Source: Latin America Advisor

Inter-American Dialogue: China’s experience in developing technology could make the country an important partner in helping Latin American countries diversify their economies, according to an October 20 report by the Economic Commission for Latin America and the Caribbean (ECLAC). How willing is China to share its expertise? Which countries in Latin America would benefit the most? To which sectors of Latin America’s economies should China provide targeted assistance? What economic lessons—and warnings—should Latin American countries learn from China?

Matt Ferchen: First, it’s important to note that ECLAC’s new report is about the region’s trade crisis. This crisis is directly linked to China’s own economic slowdown and changing growth model, both of which have affected the volume and price of some key Latin American commodity exports to China. This is in stark contrast to earlier ECLAC reports that emphasized the positive role that Chinese demand played in minimizing the impact of the global financial crisis on the region. The commodity boom, and what I’ve been calling the "easy phase" of China-Latin America relations (although they were clearly never that easy), is now obviously over and Latin America is dealing with the hangover. The end of the commodity boom provides the background and an explanation for why Latin American and Chinese officials and businesspeople are now more actively discussing ways to cooperate on new forms of trade and investment, including infrastructure and more high-tech trade. However, the likelihood that China will transfer any of its key manufacturing technologies to Latin America is very limited since this would undercut China’s own competitiveness. That said, technological upgrading in agricultural and food-based export industries is one area where cooperation is possible since Chinese demand for imports in this sector will likely remain strong. The ECLAC report argues that Latin America can learn from Chinese "long-term visions" and state support for technological upgrading, yet Chinese concerns about insufficient "innovation" and inefficient state-owned enterprises should lead to more careful evaluations of the real sources of China’s economic dynamism past and present.

This piece was republished with permission from the Inter-American Dialogue’s daily Latin America Advisor.