Latin America turning to East, but not exactly in China's pocket yet.

The FT has a curious headline on this piece, which kicks off a special section on "new trade routes" for Latin America.  It says, "China is now region's biggest partner."

A region once known for instability has sailed through the global financial crisis. Poverty is falling, the middle classes booming, and asset markets bubbling.

This is due to a spectacular expansion of commodity-based trade. Over the past decade, fast-growing emerging countries, be they in Asia, India or Africa, have shown a near insatiable demand for the commodities that Latin America has in such abundance, whether Argentine soya, Brazilian iron ore, Chilean copper or Peruvian gold.

The change has been rapid: in 1999, trade betwen Latin America and China was a mere $8bn. By 2009, according to UN figures, it had grown 16 times to $130bn. By comparison, bilateral trade with the US rose by just a half over the same period.

Less well appreciated is how intra-Latin American trade has grown over the same period. During the colonial years, neighbouring countries were more likely to trade with Europe than each other. Now, growing business and infrastructure links are bridging Latin America’s huge geographical obstacles – its vast forests and giant mountain ranges – knitting the region’s economies together.

If anything, the pace of change has increased since the global financial crisis. Developed markets remain mired in sluggish growth and high debt. Meanwhile, emerging economies are surging ahead; they now account for three-quarters of global economic growth, according to the Inter-American Development Bank (IADB).

The rising middle classes of the emerging world are behind this shift. They aspire to own the same homes and cars, and eat the same foods, as their peers in the developed world. As a result, their economies have a higher propensity to consume the commodities that Latin America produces.

Most dynamic new partner, yes, but the same piece later states that US trade with the region was $486B in 2009, or "almost four times China's total." If US trade grew by half over the last decade, then it grew in the range of about $150B, or more than China's entire amount.

Piece also says that 90% of the FDI flowing into the region's two biggest economies, Mexico and Brazil, come from OECD or Old Core economies.

Would seem that an editor got excited.

Comments

[King Jaja]

I agree that US involvement in Latin America is still massive, but that is to be expected. It is your backyard. The fact that China is competitive in Latin America speaks volumes about the tendency for the US to have foreign policy "blind spots".

Secondly, I would be more interested in what the projections are for 2021, than the absolute figures today.

Most importantly, the US lacks a strategic narrative for Latin America and Sub-Saharan Africa. You cannot continue to define the sharp end of your foreign policy engagement in Africa and Latin America based on the IMF/World Bank, "War on Drugs", Securing Oil & Gas supplies, AFRICOM and USAID.

As an African, it is painfully clear that US African policy was groping in the dark in 1990s and was partly outsourced to Bono and subsumed in the "War on Terror" last decade.

Africa has a large number of unemployed youth and only Beijing seems to either understand that or is developing the capacity to fill that void. (They are doing it without legions of consultants).

I live in Lagos, Nigeria where the Chinese are building a 16,000 hectare free trade zone. Their presence is prominent and visible. We may not like them, but most Africans would prefer to work for the Chinese than to receive aid from the West.

The US is taking its reach and global influence for granted. You cannot, in a world of Russia Today, CCTV and Al Jazeera leave public diplomacy to CNN and Hollywood. That is a grave mistake. As it is becoming increasingly difficult (due to immigration restrictions), for ordinary Africans and Latin Americans to interact with flesh and blood Americans, Africans and Latin Americans are interacting increasingly with Chinese. For example, I have Chinese living down the road and they are great guys (we play soccer together).