Diversifying exports is key to the continued success of China-Latin American trade ties, said the head of the Economic Commission for Latin America and the Caribbean (ECLAC).
“These bilateral economic relations face many challenges, but there is a key word: diversification,” Alicia Barcena, executive secretary of the Santiago-based ECLAC, wrote in an editorial posted on the agency’s website.
Barcena notes that the two regions have benefited from “highly dynamic” ties over the past 15 years, with bilateral trade growing 22-fold between 2000 and 2014.
“The growth took place when the Chinese economy grew 10 percent annually between 2000 and 2011, stoking a commodity ‘supercycle’ that benefited much of the region, particularly among South American countries,” said Barcena.
Due to both external and internal reasons, however, the pace of economic growth has slowed down, especially in Latin America, which requires countries in the region to limit their reliance on raw materials or commodity exports that are currently suffering from depressed prices, and to diversify their output.
“From a Latin American perspective, export diversification and increased productivity constitute the main pending issues,” wrote Barcena. “Just five single products, all of them commodities, represented 75 percent of the value of regional shipments to China in 2013,” said Barcena.
To advance towards more prosperous and less unequal societies, the official urged the region to overcome its excessive dependence on commodities exports. “Therefore, while the expansion of trade and investment flows with China is key, it is equally important to develop actions aimed at modifying their structure,” said Barcena.
“If Chinese investment grows and diversifies in the coming years, it will be possible to promote not only export diversification towards that country, but also productive integration within the region. Additionally, if cooperation with China helps bridge our well-known gaps in infrastructure, logistics and connectivity, we can stimulate intraregional trade and the development of regional value chains,” Barcena added.
The editorial was timed to coincide with Chinese Premier Li Keqiang’s four-nation tour of Latin America as well as his scheduled address at ECLAC’s headquarters in Santiago Monday.
Li’s visit marks “a new milestone” in the deepening of economic, political and cooperative ties between Latin America, the Caribbean and China, said Barcena.
China has made a “sustained effort to forge a joint path” towards development since it recognized the strategic nature of relations with Latin America in a 2008 White Paper stating its official policy, said Barcena.
The China-Community of Latin American and Caribbean States ( CELAC) Cooperation Plan 2015-2019, launched in January 2015 in Beijing, “provides an appropriate institutional framework for advancing in all of these areas,” said Barcena. “Now both parties must agree on mutually beneficial actions to make that cooperation a concrete reality.”