Concerns about trade imbalances between Latin American countries and China are getting more vocal, and misgivings are now heard more frequently from government officials and business executives in that region.
“We do not want to be China’s next Africa. We [Mexicans] need to be owners of our own development,” according to a quote from Neil Dávila, head of ProMéxico, in a diplomatic cable released by Wikileaks, and recently published by the New America Media, a website that brings minority issues to the forefront.
Experts claim that China made its move into Latin America immediately after joining the World Trade Organization (WTO), attempting to lure Latin Americans into its fold. To jump-start its trade relationship, China reduced trade tariffs by close to 20 percent in 2000 and another 10 percent in 2009.
“This move [WTO membership] enabled China to take advantage of Latin America as a destination for its manufactured goods and as an important source of supply for primary products,” said Daniel Morales, analyst at Peru consulting firm APOYO, in a recent Knowledge@Wharton (KW) article addressing China’s trade-related Latin American activities.
With China’s aggressive acquisition policies in the Latin American region, anxiety has risen to apprehension and at times to consternation. Not only experts, but also all segments of society cannot fathom China’s long-term intentions, which doesn’t help the situation.
“Nations from Mexico to Brazil to Chile express concern about Chinese motives in the southern hemisphere—motives that, in the opinion of many people in Latin America, have been damaging to Africa in its business dealings with China,” according to the New America Media article.
Colombia joined the chorus of apprehensive voices, with Alejandro Ossa, Colombia’s economic and commercial attaché in China, pointing to China’s detrimental labor and environmental policies. Ossa noted that Colombia will not put up with China’s machinations and won’t become a second Africa and Venezuela, where China is now pulling the strings while the governments sit by idly.
Brazil no longer hangs on China’s coattails, but more and more expresses concern about China aggressively pursuing its natural resources, and Chile is leaning further away from any relationship with China.
“Brazil is also leery, fearing that the only ‘interest’ that China expresses in Brazil is to secure natural resources: Beijing has so far failed to reciprocate on Brazilian wishes for help on its science and technology aspirations. Chile, too, has started to show concern,” according to the New America Media article.
Trade Statistics in a Nutshell
“Trade relations between China and Latin America are moving at various speeds in different countries,” states the KW article.
China woos only those Latin American countries that can provide natural resources, while it totally ignores countries that have nothing to contribute toward it achieving the world’s No. 1 trade status.
“Until now, the most helpless countries, such as the Central American nations, have had almost no trade relations with China. … It is easy to conclude that this is all about unequal and discriminatory trade ties, since the Central American nations are smaller and less competitive,” said Roberto Durán, professor of political science at the Catholic University of Chile, in the KW article.
The unequal trade between China and Latin America has taken on the same face as what is happening in the United States and other places in the world. In 2009, China shipped $78 billion of goods to Latin American countries, while those countries only exported $40 billion worth of goods to China.
The latest trade statistics published by the Ministry of Commerce of the People’s Republic of China (PRC) show that Mexico’s exports to China amounted to $2.74 billion between January and September of 2010, while China exported $32.63 billion worth of goods to Mexico during the same time frame. Mexico’s trade deficit with China amounted to $29.89 billion, which increased by 43.4 percent over the same period in 2009.
Colombia, a small potato in China’s relationships, exported $1.57 billion worth of goods to China, while importing $3.19 billion worth of goods between January and August of 2010. Colombia’s trade imbalance amounted to $1.62 billion.
Chinese aggressive trade policies have had a detrimental effect on Latin American industries, bankrupting many Latin American production companies, especially those in the textile industry.
Chinese trade policy has “forced some manufacturers in the region to shut down,” said Germano Glufke, professor at the Getulio Vargas Foundation in Brazil, in the KW article.
Next: Investing Aggressively Outside China
