China's double-edged trade with Latin America
Soy from Argentina, copper from Chile, iron ore from Brazil: China's seemingly insatiable appetite for Latin America's raw materials is credited with fueling blistering economic growth for both.
China's rise in bilateral trade with Latin America is the greatest of any region in the world -- an astonishing 18-fold increase over the past decade, thanks mostly exports of raw materials from the region.
But experts are warning the increasingly closely tethered economic ties to China may not be entirely to Latin America's benefit, and may even hamper its long-term aspirations of becoming a major exporter of manufactured goods.
Part of the reason for this is China's insistence on buying almost exclusively unprocessed raw materials from the region while refusing to purchase more sophisticated "value added" exports.
"It's essentially one commodity per country and this is quite remarkable," said Mauricio Cardenas, director of the Latin America program for the Brookings Institution think tank in Washington.
There are also risks, like one flagged recently by the Nomura economic analysis firm, which raised the concern in a recent statement that the economic boom in countries like Brazil stems from overdependence on its exports to China.
"We think Brazil's much vaunted 'new middle class' is a direct result of Chinese commodity demand," the company wrote recently in its analysis.
Another economist who specializes in economies of the region put it even more bluntly, pointing out that when it comes to export of value-added goods from Latin America, China must be viewed more as a fierce competitor than likely market.
"I don't think that with China, India, and the rest of Asia in the game, the region stands any chance of becoming a major exporter of manufacturing goods," said Mauricio Mesquita, senior economist at the Inter American Development Bank (IADB)
"I think this window is closed with a very few exceptions," he said.
And experts raise another concern -- that the seemingly bountiful resources that Latin America has been exporting to the Asian behemoth could start running out by mid-decade.
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