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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.

Suggested Citation

  • Jorge Blázquez-Lidoy & Javier Rodríguez & Javier Santiso, 2006. "Angel or Devil? China's Trade Impact on Latin American Emerging Markets," OECD Development Centre Working Papers 252, OECD Publishing.
  • Handle: RePEc:oec:devaaa:252-en
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    File URL: http://dx.doi.org/10.1787/422232033888
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    1. Federico Bonaglia & Kichiro Fukasaku, 2003. "Export Diversification In Low-Income Countries: An International Challenge After Doha," Development and Comp Systems 0307001, EconWPA.
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