Narayan AmmachchiThe Economic Commission for Latin America and the Caribbean (ECLAC) has urged regional governments to diversify their exports in order to profit from their expanding relationship with China. Specifically, ECLAC suggested that governments think of ways to export more food products to the Asian giant.
“Just five products, all of them commodities, represented 75% of the value of regional shipments to China in 2013,” says a new document released by the UN agency to coincide with the visit of Chinese Premier Li Keqiang to its headquarters in Santiago, Chile, this week.
China is now the second biggest source of the region’s imports (16% of the total) and the third biggest destination for its exports (9% of the total). In addition, the region has increased its importance as a partner for China: in 2000 it absorbed just 3% of China’s total exports and was the source of 2% of the country’s imports; in 2013 its participation in both flows rose to 6% and 7%, respectively.
As economic growth is forecast to slow both in China and in the region, bilateral trade will not keep expanding at the same speed seen in the last decade-and-a-half. Moreover, the relationship is facing new challenges with China trying to restructure its development model and modernize its economy.
ECLAC believes that exporting food products to China could prove ideal for Latin American countries, given China’s rapid urbanization and expanding middle class.
“In order to halt the worrying ‘reprimarization’ of exports, progress must be made in terms of productivity, innovation, infrastructure, logistics and the training of human resources. These advances are fundamental to growing with equality, in a context of accelerated technological change,” Alicia Bárcena, ECLAC’s Executive Secretary, states in the document’s prologue.
Chinese FDI in the region has grown significantly since 2010 to an estimated annual level of between US$9 billion and $10 billion. According to the publication, the current reforms underway in China could give a definitive boost to FDI flows towards Latin America and the Caribbean in the coming years.
“If Chinese investment flows grow and diversify, this could not only drastically redefine the economic-trade relationship between both parties but could also promote productive integration within the region itself,” the report states.
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