His most recent publications include the co-edited volumesBig Business and Economic Development: Conglomerates and EconomicGroups in Developing Countries and Transition Economies (with BarbaraHogenboom, Routledge, 2007), Latin American Conglomerates andEconomic Groups under Globalization (with Barbara Hogenboom, aspecial double issue of theJournal of Developing Societies, 20(34), 2004),Good Governance in the Era of Global Neoliberalism: Conflict and de-

politisation in Latin America, Eastern Europe, Asia and Africa (withJolle Demmers and Barbara Hogenboom, Routledge, 2004), LabourRelations in Development (with Marieke Riethof, Routledge, 2002),Miraculous Metamorphoses: The Neoliberalization of Latin AmericanPopulism (with Jolle Demmers and Barbara Hogenboom, Zed Books,2001),Regionalization and Globalization in the Modern World Economy:Perspectives on the Third World and Transitional Economies (with AndrMommen, Routledge, 1998). Address: Department of Political Science,University of Amsterdam, O.Z. Achterburgwal 237, 1012 DL Amsterdam,

The Netherlands. [email: [email protected]]

Barbara Hogenboom is lecturer in Political Science at the Centre forLatin American Research and Documentation (CEDLA) in Amsterdam.She writes on transnational politics, globalization processes, and politicaland economic development in Mexico and Latin America. Among herrecent publications are various co-edited volumes, including Big Businessand Economic Development: Conglomerates and Economic Groups inDeveloping Countries and Transition Economies (with Alex E. FernndezJilberto, Routledge, 2007),Latin American Conglomerates and EconomicGroups under Globalization (with Alex E. Fernndez Jilberto, a specialdouble issue of theJournal of Developing Societies, 20( 34), 2004), GoodGovernance in the Era of Global Neoliberalism: Conflict and depolit-isation in Latin America, Eastern Europe, Asia and Africa (with JolleDemmers and Alex E. Fernndez Jilberto, Routledge, 2004), MiraculousMetamorphoses: The Neoliberalization of Latin American Populism(with Jolle Demmers and Alex E. Fernndez Jilberto, Zed Books, 2001)



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and the monograph Mexico and the NAFTA Environment Debate: The

Transnational Politics of Economic Integration (International Books,1998). Address: Centre for Latin American Research and Documentation,Keizersgracht 395397, 1016 EK Amsterdam, The Netherlands. [email:[email protected]]

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