China matters - China's economic impact in Latin America

This paper analyzes two aspects of China's economic relationship with Latin America and the Caribbean (LAC). First, we examine the extent to which China's economic growth is affecting trade and investment flows between China and LAC. Second, we analyze the extent to which the emergence of China as a world exporter affects the ability of LAC countries to compete in world markets both in terms of exports as well as in the capacity to attract foreign investment. For each of these questions, we provide a critical assessment of a new body of work in this area, as well as offer a series of analyses that build on and confirm some of this previous work. Furthermore, we offer implications for policy and future research. We show that there is an emerging consensus regarding China and LAC. With respect to trade and investment flows, China accounts for a significant amount of the boost in LAC exports and foreign investment in recent years, but is exporting more than it imports. In terms of global competitiveness, LAC is not significantly threatened by Chinese exports in global markets, with the exception of Mexico.