China and Latin America: Expanding Economic Diplomacy, Exploring Cooperative Pot

Bilateral relations between China and Latin America have achieved unprecedented development since the 1980s. So far, 20 Latin American countries, which account for more than 95% of the total areas as well as the population of Latin America, have already established diplomatic ties with China. Through diplomatic channels and high-level visits, China and Latin America keep equal and candid communications on many important issues. Economic and business co-operations have been fully conducted, with a record-breaking bilateral trade volume of 26.8 billion dollars in 2003. Meanwhile, co-operations in science and technology, culture, academic research and military affairs are carried out in a steady manner. We can assert that China and Latin America now enjoy the best period in the history of their bilateral relations.

The importance of Latin American countries

Latin America consists of 33 countries with a total area of more than 20 million square kilometers, which forming 13.8% of the land area of the world and is three times larger than the European continent. The distance between the north and the south is 11 thousand kilometers. Latin America enjoys a vast territory and abundant natural resources. In addition to forest resources, Latin America has rich mineral resources with some mineral reserves rank among the first in the world. Besides, Latin America has favorable condition for agricultural production.
To be frank, the so-called ton-materialization?trend, which is featured by the vast use of synthetic materials, develops at a fast speed in the recent decades. However, scientific and technological development cannot completely replace the need of human society for raw materials and natural resources. So, known as the raw material base?and the brovider?of primary products, the status of Latin America in the world market can never be underestimated. With no doubt, the large amount of resources which are needed in China's rapid economic growth can be imported from Latin America.
No matter a nation or a region, the status in the world economy is decided by its economic total amount and development level. Most of the Latin American nations have gained their national independence in the early 18th century. After the development of two centuries, some nations now have relatively high-level economies. In terms of total economic amount, Latin America is better than other developing areas. According to World Bank's statistics, the aggregate GNP of Latin American nations amounted to 0.17 billion dollars in 2002, ranking top in low and middle income countries. Obviously, while Chinese enterprises strive to join the world, the importance of Latin American market cannot be neglected.
In 2005, American Free Trade Zone will take some form to join the world economy. Although the form will be different from the aim proposed in the Summit of the Americas 1994, it will have great influence on the world economy. On the one hand, it will further promote economic globalization, escalating the competition between the three economic spheres in the world; on the other hand, it will increase the overall GNP of the American countries, which will in term boost the development of international trade and investment. As a result, Latin America will take a more prominent seat in the world economy in the future.
Apparently, Latin America has the same importance in the international politics. China and Latin American countries are major components of the third world, sharing many common opinions and stances on the establishment of new international political order and on the struggle against hegemony. In addition, among the 20 countries which have established diplomatic relations with Taiwan, 13 of them are Latin American countries. In order to counterattack Taiwan's tollar Diplomacy? it is of great significance for China to develop relations with Latin American countries.

Continuous economic and trade development between China and Latin America

With the ever-deepening reform and opening up, China's foreign trade strategy has been diversified, establishing a closer relation with the third world countries. Latin America cannot be ignored in South-South cooperation. Since the 1990s, China has kept expanding the economic and trade cooperation field with Latin America. You can find products made in China nearly in every corner of the Latin America continent.
In the 1990s, Latin American countries carried out drastic reforms, reducing trade barriers by a large extent and conducting trade liberalism. However, because the speed of import increase was faster than that of export, many Latin American countries suffered from great trade deficit and a large number of small firms, being defeated by the foreign goods, went bankrupted. In order to protect the domestic markets, many Latin American countries took anti-dumping measures in succession. A lot of labor-intensive products made in China were among those foreign goods which suffered those anti-dumping measures.
Latin America's anti-dumping measures against China's export are featured by large quantity, broad scope and high tax rate, with a more and more systemized anti-dumping decision-making procedure. Mexico is the most typical example, whose anti-dumping against China started on Apr. 15th, 1993. So far, there are over 4000 Chinese products on Mexico's anti-dumping list. The tax rates are extremely high, ranging from 200% to 500% and the highest even reaches 1105%. However, as pointed out by the research report made by Economic Commission for Latin America and Caribbean (ECLAC), The China Factor?has made greater contributions to the economic growth of Latin America since the end of 1990s. In 2003, China's import increased by nearly 40% while China's import from Latin America grew by nearly 80%. China needs to import a huge number of primary goods, so the prices of many primary products in the international market appear the trend to rise. This trend is conducive to Latin American countries because they are the exporter of many categories of primary products. Take Brazil for example, soybean, iron ore, steel, soybean oil and timber account for 75% of its total export to China. China only constituted 1.4% of Brazil's total export in 1999. But in 2003, this proportion rose to 6.2% while China's import from Brazil increased by nearly 100% in the same year.

Taking measures to enhance relations between China and Latin America

To further enhance the bilateral relationship, both China and Latin America should make efforts in the following aspects:
1. To promote further mutual understanding. Although more and more Latin Americans have a complete new appraisal of the achievements made in China's reform and opening up, they don's have a profound understanding about China. Also, the Chinese know little about Latin America. Therefore, both China and Latin America should take effective measures to promote the people-to-people relations. The following measures are necessary in China: giving full usage of the Internet to introduce China's national conditions and achievements to Latin American countries; enrolling more university students to study Spanish; offering courses on the politics, economy, history and diplomacy of Latin America; giving greater support to the academic research sphere in Latin America; some related departments should cooperate with the embassies of Latin American countries to China, co-organizing various forms of culture week, movie week or other kinds of art week to introduce Latin America at regular intervals.
2. Try to reduce the impediments caused by the transportation inconvenience. So far, there has no direct airline between China and Latin America. Although there are sea routes between China and some Latin America countries, problems like cargo ships cannot arrive on time or the untimely delivery are serious due to the influence of some human factors and non-human factors. These problems give huge strikes to the commercial interests of the exporters as well as the importers. Another thing needs to be pointed out is that some small Latin American countries have no ocean shipping fleet. Therefore, the transportation problem is extremely grave to the bilateral trade.
3. The development of economic relations should be the essential prerequisite to promote political relations. To a great extent, only when the economic relationship has developed, can the political relationship be reinforced. Although the bilateral economic relationship has achieved unprecedented development in the past two decades, it is far from enough compared with the economic scales of China and Latin America. For instance, the bilateral trade volume between China and Latin America only accounts for about 3% in their respective foreign trade. Latin America has little investment in China and China has even less investment in Latin America.
In order to further tap the economic and trade cooperative potentials between China and Latin America, we must attach more importance to economic diplomacy. Besides the trade activity and foreign assistance in common sense, economic diplomacy consists of investment, technology transfer, tourism and other fields. Without a doubt, China and Latin America have great potentials for cooperation in the fields mentioned above.