América latina a China: Usted hace que desea ser una economía mejor

After the Asia-Pacific Economic Cooperation (APEC) forum summits became annual events on the diplomatic calendar more than a decade ago, visits by Latin American leaders to Asia and Asian leaders to Latin America became more frequent. Yet whenever a Latin president turned up in Beijing or an Asian prime minister headed to São Paulo, the getting together of distant amigos seemed more quaint happenstance than a meeting of valued trading partners with strategic mutual interests।

By 2004, when Chinese President Hu Jintao spent two weeks touring Argentina, Brazil and Chile before passing through Cuba, that had changed. Both sides hailed Hu’s trip as a milestone in three decades of Chinese relations with South America. The reason: trade and investment between China and the region had been climbing sharply in recent years – and many South American countries were reaping the benefits of China’s soaring demand for commodities, still the backbone sector of the continent’s economies. In 2006, trade between China and Latin America rose to US$ 70.2 billion, up from about US$ 10 billion in 2000.

At the World Economic Forum on Latin America 2007 in Santiago in April, it was therefore highly appropriate that a number of sessions focused on China and the impact of its zooming growth and widening geopolitical role on Latin America. Participants from both sides of the Pacific stressed that the relationship was no flash in the pan of commodities but rather a match of complements with coinciding interests and a long, mutually beneficial future. “The trade and investment relationship between Latin America and China is a long-term strategic partnership,” said meeting Co-Chair Zhang Shoulian, President of China Minmetals Non-ferrous Metals.

But for a real partnership to evolve, China and Latin America will have to develop a more textured relationship, certainly one based on more substance than raw materials trade. Many in Latin America still do not know or understand the China phenomenon. Inasmuch as there is widespread skepticism about globalization among Latin Americans so is there wariness – even fear – of a rising China. Believers such as meeting Co-Chair Andrónico Luksic Craig, Vice-Chairman, Banco de Chile, took the opportunity to rally the doubters. “Let's dare, take risks, step out,” Luksic urged participants. “We need to understand and shake hands with our friends in China. We need to learn and know China.”

At one level, Luksic was exhorting Latin American business to seek out higher-value trade and investment opportunities in China. This dovetailed with the Chilean Finance Minister’s call for a transformation of Latin America’s economies so they are not captive of the boom-bust price cycles of raw materials. When the commodities party should end, Latin America has to be prepared. Countries must not only exploit the opportunities that China offers but must also prepare themselves to exploit their comparative advantages to compete in the global market against China, India and other emerging economies. This is particularly true for nations in Latin America that are not resource rich and may not be benefiting directly from China’s hunger for raw materials to fuel its 11% annual growth.

For countries to boost their competitiveness and come up with the products and services that China and the rest of fast-growing Asia need and will buy, Latin American economies must pursue the key prescriptions of the Santiago Consensus and invest more in education, innovation and infrastructure. Some in Latin America have pointed out that during Hu’s visit in 2004, China had promised to invest in a number of infrastructure projects. While China has been busily financing and building infrastructure across Africa, it has not been as active or munificent in Latin America. The region should not sit and wait for the bounty to come its way, but must move quickly to address its competitive shortcomings such as the lack of infrastructure, countered Javier Santiso, Deputy Director, Chief Development Economist, OECD. “China and Latin America are two faces of the same coin,” Santiso reckoned. “China represents an opportunity. It is a wake up call for Latin America to pursue reforms.”

That is a key proposition of globalization. Globally competitive countries should motivate or even force both partners and rivals to improve themselves and become more productive and efficient. China’s current advantage is its ability to produce quality products at a reasonable price, but its own economic transformation is slowly turning this giant Asian economy into a formidable force in higher-value sectors such as IT services and biotechnology that require innovation, world-class infrastructure and the rule of law to flourish. Latin America must follow suit. Like many Chinese companies that are going global after a period of reform or as a way to force themselves to become more competitive and hence better able to compete at home, Latin American enterprises have to reinvent themselves too. Concluded meeting Co-Chair José C. Grubisich, CEO, Braskem Brazil: “Global companies are looking to India and China which gives our local companies the opportunity to restructure and to prepare a strong platform to move into the international market in a better shape.” That is precisely how the rise of China is driving a powerful positive agenda for Latin America.