Latin American Perspectives: China's South-South Relationships with Latin America in the Current Era
Issue Editor J.M. CYPHER
With the neoliberal policy approach in retreat, how has the ongoing restructuring of the economies of Latin America been impacted by the surging growth of the Chinese economy?
It is hypothesized that China's impact is of a two-fold nature:
1. China's rapid expansion is based, to some extent, on a dynamic capacity to export.
These exports have directly affected Latin American economies in several areas:
i. Food and related items; crowding out Latin America's cultivators in several areas.
ii. simple manufactured products; forcing Latin America's already besieged manufacturers to retrench, cut wages (further) and to abandon productive activities thus deepening deindustrialization trends that began in the early 1980s.
iii. more advanced manufacturing products; causing electronics firms to abandon production or slow growth in this sector. This effect is/will take a new form as Chinese made autos debut in Mexico and other nations in 2008.
iv. raw material-based manufactured products;--such as steel--are facing weaker demands than would be expected because Chinese buyers have a strong preference for the purchase of raw materials. As higher value-added activities are shifted to China, Latin
America faces forced “specialization” in primary products
2. China's rapid expansion is based, to some extent, on the capacity to import raw materials from Latin America
These imports have directly affected Latin America in several areas:
i. Food and fodder imports such as soy products have led to booms in rural areas of Argentina, Brazil, Paraguay and other nations creating an uneven pattern of economic recovery and expansion that is highly dependent on external forces. At the same time, in the view of many observers, China’s new role as a massive importer has caused prices of basic food products to rise and conditions of scarcity to occur for some commodities, giving rise to what has been termed the “Global Food Crisis”.
ii. Extraordinarily high demands for minerals and fuels have created a mining and resource boom. Chinese Direct Foreign Investment has flowed into Latin America restructuring channels of foreign influence and control. U.S. dominance in the region may be retracting. The boom in Chinese investment potentially allows agile nations to enhancing their bargaining with foreign entities as the Chinese compete with major resource investors such as the US, Canada, Australia and others. This boom has created vast economic rents that are largely appropriated by foreign-owned corporations who repatriate then to “center” nations. Royalties and taxes from these investments have been modest or minimal, while States have done little to channel such windfalls into the expansion of the productive base of their nation.
iii. Important indirect effects are to be noted in Mexico, Central America and other areas, such as the Caribbean where maquiladora type operations, particularly in textiles and related labor-intensive low skill operations, but now in auto-parts, are either closing or cutting wage costs to remain competitive in the US market, or other export markets. China's impact has led to a sea-change in Mexico--and perhaps elsewhere--with many policymakers no longer searching for Direct Foreign Investments involving maquila-style operations.
3. China's new role may have been important in the derailment of US plans for enhanced hegemony, particularly via the FTAA, while it may provide an opening for substantially new configurations at the political and economic level, nationally and internationally:
There is considerable sympathy among many developing countries for the Chinese foreign policy doctrine of the Four No's as proclaimed in April 2004 by the President Hu Jintao: no hegemonism, no power politics, no arms races and no military alliances. For many countries of the 'Global South' this new strategic doctrine for China's peaceful rise is favorable for mutual confidence and international cooperation, as well as preventing Cold War-like international conflicts and confrontations. Moreover, next to various negative effects on specific countries and sectors, China's expansive insertion into the global economy creates important economic South-South relations that help many developing countries to diversify their trade and investment partners, and diminish their dependency on a limited number of (still protected) markets such as the US market.
The joint efforts of Brazil, China, India, South Africa and the other members of the G20 at the 2003 Cancun summit of the World Trade Organization (WTO) and subsequent meetings of the WTO have been remarkable. For the first time since the start of the debt crisis in the 1980s there has been genuine South-South cooperation that has changed the direction of global politics and the evolution of the global trading regime. Economically, it might be hypothesized that, Latin America and China overall gain substantially from one another in the form of South-South trade and investment.
However, as noted in 2 (iii) above, depending on the type of insertion in the global economy, for some Latin American countries the losses from Chinese competition are bigger than the gains from this new export destination and source of foreign investment.
4. China's new role is underwriting the economic boom that is shaping, or could shape, the socioeconomic policies of the left/nationalist governments of Argentina, Bolivia, Brazil, Ecuador, Paraguay, Uruguay and Venezuela.
As a sign of the increasing desire in the region to find alternatives to trading with the US, several other South American nations, such as Venezuela and Argentina, have been strengthening their economic relations with Asia, particularly with China. In May 2004, Lula visited China with 18 ministers and some 500 representatives from all sectors of Brazilian business and industry. Shortly afterwards, Kirchner visited China with a team of ministers and 270 business people from Argentina. Then, in late December 2004, Chavez visited China, which was followed in January 2005 by the signing of some 19 different agreements between Venezuela and China. These agreements involve joint ventures in oil, agriculture and technology, and include extensive Chinese investments in oil and gas exploration in Venezuela. The US government is likely worried about the domino effect of this increasing tendency toward independent trade policies and trade with China.
5. Possible Articles:
(These are suggestions not intended to preclude other themes)
i. A series of national-specific articles, particularly three, each focusing on (a) Brazil, (b) Argentina and (c) Mexico dealing with the range of China's impacts and possible ways of channeling these impacts in a constructive manner.
ii. A broad article focusing on the multilateral issues involved be they with regard to the WTO, the World Bank, the IMF or other areas. At the same time, ideally, such an article would scrutinize the Bolivarian attempts, developments within Mercosur, NAFTA and any other hemispheric initiative/structure that was not strictly a national formation.
iii. A theoretical article that would look at the rising terms of trade for Latin America caused primarily by the commodities boom driven in the first instance by China and to a lesser degree by India.
iv. A theoretical piece focusing on dependency analysis and neoliberalism showing us how to best interpret the China boom in a broad theoretical formulation.
v. A critical article on China that focuses on China's foreign economic policy, the history of China's involvement in Latin America, China's Latin American strategy, and China's conceivable future role in Latin America with a focus on its implications and socioeconomic impacts particularly on Latin America's working class, the peasantry and the informal sector workers.
Manuscripts should be no longer than 25 pages of double-spaced text in English, Spanish, or Portuguese. If possible, submit two copies along with a cover sheet and basic biographical information. With these items, we also require that the manuscript be sent on a CD-R, by e-mail, or on a floppy disk if the other formats are not available. The LAP style guide is available on request or online.
Please send any manuscript submissions to:
Managing Editor, Latin American Perspectives¸ P.O. Box 5703, Riverside, California 92517-5703
LATIN AMERICAN PERSPECTIVES
P.O. BOX 5703
RIVERSIDE, CALIFORNIA 92517-5703
FAX to LAP (951) 827-5685
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