Significant partnership

BEIJING, Dec. 18, 2024 /PRNewswire/ -- A news report from chinadaily.com.cn:

By JOSÉ MANUEL SALAZAR-XIRINACHS

Strengthening ties with China presents a strategic opportunity for the economic transformation of Latin America and the Caribbean

Over the past two decades, the economic relations between China and Latin America and the Caribbean have considerably expanded. Trade surged from $14 billion in 2000 to nearly $500 billion in 2022, making China the second-largest trading partner for LAC and the primary export market for South America.

China has signaled a strong commitment to enhancing these ties. At the 60th anniversary of the United Nations Conference on Trade and Development, President Xi Jinping reaffirmed China's solidarity with the Global South. He emphasized plans to increase imports from developing countries, boost cooperation in trade and investment, and support the UN's 2030 Agenda for Sustainable Development.

This partnership comes at a critical moment for LAC countries. The region has been grappling with declining economic growth for several decades. Between 2014 and 2023, the average annual GDP growth rate was just 0.9 percent, a decline from the 2 percent growth of the 1980s. This downward trend extends further back: from 1950 to 1979, the region grew at an average of 5.5 percent per year; from 1980 to 2009, this rate fell to 2.7 percent; and over the past 15 years, it dropped to 1.6 percent.

Breaking free from this low-growth trap requires deep structural transformations in production models and growth strategies. Cooperation with China offers a valuable opportunity to move toward higher, sustained and more inclusive growth. China's experience with modern industrial policies — centered on technological innovation and public-private collaboration — provides insights that could be adapted to the context of LAC countries.

Given their limited fiscal resources, LAC countries may not be able to rely on subsidies to stimulate growth. Instead, they should focus on establishing effective governance frameworks and fostering partnerships among key stakeholders to promote dynamic sectors. Areas such as energy transition, circular economy, electromobility, digital services, health sciences and the care economy hold significant development potential.

Enhancing trade and investment relations, along with technological and infrastructure cooperation with China, could be pivotal. However, to maximize these benefits, LAC countries may need to adjust their current trade pattern. The region predominantly exports natural resources and food products while importing mostly manufactured goods. Investing in productive development policies can help diversify economies and increase the technological sophistication of both production and exports.

The Economic Commission for Latin America and the Caribbean (ECLAC) has identified sectors poised to drive growth and transformation. These include renewable energy, the digital economy, biotechnology, electromobility and internet-enabled services. Engagement with China in these areas could significantly impact regional development. The Belt and Road Initiative has already contributed to improving infrastructure in some LAC countries.

China's emphasis on a global green transition aligns with the region's considerable potential in renewable energies. Cooperation in solar and wind energy and electromobility could be transformative. Beyond addressing low growth, such collaboration could help tackle high inequality and poverty levels. According to the ECLAC's Social Panorama 2022, approximately 201 million people — 32.1 percent of the region's population — live in poverty, with 82 million (13.1 percent) in extreme poverty. Strategies that promote both economic growth and social inclusion are essential.

The ECLAC is advocating for a new vision of productive development policies. Detailed in our 75th anniversary publication and the recent report Panorama of Productive Development Policies in Latin America and the Caribbean, this vision analyzes the low-growth context, examines current policies, and recommends improvements for more productive, inclusive, and sustainable development.

Strengthening economic relations and strategic cooperation with China could play a crucial role in helping the LAC region overcome the low-growth trap, reduce poverty, and generate high-quality employment. Initiatives such as the Global Development Initiative and the BRI offer platforms for cooperation in key development areas.

For China, the relationship with LAC countries is also significant. The region's share in China's imports increased from 2.5 percent in 2000 to 8.5 percent in 2022, surpassing imports from the United States, which stood at 6.6 percent in the same year. Notably, one-third of China's total food imports come from LAC countries, particularly from Brazil and Argentina. Additionally, the region's share in China's total exports more than doubled from 3 percent to 7 percent over the same period, indicating a deepening mutual dependence.

In a global landscape marked by technological revolutions and geopolitical shifts, it is sensible for LAC countries to develop a clear vision for productive transformation and engage in strategic collaborations. Certainly, the China-LAC partnership holds significant promise to unlock sustainable and inclusive growth, overcome long-standing economic challenges, and contribute to the aspirations of societies for more productive, inclusive and sustainable development.

The author is the executive secretary of the United Nations Economic Commission for Latin America and the Caribbean. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Contact the editor at [email protected].