Tuesday, June 21, 2016

Latin America and China

The Inter-American Development Bank has a new issue of its journal Integración & Comercio dedicated to trade with China. As you might guess, it has a very positive spin. I am glad, though, that at the beginning it recognizes a massive problem:

Este contexto pone de relieve la urgencia y la necesidad de diversificar las exportaciones de la región a China, que continúan altamente concentradas (soja, cobre, mineral de hierro y crudo representan cerca del 50% de las exportaciones). Es cierto que los commodities probablemente continuarán siendo el mayor negocio de ALC en China, pero la dinámica de crecimiento de este país sugiere que para mantener el ritmo de crecimiento de las exportaciones, América Latina y el Caribe tendrá que apelar a un portafolio de bienes más diversificado. 

You can talk about China all you want, but heavy dependence on commodities is not the foundation of a healthy relationship. Unfortunately, that point does not get driven home very much after the beginning.

One other thrust of the issue is that Latin America should learn from the Chinese economic model. Given that the model is based on authoritarian rule, this is problematic. The articles are striking apolitical. More precisely, they seem to pretend that politics does not exist.

Nonetheless, check it out if you want to get an establishment view of how Latin America should engage with China.

Update: From the NYT, here's a snapshot of the Chinese model,

The training session started with a harsh public shaming. A performance coach took to the stage and asked eight employees at a Chinese bank to explain to a room of their peers why they had fallen short. 
“I didn’t cooperate well,” a woman said. 
“I wasn’t courageous enough,” another confessed. 
Then the session took a bizarre turn. The coach brandished a wooden stick and shouted, “Get your behinds ready!” He proceeded to slap the employees on their rears, going down the line four times. A woman recoiled in pain, and several workers gasped.


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