Trade patterns in China-Latin America trade for 1999-05

21 Feb '07

4 min read

China's merchandise trade balance with Latin America fell from a $2.2 billion surplus in 1999 to a $3.3 billion deficit in 2005. While the magnitude of bilateral trade remained small relative to China's global trade flows, it has represented an increasingly important source of economic growth for many Latin American countries. Moreover, the progressive widening and restructuring composition of China's trade deficit with Latin America since 1999 are suggestive of important new trade phenomena that warrant deeper analysis.

Using highly disaggregated trade data from official Chinese and Latin American sources, USITC identify the following prominent trade patterns:

Key Trade Patterns:

• Commodity trade: China's imports from Latin America have become increasingly concentrated in a few commodities —iron, copper, and soybeans— which have helped fuel China's rapid industrialization and rising standards of living. Latin American firms have recently benefited from quantity and price increases associated with growing demand from China as a dominant global purchaser.

Moreover, increased trading among Chinese and Latin American state and para-statal enterprises, as well as volatility in global commodity markets, have added new dimensions to the evolving trade relationship.

• Global supply chain integration: China and Latin America have become increasingly integrated on global supply chains, particularly in the manufacturing of electrical products, such as mobile phones and computers. China's fastest growing exports to the region are "parts for assembly" for Latin American factories. This trend is differentiated from China's well established supply chain relationships in East Asia, where China has typically remained at the final stage of the assembly process.

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