China and Latin American Development

Here are the highlights of the China-Latin America Economic Bulletin published by the Pardee Center and written by Rebecca Ray and Kevin P. Gallagher.

• LAC exports to China have soared since 2000, but slowed in 2012, stalling to a 7.2 percent growth rate in real dollar terms, compared to average annual export growth to China at 23 percent from 2006 to 2011.
• Behind this slowdown are falling commodity prices. LAC exporters are “running in place” as exports to China have continued to grow in volume, but have fallen in price, leading to stagnant total export values.
• More than half of all LAC exports remain concentrated in three broad sectors related to copper, iron, and soy—with the majority of these exports concentrated in three countries: Brazil, Argentina, and Chile. These sectors are all prone to large price swings, contributing further to the slowdown in the value of exports to China.
• Chinese exports to LAC are diverse and mostly in manufacturing, with a heavy emphasis on electronics and vehicles. Their value has grown more quickly than LAC exports to China, opening an LAC trade deficit in goods with China in 2011 and 2012.
• Chinese FDI to LAC increased slightly but remains a relatively small percent of total FDI into LAC. Chinese FDI continues to be concentrated in a handful of sectors, such as food and tobacco, automobiles, energy and communications.
• Chinese finance to sovereign governments has slowed and become more discretionary in nature, rather than earmarked for particular industries and sectors.
• Based on preliminary commodity price values for 2013 and projections for 2014, it is reasonable to expect a growing LAC trade deficit in goods with China.

Read the whole report here.