Global Economy
China's economic rebalancing hitting Latin American economies
By Michael Hennigan, editor and founder
Mar 30, 2015 - 2:25 PM

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China's surging economic growth in recent decades has been a growth engine for other developing economies in Asia, Latin America and Africa but economic rebalancing is now creating challenges for several countries.

China’s rapid economic growth over the last decade in particular has been heavy industry- centred and reliant on natural resources imports.

By value, China is the world’s largest consumer of iron ore, copper and soya beans. Thus, commodity exporting countries – including those in Latin America – have benefited from Chinese commodity demand and related high prices. Especially the southern part of the continent with its vast natural resources has been a perfect match.

Latin American exports to China rose from US$11bn in 2003 to almost $106bn in 2013. This pushed up China’s share in Latin American exports nearly tenfold in that period, while the share of the US declined, according to Deutsche Bank Research.

Emerging Asia (including China) became the second most important export partner for the Latin America after the US in 2012, overtaking the EU, which now occupies third place.

Deutsche Bank says that for Latin America as a whole China is the 2nd most important market after the US, taking up 10% of the region’s exports. Chile, Uruguay, Brazil, Peru, Cuba and Venezuela have a higher-than-average export share vis-à-vis China. For the first three countries, China is actually their No. 1 market worldwide. Among countries with a smaller-than-average share of exports to China, Colombia stands out and is rapidly catching up towards the regional average.

Food producers will continue to gain compared with producers of hard commodities.

Latin America has a relatively diversified export structure: 44% of its exports to the world are manufactured products while 56% are commodities (although for South America the share of manufactured exports is lower at 24%). However, only 8% of Latin American exports to China are manufactured goods. Within the commodities group, exports to China are heavily dominated by metals, ores, and agricultural products.

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