Measuring Latin America’s export dependency on China
| DOI | https://doi.org/10.1108/JCEFTS-08-2016-0022 |
| Published date | 03 October 2016 |
| Date | 03 October 2016 |
| Pages | 213-233 |
| Author | Carlos Casanova,Le Xia,Romina Ferreira |
| Subject Matter | Economics,International economics |
Measuring Latin America’s
export dependency on China
Carlos Casanova, Le Xia and Romina Ferreira
Department of Research, Banco Bilbao Vizcaya Argentaria SA,
Hong Kong, Hong Kong
Abstract
Purpose – The purpose of this paper is to deploy an export dependency index to identify the sectors
and countries in Latin America which are most exposed to uctuations in Chinese demand. Bilateral
trade between China and Latin America has grown very quickly in the past decade. As a consequence,
economic relationships with Latin America intensied tremendously, as growing demand for resources
drove China into relatively unexplored frontiers.
Design/methodology/approach – The Index measures the relative exposure of Latin American
exporters to shifts in demand from China and is scaled from 0 to 1 (the higher the score, the more
exposed an exporter is to disruptions of trade with China). The authors undertook the analysis using
six-digit trade gures from the United Nations COMTRADE database (Harmonized System 2007
nomenclature) to ensure granularity and consistency and contrasted their results across two points in
time, 2008 and 2014. The analysis was very comprehensive, covering the products that accounted for 80
per cent or more of all exports to China in 2014, for all countries in Latin America and the Caribbean.
Findings – According to our estimates, dependency on China increased overboard across Latin
America for all countries and all sectors between 2008 and 2014. Absolute dependency levels were
highest in Costa Rica, Colombia, Uruguay, Venezuela, Brazil, Panama, Peru, Chile, Guyana and
Argentina. Of these, the largest exporters to China, namely, Brazil, Argentina, Chile, Peru, Colombia and
Venezuela, featured high dependencies concentrated around just four commodities: soy in the form of
soybeans and soybean oil; crude oil; copper in the form of copper ore, copper cathodes and unrened
copper; and iron ore. These four commodities accounted for 80 per cent of the regions’ total exports to
China.
Originality/value – This is one of few studies that look into Latin America’s commodity export
dependency on China at such granular level.
Keywords China, Latin America, Trade, Natural resources, Trade dependency
Paper type Research paper
1. An overview of China–Latin America trade relations
1.1 Bilateral trade has grown very quickly but remains unbalanced
China’s economy grew at an average annual rate of 8.8 per cent between 2008 and
2014, fueled by fast investment growth and high rates of urbanization, which
translated as a voracious appetite for raw materials. As a consequence, economic
relationships with Latin America intensied tremendously, as growing demand for
resources drove China into relatively unexplored frontiers. Bilateral trade increased
by an average rate of 23 per cent during the same period and now stands at
US$260bn, but the nature of these ows remains unbalanced (Figures 1-5). First of
all, Latin America has a trade decit with China, equivalent to US$8bn or 1 per cent
JEL classication – D51, F02, F14
The current issue and full text archive of this journal is available on Emerald Insight at:
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Export
dependency
on China
213
Journalof Chinese Economic and
ForeignTrade Studies
Vol.9 No. 3, 2016
pp.213-233
©Emerald Group Publishing Limited
1754-4408
DOI 10.1108/JCEFTS-08-2016-0022
0
20
40
60
80
100
120
140
Argentina Brazil Chile Colombia
Mexico Peru Venzuela Others
Source: IMF DOT
Figure 1.
Latin American
imports from China
(US$ billion)
0%
5%
10%
15%
20%
25%
Argentina Brazil
Chile
Colombia
Mexico Peru Venezu ela
Source: IMF DOT and World Bank
Figure 2.
Latin American
imports from China
(% GDP)
0
20
40
60
80
100
120
140
160
Argentina Brazil Chile Colombia
Mexico Peru Venezuela Others
Source: IMF DOT
Figure 3.
Latin American
exports to China
(US$ billion)
JCEFTS
9,3
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