China to Become the Region's Second Export Market Midway Through the Next Decade

(13 April 2010) China will surpass the European Union and tail behind the United States as the region's export market in the middle of the next decade, according to a report by the Economic Commission for Latin America and the Caribbean (ECLAC) released today.

The report "The Popular Republic of China and Latin America and the Caribbean: Towards a Strategic Relationship" is a mainly graphic compendium that reviews trends in trade and investment between China and the region, providing some projections through the next 10 years.

If Latin American exports to its different market destinations continue rising as they have over the past 10 years, ECLAC estimates that midway through the next decade, China may be the second world destination of the region's exports, buying 19.3% of its total exports in 2020, up from 7.6% in 2009.

The European Union will tend to keep its participation around 14%, being surpassed by China as of 2015.

The rise of this export market will come at the cost of a persistent fall in exports towards the United States (from 38.6% in 2009 to 28.4% in 2020).

The importance of China as an export market differs significantly within the region. It is a key market for Chile, Peru and Argentina, for example, but a much smaller one for exports from Central America, except Costa Rica. Mexican exports to China in 2009, for example, represented less than 1% of its total exports.

Similar performance is expected in terms of Chinese imports, according to the report. China could surpasss the European Union and the United States by 2020 as origin of the region's imports. This increase will concentrate mainly on the same capital goods that are already present in the region, such as electronic products, pieces and parts, machinery and textiles.

Some countries in the region depend significantly on China as a trade partner. Chile has the highest rates in this trade relationship, with 13% of its exports going to China. It is followed by Peru (11%), Argentina (9%), Costa Rica (7%) and Brazil (7%).

As for imports, Paraguay is an extreme case: 27% of its imports are from China. It is followed by Chile (11%), Argentina (11%) Brazil, Mexico and Colombia (10%).

The region's basket of exports to China continues concentrated on prime materials and their by-products, although the degrees of specialization vary. Costa Rica, Mexico and El Salvador, for example, sell China some high-technology manufactured products.

China's high demand for food, energy, metals and minerals has improved South America's terms of trade, contributing to growth. This trade relationship was a key factor that explains in part the resilience of the subregion during the recent global crisis.

However, notes the report, the countries in the region should improve the quality of this trade, diversifying and adding more value and knowledge to their exports in order to facilitate their insertion in Asia-Pacific production chains.

China has become a strategic trade partner for Latin America and the Caribbean and there are ample opportunities to reach trade and investment agreements in areas such as mining, energy, agriculture, infrastructure and science and technology, states ECLAC.

Given the size of China's market, these possibilities would be heightened through concerted or coordinated efforts among several countries in the region or through regional integration bodies, recommends ECLAC.

Further international trade data is available here.

For more information, contact ECLAC's Information Services. Email: dpisantiago@cepal.org; telephone: (56-2) 210-2040/2149.