As global attention to China’s expanding economic influence grows, Triple Crisis blogger Kevin P. Gallagher published the following opinion article in the Financial Times on China’s role in Latin America. It draws on his new book with Roberto Porzecanski, The Dragon in the Room: China and Future of Latin American Industrialization.
Latin America must see China as a trade threat, as well as a partner
Major Chinese investment in Latin America is now a regular event: Sinopec’s $7.1bn investment in Repsol’s Brazilian unit is just the latest example. Such deals are rightly celebrated with fanfare in Latin America. However, the long-run effects are uncertain – especially given that Latin American exports are losing badly to their Chinese counterparts in world markets.
Latin America needs to diversify its exports – away from oil, iron, soya, meat and the like – if it is to grow sustainably. Unfortunately, as the region has focused on selling its commodities to China, Chinese firms have been outcompeting Latin American manufacturing exporters at a frightening pace.
In the 1980s and 1990s, Latin America looked to the US as a core economic partner, adopting the Washington Consensus in order to attract US investment and gain better access to US markets. Alas, in the twenty years up to 2002, Latin America grew by barely one per cent a year in per capita terms.
Read the full article at Financial Times.
Read more on Gallagher’s work on China in Latin America.