Budding relationship with China offers LatAm development opportunities, says economist

BUENOS AIRES - The budding relationship between China and Latin America in the past few years has generated multiple development opportunities for the region, an economist has said.

Speaking of the upcoming visit to the region by Chinese President Xi Jinping, Paolo Giordano, chief economist at the Inter-American Development Bank, said the China-proposed Belt and Road Initiative and the opening of the Chinese market are conducive to Latin American development.

"Seen from a Latin American perspective, the initiative is important not only in itself, but also in the need it generates for a regional vision of the infrastructure development," Giordano said.

"Transport costs in Latin America are relatively high and are a major obstacle to trade," Giordano said.

The fact that China regards Latin America as a natural extension of the 21st-Century Maritime Silk Road will combine trade integration efforts with physical integration efforts, which will lower export transportation costs within the region and with the rest of the world.

"But it's necessary to do it from a perspective of the whole region, not from a perspective of individual countries," he said.

Furthermore, Giordano believed that the Latin American region faces the unavoidable task of making its exports more competitive in global markets.

In this sense, he said, China is a country with a very strong demand for exports from Latin America.

"The problem is about how Latin America can boost the quality of what it exports to the world and how the region can make products of better quality and more added value, less dependent on the ups and downs of the economy," he said.

Giordano said China is developing fast with a growing middle class, whose commodity demands are diverse, so Latin American countries should adjust their export strategies to meet the needs of that market.

"China is in an accelerated development process. It incorporates hundreds of thousands of people into the middle class each year and its market demand is going to turn toward a more sophisticated demand pattern, so Latin America should be in a position to gain ground in this market," Giordano said.

China is now Latin America's second largest trading partner. According to China's customs authority, bilateral trade between China and Latin America and the Caribbean has been dynamic, amounting to some 260 billion US dollars in 2017, up 18.8 percent year-on-year.