China and Latin America

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The increasing economic presence of China in Latin America: implications for US foreign policy.

Maria Camila Gonzalez

Research project
Christian Maisch
December, 11. 2012

Table of Contents
1.0 Introduction
2.0 Chapter 1: China’s historical presence in Latin America 3.0 Chapter 2: Consequences of Chinese economic presence for Latin America 4.0 Chapter 3: Changes in United States foreign policy to Latin America 5.0 Chapter 4: Study case - Brazil

6.0 Conclusion
7.0 Bibliography

1.0 Introduction: The increasing economic presence of China in Latin America: implications for US foreign policy.  China's awakening, one of the most important events of this century, has been the result of a sustained process of economic reforms and it has had global and regional implications. Countries and continents need to be prepared for the influence China will exert now that it has the resources to expand and the need to look for new ways to supply its domestic market with goods, and its growing economy with raw materials and other industrial inputs. At the same time that China wants to develop rapidly and requires more suppliers, Latin America is rich in raw materials and other goods, and is always looking for more export markets. Given these complementary factors, the Chinese economic presence in Latin America is increasing rapidly. At the international level China has grown more than any other country, both economically and politically, over the last three decades. As a result, China is becoming much more closely linked to Asian economic cooperation schemes, as well as to other global organizations. This started when China joined the International Monetary Fund (IMF) in 1980 as an economic strategy intended to fortify the domestic reforms. Later, in 1986, China joined the Asian Development Bank to consolidate this strategy at the regional level. The most important accomplishment, though, was gaining membership in the World Trade Organization (WTO) in 2001. Joining the WTO was a key step in China’s parallel processes of opening to international markets and, reforming its domestic economic system. Membership in the WTO was an engine and a pillar of its economic reform and China’s invitation to join the G-7 in September of 2004 was recognition of its role as a global economic power that had become fully integrated with the world economy. Domestically, China’s growth rate of approximately 9% per year, the sustained percentage for more than thirty years, has resulted in significant changes in the social structure and economic organization of the country. Some of the most significant changes in China have come from the industrialization process and from the growth of the service sector, as a percentage of the whole Chinese economy. These two developments have increased the standards of living and the purchasing power of the Chinese people, given the Chinese population, changes in its domestic economy impact the world directly. These domestic policy changes have also transformed the way China interacts with the world. The Chinese economy has become much more integrated into the world economy. China’s share in world merchandise imports increased from 6.9% in 2008 to 7.9% in 2009, making China the second largest world importer. On the other hand, imports are also a significant aspect in Chinese integration with the world. As Pascal Lamy expressed: “What many people do not always realize, because they are very much focused on how much China exports, is how much China imports. China's imports have grown at an average of 20 percent a year for the past ten years; it is an enormous change." This growth impacts Latin America in a direct way since it has led to the rise of its commodity prices. This increase in international prices has resulted in better economic conditions for the producer countries including those in Latin America.

The increasing economic presence of China in Latin America leads to some other questions...
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