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Latin America And The Caribbean And China
The timing is right for Latin America and the Caribbean to take a qualitative leap in its relations with China. The Cooperation Plan 2015-2019 is a necessary and important first step in this direction, as it defines an institutional framework and general groundlines. Now the Plan needs to be endowed with specific content, which in turn means agreeing upon a regional agenda of priorities, affording a prime role to multi-country initiatives.
This document was prepared by the Economic Commission for Latin America and the Caribbean (ECLAC) on the occasion of the visit by Li Keqiang, Prime Minister of China, to ECLAC headquarters on 25 May 2015.
The document has five sections. The first analyses the main features of the international economic context for Latin America and the Caribbean and China. The second examines progress of the economic reforms under way in China and remaining challenges in this regard. The third section offers an overview of the region’s trade and investment relations with China, and the fourth discusses some of the main components of the China-CELAC Cooperation Plan 2015-2019, which was adopted by the Community of Latin American and Caribbean States (CELAC) and China in January 2015. Lastly, the fifth section offers a number of reflections and recommendations for enhancing economic ties between the parties.
Over the past few decades, China (along with the other emerging economies of Asia) has become a key for understanding the process of and prospects for globalization. On the strength of its robust performance in terms of economic growth, international trade, foreign direct investment and technological innovation, and its role as a source of international financing, China is rapidly rearranging the global economic map. It is strengthening the links between developing economies and contributing to an unprecedented cycle of growth, trade, investment, poverty reduction and progress in the internationalization of emerging economies. Thanks to this, the income gap between these economies and the industrialized countries is narrowing.
The rate of expansion of China’s economy has moderated since 2012 and is expected to continue to do so over the coming years. This has driven down the prices of a number of the commodities that the Latin American and Caribbean region exports to China, which has been interpreted as the end of the supercycle of high commodity prices that lasted for most of the period between 2003 and 2011. At the same time, the guidelines adopted by the Chinese authorities are aimed at rebalancing China’s development model, focusing more on household consumption and less on exports and investment. All of these developments pose opportunities and challenges for trade relations between Latin America and the Caribbean and China, which will continue to gain in importance in the coming years.
China is well aware of the growing importance of its links with Latin America and the Caribbean, in which five landmarks may be identified. The first is the White Book on foreign relations between China and Latin America, published by the Government of China in November 2008. A second was the proposal by the then Premier Wen Jiabao to strengthen political, economic and cooperation relations between China and Latin America and the Caribbean, made in June 2012, at ECLAC headquarters. A third milestone event was the proposal of an ambitious cooperation framework for 2015-2019, known as “1+3+6” which was presented in July 2014 by President Xi Jinping at the first Summit of Leaders of China and of countries of Latin America and the Caribbean, held in Brasilia. The fifth landmark was the adoption of the Cooperation Plan 2015-2019 between the member States of CELAC and China. And the fifth milestone is the visit of Prime Minister Li Keqiang to Brazil, Chile, Colombia, Peru and, again, to ECLAC headquarters.
The keen interest shown by the Chinese authorities in strengthening ties with Latin America and the Caribbean provides the region with a historic opportunity. For example, rebalancing the region’s worrying export reprimarization calls for progress in productivity, innovation, infrastructure, logistics, and training and capacity-building. This is essential for achieving growth with equality, in a context of rapid technological change. Cooperation between CELAC and China could benefit this rethinking of industrial policy and lead to more processing of natural resources and better linkages with manufacturing and services. All this would help to diversify the region’s exports and raise their technology content and value added. Insofar as cooperation with China helps to close our gaps in infrastructure, logistics and connectivity, it will also fuel intraregional trade and the creation of regional value chains. Conversely, the wealth of experience our region has built up in terms of innovative social policy, urbanization, environmental protection and many other areas may benefit China’s policies for tackling its own development challenges.
The timing is right for Latin America and the Caribbean to take a qualitative leap in its relations with China. The Cooperation Plan 2015-2019 is a necessary and important first step in this direction, as it defines an institutional framework and general groundlines. Now the Plan needs to be endowed with specific content, which in turn means agreeing upon a regional agenda of priorities, affording a prime role to multi-country initiatives. Achieving this will pave the way for a future Summit of Heads of State of China and Latin America and the Caribbean, as China has with Europe, Asia, Africa and the Arab world.