Latin America and China

The rise of China has a great impact on Latin America’s development trajectories. Economic relations with China have expanded at an unprecedented speed since the start of the 21st century. From 2000 to 2016, trade between Latin America and China increased no less than 26 times, and China became the number one trade partner for Brazil, Argentina, Chile, Peru, and Uruguay (IISCAL, 2018). China is also becoming a source of major direct investments and development loans to Latin American countries. These trends are primarily driven by China’s growing demand for raw materials and the Chinese government’s Go Global strategy since the 2000s. After the crisis of the 1980s and the disappointing economic performance during the 1990s, most Latin American countries greatly benefitted from the commodity boom of 2003–2013. The boom was partly driven by China’s economic growth, and in this same period China became the world’s leading importer of several raw materials of which Latin America holds large reserves, especially iron ore, copper ore, bauxite, and oil. With the increased interest of the Chinese government, companies, and banks in the region, the countries have become less dependent on US and European markets, capital, and policies. However, the subsequent downturn of global prices for key metals, oil, and soy has reminded the region of the risks of such commodity-based growth, whereas cheap Chinese products continue to harm Latin America’s manufacturing sector.