China Engages Latin America: Tracing the Trajectory

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China Engages Latin America: Tracing the Trajectory Adrian H. Hearn and José Luis León-Manríquez Lynne Rienner Publishers, 2011 Hardcover, 325 pages

During the early 1990s, many Latin American and U.S. analysts expressed concerns about an Asian giant that was buying Brazilian iron ore and investing in Mexican manufacturing, while at the same time showing signs of out-competing Latin American and U.S. firms in the region. That giant was Japan.

Hysteria heightened and academic research accumulated. But today few people worry about Japan's role in the region-despite the fact that it is a top-five trading partner and has a large diaspora that includes Peru's Alberto Fujimori, a former (now jailed) Latin American president.

Is history repeating itself? The new source of hand-wringing in the region is China, which, like Japan years earlier, is portrayed by many as stealing Latin American jobs, plundering the region's resources and creating diplomatic alliances that could erode the rule of law. At the same time, some U.S. observers see China's inroads as a threat in the U.S.'s backyard.

How do we make sense of China and Latin America? Are China's everexpanding ties a significant threat to Latin American development and/ or U.S. strategic interests in the region? These are the questions that a burgeoning group of scholars are beginning to ask. Among them are the editors of China Engages Latin America: Tracing the Trajectory-Adrian H. Hearn of the University of Sydney and José Luis León-Manríquez of the Universidad Autónoma Metropolitana in Mexico City. This is a must-read for those seeking to better understand Chinese engagement in Latin America.

Not only is their book one of the broadest and most balanced in a steady stream of volumes dedicated to the topic; it truly breaks new ground. It does so by presenting the latest and most dispassionate economic analyses of the China-Latin America relationship and anthropological evidence on how this relationship is playing out in communities.

Much of the recent scholarship has concluded that China's growing economic ties, while fairly beneficial to South American countries, have been costly-politically and economically- to Mexico and Central America. South America has natural resources that it sells to the Chinese, but many Central American countries have suffered retaliation from China because of their recognition of Taiwan. And Mexico's fewer natural resources not only offer little opportunity for exporting to China but make it more difficult to compete globally with Chinese firms. Meanwhile, U.S. observers are increasingly alarmed that South Americans may be creating political alliances with the Chinese. Not all alliances are of concern, but loans-for-oil deals with Venezuela and satellite cooperation between Brazil and China have raised eyebrows in some Washington circles.

While there is some truth to that overall view, this book goes deeper and wider. Economic essays do a nice job of separating some of the benefits and costs of the China-Latin America relationship. For example, as Javier Santiso of ESADE Business School and Rolando Avendano of the OECD Development Centre point out, China offers a new source of trade and fi- nance for many countries, and, as the U.S. economy continues to slump, this diversified portfolio is a good thing for many Latin Americans.

However, there are costs as well. Chinese imports are putting pressure on Latin American firms by outcompeting them in both world and home markets, and Chinese investment in natural resources can exact a heavy environmental and social toll. The combined effect can push up the value of a country's currency and threaten long-term economic growth.

In Brazil, for example, China has triggered a debate over de-industrialization and the future of economic growth. In the essay "China's Challenge to Latin American Development" Enrique Dussel Peters of the Universidad Nacional Autónoma de México shows how Chinese economic activity is accentuating inequalities and creating new sets of winners and losers across the hemisphere. …