The 'China Effect' on SouthSouth Relations

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The 'China Effect' on South-South Relations

• Dr. Barbara Hogenboom (CEDLA)
• Dr. Alex E. Fernández Jilberto (UvA)

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Changing power relations in the world economy

• Before 2040 Western economies will be outrun by
  the BRIC countries (Brazil, Russia, India and
  China)
• Since 2003, no rules for the global economy can
  be set without BRIC consent (WTO summit Cancún)

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1. Global neoliberalisation convergence and
divergence
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Convergence LA en China

• Deregulation and economic opening
• (end of living socialism)
• Top-down policies, often by authoritarian regimes
• Negative social effects economic concentration,
  inequality, social discontent

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Divergence LA and China

• Origin of reforms exogenous / endogenous
• Small state (privatisation) vs transformed state
• Slow vs rapid modernisation volatile vs steady
  growth

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2. LA and Chinas entry into the WTO

• 1986 (GATT) - 2001 (WTO)
• Bilateral negotiations Mexico, Brazil, Chili
• Recognition of China as market economy
  Western resistance, LA pragmatism

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3. Investments cause of LA-China competition and
cooperation Regional Distribution FDI
1990/1997-2004 (billions of dollars)
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Mexico and Central America competition

• NAFTA and CAFTA expectations modernisation
  through maquiladorisation for the US market
• FDI in export production assembly of
  Chinese/Asian parts
• Chinas WTO membership harms MCA comparative
  advantages

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South-America cooperation

• ALCA??
• FDI in export production commodities (and some
  processed raw materials)
• China effect rising demand and prices of oil,
  copper, soya, etc.
• WTO membership stimulates C-SA investment in
  complementary areas.

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4. New South-South politics

• De-ideologised relations
• G-20 and pro-South globalisation
• Chinas (asymmetric) diplomacy in LA

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Composition of Chinas export and import, 2004 ()