Latin America and China: mutual benefit or dependency?

Abstract

This article seeks to contribute to the debate on China-Latin America relations. It considers whether the trade relations that exist between China and the region are mutually beneficial or, instead, reinforce Latin America’s dependency on the international scenario. The effects of Chinese growth on a group of Latin American countries are analysed using the computable general equilibrium model of the Global Trade Analysis Project (GTAP). Chinese growth was simulated through an expansion of the Chinese capital stock, thus mirroring the trend observed in recent decades. The results suggest a return to the commodity export model and a reduction in industrial activity in the Latin American countries analysed, particularly in the high-tech sectors. Nonetheless, well-being in Latin America also increased, mainly owing to improvements in the terms of trade (resulting from the commodity price boom).