Latin America and the Rise of China: Possibilities and Obstacles for Development

At first glance, China’s expansion is a very positive development for Latin America and the Caribbean, as trade figures show steep rises. Several countries greatly benefit from China’s enormous demand for energy, minerals, and other primary commodities. Yet to other countries the “China effect” is mainly trade competition in local and global markets. With respect to foreign investment the effects of China’s expansion are diverse, too, involving competition for MNC investment, but also new Chinese joint ventures, especially in the exploitation of Latin America’s natural resources. However, the contrast between China’s rise and Latin America’s low and volatile growth figures leads to the question of what Latin America can learn from the People’s Republic of China (PRC). In particular, this contrast stresses the crucial role of the state in developing countries to maintain or broaden their economies’ position in global markets. Also for Latin America the issue of the Chinese miracle is about ‘the future “spaces” open for the development of industrial exports in a liberalized world in which the PRC is preempting many markets for products that developing countries can export’ (Lall and Weiss 2004:23).