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

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  • Jorge Blázquez-Lidoy
  • Javier Rodríguez
  • Javier Santiso

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. L’économie de la Chine s’est développée à pas de géants, en progressant de manière spectaculaire depuis qu’elle a commencé à s’ouvrir aux investissements étrangers et s’est réformée en 1978. Tout au long des 25 dernières années et suite à une longue période d’autarcie économique, le pays s’est imposé en tant qu’acteur majeur du commerce mondial. Son adhésion à l’Organisation Mondiale du Commerce (OMC) en 2001 a été un événement de taille. Ainsi, la Chine représente à la fois une menace et une opportunité pour les marchés émergents d’Amérique latine. En moyenne et en dépit de certaines exceptions, l’Amérique latine fait partie des gagnants de l’intégration globale de la Chine. Ce document étudie les structures d’importation et d’exportation de la Chine, en s’appuyant sur une base de données composée de 620 biens. Deux indices de compétitivité commerciale ont été élaborés afin de comparer les impacts de la Chine sur 34 économies tout au long de la période 1998-2004, 15 d’entre elles étant des économies latino-américaines. De manière générale, les résultats confirment qu’il n’y a pas de concurrence importante entre la Chine et l’Amérique latine. Mais l’émergence de la Chine appelle aussi les pays latino-américains à se réveiller. Si la région souhaite maintenir ses avantages comparatifs, d’autres réformes sont nécessaires, en particulier au niveau des infrastructures.

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File URL: http://dx.doi.org/10.1787/422232033888
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Bibliographic Info

Paper provided by OECD Publishing in its series OECD Development Centre Working Papers with number 252.

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Date of creation: 29 Jun 2006
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Handle: RePEc:oec:devaaa:252-en

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Cited by:
  1. Enestor Dos Santos & Soledad Zignago, 2010. "The impact of the emergence of China on Brazilian international trade," Working Papers, BBVA Bank, Economic Research Department 1022, BBVA Bank, Economic Research Department.
  2. Qureshi, M.S. & Wan, Guanghua, 2008. "Trade Expansion of China and India: Threat or Opportunity," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) RP2008/08, World Institute for Development Economic Research (UNU-WIDER).
  3. Thierry Mayer, 2006. "Policy Coherence for Development: A Background Paper on Foreign Direct Investment," OECD Development Centre Working Papers 253, OECD Publishing.
  4. Sergio Lehmann & David Moreno & Patricio Jaramillo, 2007. "China, Commodity Prices and Latin American Performance: A Few Stylized Facts," Working Papers Central Bank of Chile, Central Bank of Chile 424, Central Bank of Chile.
  5. Jenkins, Rhys, 2008. "Measuring the Competitive Threat from China," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) RP2008/11, World Institute for Development Economic Research (UNU-WIDER).
  6. Jesús Cañas & Roberto Coronado & Robert W. Gilmer & Eduardo Saucedo, 2011. "The impact of the maquiladora industry on U.S. border cities," Working Papers, Federal Reserve Bank of Dallas 1107, Federal Reserve Bank of Dallas.
  7. Roberto Álvarez; & Sebastián Claro, 2008. "David Versus Goliath: The Impact of Chinese Competition on Developing Countries," Working Papers Central Bank of Chile, Central Bank of Chile 478, Central Bank of Chile.
  8. Avendano, Rolando & Alonso Arroba, Angel & Estrada, Arturo, 2009. "Adapting to the Rise of China: How can Latin American Companies Succeed?," MPRA Paper 25948, University Library of Munich, Germany.
  9. Pierluigi Montalbano & Silvia Nenci, 2011. "Are the Emerging Economies a Threat to the Italian Competitiveness?," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, Associazione Rossi Doria, issue 4, December.
  10. Roberto Álvarez & Sebastián Claro, 2007. "On the Sources of China’s Export Growth," Working Papers Central Bank of Chile, Central Bank of Chile 426, Central Bank of Chile.
  11. Sergio Lehmann, 2010. "China en la economía global y su impacto sobre el desempeño de América Latina," Economic Policy Papers Central Bank of Chile, Central Bank of Chile 39, Central Bank of Chile.
  12. Patricio Jaramillo & Sergio Lehmann & David Moreno., 2009. "China, Precios de Commodities y Desempeño de América Latina: Algunos Hechos Estilizados," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 46(133), pages 67-105.
  13. Daniel Lederman & Marcelo Olarreaga & Eliana Rubiano, 2008. "Trade Specialization in Latin America: The Impact of China and India," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 144(2), pages 248-271, July.
  14. Naudé, Wim, 2010. "New Challanges for Industrial Policy," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) wp2010-107, World Institute for Development Economic Research (UNU-WIDER).
  15. Gallagher, Kevin P. & Moreno-Brid, Juan Carlos & Porzecanski, Roberto, 2008. "The Dynamism of Mexican Exports: Lost in (Chinese) Translation?," World Development, Elsevier, Elsevier, vol. 36(8), pages 1365-1380, August.
  16. Pearson, Joseph & Viviers, Wilma & Cuyvers, Ludo & Naudé, Wim, 2010. "Identifying export opportunities for South Africa in the southern engines: A DSM approach," International Business Review, Elsevier, Elsevier, vol. 19(4), pages 345-359, August.
  17. Wong, Sara A. & Petreski, Marjan, 2014. "Dutch Disease in Latin American countries: De-industrialization, how it happens, crisis, and the role of China," MPRA Paper 57056, University Library of Munich, Germany.
  18. Baboo M. Nowbutsing & Sonalisingh Ramsohok, 2012. "The rise of China: a new fear of trade competition for Mauritius?," Journal of Chinese Economic and Foreign Trade Studies, Emerald Group Publishing, Emerald Group Publishing, vol. 5(2), pages 91-106, June.
  19. Anoop Singh & Martin D. Cerisola, 2006. "Sustaining Latin America's Resurgence," IMF Working Papers 06/252, International Monetary Fund.

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