China's Challenge to Latin America

Relations between China and Latin America and the Caribbean are paradoxical. While bilateral trade has increased and diplomatic relations have strengthened in the past few years, a lack of knowledge persists between the two regions, and in some cases tensions are growing. Hardly any major projects between China and Latin America have been initiated by the private, public, or academic sectors, and bilateral institutions do not yet reflect the weight of economic dynamics.

There are two aspects to this paradox. First, many Chinese enterprises – particularly in basic-goods sectors such as soy, meat, iron, steel, copper, and oil – have initiated activities in Latin America, either through direct investment or by buying products and/or businesses. To a lesser degree, Latin American enterprises – such as Gruma, Modelo, Embraer, Marco Polo, and Embraco – have successfully introduced themselves in China.

Even so, Latin America remains a secondary economic and commercial partner for China. In 2006, Latin America and the Caribbean accounted for 3.7% of China’s exports and 4.3% of its imports. But bilateral trade has been growing at impressive rates, with Chinese exports and imports up by 24.8% and 23.9%, respectively, from 1995 to 2006.

Indeed, for practically all of Latin America’s countries, China is one of the ten main trade partners – and already in second place in several – with rates of growth well above total trade. Even in the Caribbean and Central American countries – several of which do not have diplomatic relations with China – commerce has been prolific.