Research published in the Winter issue of Americas Quarterly, released today, shows that Chinese exports not only compete with Latin America in export markets, they also undermine manufactured goods domestically. Osvaldo Rosales of the Economic Commission on Latin America and the Caribbean writes in his article, “Trade Competition from China,” that China’s emergence on the global trading scene “has undoubtedly delivered benefits for Latin America—primarily by enhancing the value of its exports of natural resources and related products,” but also produced “a major competitor” in the markets of Latin America’s key trading partners.
A study conducted by Rosales and his colleagues empirically documents the effect of competition from Chinese goods on the products of four select Latin American countries (Argentina, Brazil, Colombia, and Mexico) in third markets and within countries. The study shows that, as China’s participation in the four countries’ key markets—the U.S. and Latin America—increased, their own market share was eroded, in both high- and low-tech products. Overall, the affected market share in 2010 for the four countries represented 25 percent of their total exports to the U.S. and 12 percent of their total intraregional exports.
In spite of the substantial inroads that Chinese imports have made in Latin America’s domestic industries and export markets, writes Rosales, “public policy can make a difference.” He notes that Latin American products’ competitiveness could be increased by reducing logistics costs to enable them to benefit from shorter travel distances to markets; increasing spending on research, development, design, and marketing of products that already have a higher probability of maintaining market share; and fostering innovation and improving quality control.
For more on China and Latin America, read the new Americas Quarterly.