China's presence in Latin America: Too big to fail?
- By Guo Jie
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E-mail China.org.cn, January 9, 2015
When you look back at the history of Latin America, many countries and regions adopted various economic patterns after they became independent, but their economies are still not developing well enough. Throughout the 20th century, when the world economy became ill, Latin America often caught a cold too. Latin America finally embraced its golden years from 2003 to 2008 and moved into prosperity. The local Gross Domestic Product (GDP) increased by 5 percent a year and GDP per capita increased by more than 3 percent a year. In the recent global financial crisis, Latin American economies generally performed well and were soon revived. For many reasons, the most recognized of which is that China's large demands for global bulk stock since 2003 benefit Latin American countries as other developed countries had weak import demands. China's persistent demand played a very important role in local trade and the price rally of bulk stock. It may be the first time in people's memories that "Latin America" and "China" have become so close.
Figure 1
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Source: Economic Commission for Latin America and the Caribbean (ECLAC), "People's Republic of China and Latin America and the Caribbean: Ushering in A New Era in the Economic and Trade Relationship," Santiago, Chile, June 2011, p.13. |
Trade miracle: "fifty years of progress in five"
The period from 1956 to 1961 was called Brazil's "golden era." Under the leadership of then president Juscelino Kubitschek, Brazil started to industrialize. Its industry' grew by an average annual rate of 9 percent. The president's slogan of "fifty years of progress in five" was written in history. The slogan was so ambitious not just at that time, but even now. However, if you look at the diagram of trade between China and Latin America below, you will be surprised about how quickly the growth occurred.
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Sources: Yearbook of China's Foreign Economic Relations and Trade, China Customs Statistics Yearbook (annual editions) Note: Statistics before 1979 are from foreign trade business; Statistics since 1980 are from customs of exports and imports. |
We can see from figure 2, China and Latin American trade volume amounted to US$10 billion in 50 years, but during 2007 to 2012, in just five years, the export and import trade volume of both sides soared from US$100 billion to US$250 billion. Latin America has become the fastest region to increase exports to China, and China surpassed the EU to become the second biggest exporter to sell Chinese goods in Latin America.
