China’s trade with Latin America and the Caribbean increased 21-fold from 2000 to 2012 to reach $250 billion today, making the region a trustworthy partner of the world’s fastest growing economy, according a to document prepared by the Economic Commission for Latin America and the Caribbean (ECLAC).
The communist country, whose GDP is set to outstrip that of the United States’ by 2017, seems to have brightened the economic outlook of Latin America.
China, for decades the factory floor for the world’s manufacturing companies, has turned to Latin America for energy sources in recent years. Though the trade volume is ballooning, China is not among the top investors in the LAC region, says the UN agency.
Nevertheless, Latin America has befriended China by satiating its hunger for raw materials and energy sources. Now the question is how the LAC region can cash in on this friendship.
China is already the main destination for exports from Brazil, Chile and Peru, the second destination for Venezuela, Colombia, Cuba and Uruguay, the third for Argentina and the fourth for Mexico. In addition, China is also one of the main sources of imports for almost all the region’s countries.
But there are very few Latin American firms expanding their business operations in the communist country. Therefore, the ECLAC is proposing the creation of a Trade Facilitation Center in Beijing to support regional exports to China and promote trade relationships with Chinese companies.
The agency has also urged the countries to diversify exports to China, as they are currently concentrated on a very small range of commodities. There is a need to broaden the relationship in the areas of tourism, entertainment, architecture, urban planning and environmental management, ECLAC stated.
Making full use of these new opportunities will involve the region’s enterprises increasing their presence in China. “In the next few years, Latin American and Caribbean governments therefore need not only to promote exports to China but also support the direct presence of the region’s companies within that market,” ECLAC said.
In addition, these reforms could boost foreign direct investment flows from China to Latin America and the Caribbean. Yet it is hard for Latin America to determine what it could sell to China, which has 7% of the planet’s arable land and 6% of all water resources and is home to 22% of the world population.