Angel or Devil: China's Trade Impact on Latin American Emerging Markets

CEPAL Review No. 90, pp. 15-41, December 2006

27 Pages Posted: 11 Nov 2008

See all articles by Javier Rodriguez

Javier Rodriguez

Grupo Banco Bilbao Vizcaya Argentaria (BBVA)

Jorge Blazquez

affiliation not provided to SSRN

Javier Santiso

ESADE Business School

Date Written: June 10, 2006

Abstract

China's economy has expanded by leaps and bounds, with dazzling progress since it first opened to foreign investment and reform in 1978. Over the last 25 years and after a long period of economic autarky, the country has emerged as a major player in world trade. Its accession to the World Trade Organisation (WTO) in 2001 was a milestone. China presents both a threat and an opportunity for Latin American emerging markets. On average and despite some exceptions, Latin America is a clear trade winner from Chinese global integration. This contribution studies China's exporting and importing structure, using a database of 620 different goods. It builds two indices of trade competition to compare Chinese impacts over 1998-2004 on 34 economies, of which 15 are Latin American. The results generally confirm that there is no relevant trade competition between China and Latin America. Not surprisingly, countries that export mainly commodities face lower competition, because China is a net importer of raw materials. But the emergence of China is also a wake-up call for Latin American countries. More reforms are needed, especially in infrastructures if the region wishes to maintain its comparative advantages. Latin America will have also to deal with the Chinese bonanza. The dark side of this windfall is the risk of being stuck out of the global value chain in a raw material corner.

Keywords: Trade, Latin America, Resource curse

JEL Classification: F1, N5

Suggested Citation

Rodriguez, Javier and Blazquez, Jorge and Santiso, Javier, Angel or Devil: China's Trade Impact on Latin American Emerging Markets (June 10, 2006). CEPAL Review No. 90, pp. 15-41, December 2006, Available at SSRN: https://ssrn.com/abstract=1298968

Javier Rodriguez

Grupo Banco Bilbao Vizcaya Argentaria (BBVA) ( email )

Paseo de Recoletos, 10
Madrid
United States

Jorge Blazquez

affiliation not provided to SSRN ( email )

Javier Santiso (Contact Author)

ESADE Business School ( email )

Mateo Inurria 27
Madrid, 28036
Spain

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