The countries and regions that know how to capture this potential will come out ahead with the rise of China. Latin America, with its strong agricultural capacity and production of raw materials, is without a doubt an area that can come out ahead. Brazil, Argentina, and Paraguay, for example, with 28 percent, 21 percent, and 3 percent, respectively, of total world production. Likewise, Chile, Peru, and Mexico enjoy 29 percent, 11 percent, and 7 percent of the world copper reserves. Together, the region has at its disposal 50 percent of the total production or reserves in the world.
In the next decade China will be a source of luck by also a challenge for the region. Whatever happens or stops happening in the country will have major repercussions in Latin America. In 2009 we are seeing (in this case in a positive way): while Mexico is suffering a historic drop in its GDP, due in large part to its proximity to the United States, the epicenter of the global crisis, Brazil has barely skipped a beat and in 2010 will already be meeting its potential with almost 5 percent growth, according to the forecasts of the OECD.
Which is to say, Brazil --also due partly to great diversification of its exports to Asia and a rebound in the prices of raw materials, oil, iron ore, or soy-- is experiencing the drive from Chinese demand. A symbol of the closeness between Brazil and China are businesses like Vale, one of the biggest producers of minerals in the world and whose income and sales have come almost 45 percent from the Chinese market in 2009, or like Petrobras, which just concluded a gigantic agreement for $10 billion with Chinese partners.
In the future the adjustments in the rise or fall in the Chinese GDP won't be indifferent for region. Although the old oft-used saying is, when the US sneezes, Latin America gets a cold, this will also be true for China: when Beijing accelerates or slows the pace of its growth, the region will also perceive the winds and tides of the Far East.
Thursday, December 17, 2009
China in the Neighborhood
Javier Santiso (who I always feel obliged to add is the author of a very insightful book about modern developmentin Latin America) on China and Latin America: