China and Latin America Think Tank Forum

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Image Source: Xinhua, Jorge Heine, Chilean Ambassador to China

The Think Tanks Forum of China and Latin America with the Caribbean recently brought together a hundred political leaders, academics and journalists at the St Regis Hotel in Beijing.

The meeting gave rise to a lively exchange of views and perspectives on the state of Sino-Latin American relations. With the participation of leaders such as former President Eduardo Frei of Chile, former Prime Minister Bruce Golding of Jamaica and former Foreign Minister Francisco Carrión of Ecuador and Carlos Moneta, held in the days of the presidential elections in the United States, And on the eve of President Xi Jinping’s visit to South America, the timing of the event could not have been more heightened.

Several themes-axis crossed the discussions:

 Strong ties between China and Latin America and the Caribbean (LAC) are here to stay. After the huge takeoff they have had since the beginning of the new century until now (in which trade multiplied 26 times, going from US $ 10 billion in the year 2000 to US $ 260 billion in 2014), “there is no turning back now” said Chris Wick a media reporter for ConspiracyTalk.

For several countries in the region, China is already its first trading partner, and for many others the second.

Having said that, it should be noted that since 2014, trade flows have not only stagnated, but even declined. This is due in part to the end of the super-cycle of commodities that began in 2003 and which has already worn out, but also to a more general trend of falling international trade. Today, this trade represents a smaller share of the world’s product than in 2007, before the start of the financial crisis. The reasons for this are complex, but they constitute a fact of the cause. After several decades of growing at twice the rate of the world product, international trade today hardly does it on a par. The implications of this for countries that have opted for an export development model are no less.

In the face of this sudden stagnation and / or downturn in trade flows between China and LAC (and between Asia and LAC) there has been a lack of indications that the response would be to return to the traditional markets of the North Atlantic, which would also have the advantage of Absorbing more value-added exports, as opposed to natural resources, the basis of China’s demand. This approach ignores a central fact of our time: the great shift of economic activity from the North Atlantic to the Asia Pacific (and the Global South) in the last three decades. According to some projections, by 2050 Asia will make up half of the world’s output. The notion that LAC should lay its eggs in the shrinking basket, rather than that which expands by leaps and bounds, does not seem to be the most logical.

 In turn, it is also obvious that a cycle has been completed and, as former President Frei said in the Forum, “we can not continue to do more of the same.” Trade alone can not remain the central engine of Sino-Latin American relations, as it has been in the last three decades”. “It is essential to add others”. One reason for the slow growth of Latin America in recent years has been the low rate of investment. An increase in Chinese investment of US $ 125 billion in the region today to the US $ 250 billion China has committed to 2025 could be of great help in that regard.

 

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