Brazil replaces Mexico as China’s top market in Latin America and boosts its surplus as well.
BY JOACHIM BAMRUD
As Chinese and Latin American companies meet in Bogota this week for the third annual China-Latin America Business Summit, they have reason to be bullish. China continues to be the fastest-growing trade partner for Latin America, helping offset weaker markets like Europe and the United States.
Last year, total trade between China and Latin America reached $140.0 billion, a new record and a 40.3 percent increase from 2007. That’s more than three times the increase in Latin America‘s trade with the United States and Europe, according to a Latin Business Chronicle analysis of data from the International Monetary Fund (IMF), the U.S. Census Bureau and Eurostat.
“At this time, China needs raw materials and Latin America manufactured products,” Feng Liu, first vice president of the New York branch of the Bank of China, said at the annual Latin American bankers association (Felaban) meeting in Miami last week. “But, we need to study how these trends will change in the future in order to maintain a strong trade structure.”
China’s need for raw materials and Latin Americans’ enhanced purchasing power provide ample basis for continued strong trade between the two areas, added John Weinshank, senior vice president for the China Construction Bank.
China’s exports to Latin America grew by 39.4 percent to $69.7 billion, while imports increased 41.2 percent to $70.3 billion. That means that Latin American exports to China grew by more than four times compared with exports to the United States last year, and more than three times compared with exports to the European Union. The crisis will likely cement that trend, since China has been the fastest-growing major economy in the world this year, while the U.S. and European economies continue to be weak performers.
It also means that Latin America managed to post a surplus with China last year – of $535 million – compared with a deficit of $235 million in 2007. That surplus was caused by six countries alone. The other 14 posted deficits with China.
The China-Latin American trade growth is even more dramatic when compared with previous years. In the five-year period from 2004 to 2008, it more than tripled, growing by 256 percent.
The Latin Business Chronicle analysis shows that Brazil replaced Mexico as China‘s top market in Latin America, but Bolivia and Peru saw even …
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