BANCO DE DESARROLLO DE AMÉRICA LATINA FLACSO General Secretariat Adrián Bonilla Soria, Secretary General FLACSO Editors Adrián Bonilla Soria Paz Milet García 382.3 A512a Latin America, Caribbean and China : sub-regional strategic scenarios/ Adrián Bonilla Soria, Edit.; Paz Milet García, Edit. – 1st ed. – San José, C.R. : FLACSO, 2014. 300 p.; 21 x 15 cm. ISBN 978-9977-68-277-8 1. Latin America – Foreign trade. 2. Caribbean (region) – Foreign trade. 3. China – Foreign trade. 4. Trade Policy. I. Bonilla Soria, Adrián, Edit. II. Milet García, Paz, Edit. III.Title. Translation: Susan Roraff Copy Editing: María Fernanda Morales C. Design and printed in San José, Costa Rica by Ingenium Studio Julio, 2015 The findings, interpretations and conclusions expressed in this publication are those of the authors and do not necessarily reflect the views of FLACSO, nor the views of any institutions with which they are affiliated. TABLE OF CONTENTS Presentation L. Enrique García ...................................................................... 5 Foreword Adrián Bonilla Soria ................................................................... 7 Introduction China’s impact on the international relations of Latin America and the Caribbean Adrián Bonilla and Paz Milet ....................................................... 9 Relations between Latin America and the Caribbean and China. Trade and Strategic Relations in a World in Transition Enrique Dussel Peters ............................................................... 21 China and Latin America in a World in Transition: A Chinese Perspective Song Xiaoping ........................................................................ 51 Latin America, United States and China: Strategic Continental Relations Nashira Chávez ...................................................................... 73 Trends in relations between Latin America and the Caribbean and the People’s Republic of China: A current assessment 2013-2014 Isabel Álvarez Echandi and María Fernanda Morales ........................103 Sub-regional studies China in the Southern Cone: Regularities, Impacts and Responses Hernán Gutiérrez and Sergio Cesarin ............................................125 Latin America - China relations in a world in transition: A case study of Central America Vinicio Sandí Meza .................................................................143 Relations between China and the Andean Region Milton Reyes Herrera ...............................................................163 Mexico-China relations in a new era of regional integration Juan José Ramírez Bonilla and Francisco Javier Haro Navejas ..............191 Notes on the Brazil-China Strategic Partnership Marcos Cordeiro Pires ...............................................................239 Relations between the countries of the Caribbean community (CARICOM) and China: David vs. Goliath? Juan Miguel González Peña and Laneydi Martínez Alfonso ...............261 Conclusions An assessment of relations between China and the Americas: Foreign policy under Xi Jinping Isabel Rodríguez Aranda ...........................................................321 Latin America-China Relations in a World in Transition. Preliminary observations for discussion Alicia Puyana ........................................................................339 Contributors ......................................................................353 PRESENTATION In a span of two and half decades, the emergence of China has become one of the main vectors of the transformation of the world economy. The unprecedented dynamics of economic growth has resulted in increasingly important participation in the areas of global trade, direct investment flows and sources of international financing. The enormous economic, social and demographic changes during that period in the world’s most populous country, have created an exceptional demand for food, minerals and energy, which in turn has had major impacts on internation- al prices of basic products. From the past decade, China looms large in foreign trade in Latin America and the Latin American region has become increasingly important in the commercial relations of the country. Chinese investment in the region have also increased, particularly in the areas of physical infrastructure, exploitation of natural resources and raw materials export platforms. The intensity and the characteristic features of economic Sino- Latin American relations differed markedly across countries, as are different impacts resulting from the penetration of Chinese products in markets that were previously supplied by the Latin American economies. The texts included in this publication clearly show the absence of a single model of relations between Latin American economies and China, as well as the lack of public policies in the region regarding this country. The economic dynamism of the Asian giant has contributed to the exceptional cycle of high international prices of Latin American exports, which in some cases has brought about a model of ex- change of raw materials for manufacturing, similar in some respects to the model of international division of labor established in the century following the Industrial Revolution. In view of the coming decades, it seems likely that the overall dynamics of inter- national economic relations will depend largely on the dynamism that demonstrate the economies of China and the Asia - Pacific region. From here derives the critical importance for the countries in our region to establish shared strategies and policies regarding our relationship with the markets of Asia. The goal should be to correct asymmetries already evident, and to establish appropriate mechanisms for consulta- tion and cooperation to ensure mutual benefits to all economies involved. 5 L. Enrique García In this context, we should take into account that individual initiatives of Latin American countries are not enough to fully benefit from the different opportunities that China could offer the region, for instance, through participation in interna- tional value chains, with consequent impulses for the modernization of the indus- trial park and strengthening innovation systems. For these objectives, it is essential, among other measures, to attract direct investment into Latin American economies by establishing appropriate policies coordinated at a regional level. A shared vision of the potential offered by the deepening of relations with China and Southeast Asian economies should be expressed in clear objectives related to sustained productivity growth, improvements in terms of quality of physical infra- structure, transport and logistics, strengthening of institutions, progress in educa- tion, and the promotion of technological innovation. There is no doubt that this book is the result of an effort to analyze the priorities of China in its relationship with Latin American countries, seeking preliminarily to identify characteristics and patterns for some countries and regions of Latin Amer- ica. To address these and other similar issues, case studies of regional, sub-regional and bilateral scope, which were presented at a seminar held in April 2014 at the headquarters of FLACSO in Mexico, were entrusted. The texts published now set an agenda of academic research, which should also include an analysis of the cul- tural, political and institutional supports. In short, this book is a valuable attempt to contribute in the configuration of a long- term agenda for economic relations between Latin America and China. Despite the great progress made in recent years, there is still a long way to go before the full potential of cooperation could be experienced. L. Enrique García Executive President Development Bank of Latin America 6 FOREWORD This book is the result of the Proyecto Nuevas Dimensiones Sociales e Interna- cionales de América Latina (New Social and International Dimensions of Latin America Project) carried out by the Latin American Faculty of Social Sciences (FLACSO) in conjunction with the Development Bank of Latin America (CAF). The goal of the project was to respond to the social and economic demands of Latin America and the Caribbean through a two-pillar analysis. The first, called International Relations with China, was dedicated to monitoring the status of re- lations between Latin America and China. The second, titled Social Policies in the Region, was aimed at creating a state of the art for social policies in Latin America that would provide a qualitative and quantitative description of how Latin Amer- ican countries respond to social policy beneficiaries. Best practices as well as the accomplishments and limitations of social policies implemented throughout the region were identified, compared and evaluated. This publication titled “Latin America, the Caribbean and China: Sub-regional Strategic Scenarios” is a collection of the papers presented at the international semi- nar “Latin America-China Relations in a World in Transition” held in Mexico City on April 8, 2014. The book is divided into three sections. The first contains three regional studies on China-Latin America relations: an analysis from the United States; a comprehensive study from the Latin American viewpoint; and the Chinese perception of growing relations. The second section presents a thorough evaluation of the growing closeness between the “Asian giant” and specific sub-regions, fo- cusing on the Southern Cone, Central America, the Andean Region, CARICOM and the individual cases