China sales a mixed blessing for
Latin America By Felipe
Seligman
NEW YORK - If Latin America's
economic ties with China do not undergo a
structural change, the region will be unable to
meet the Millennium Development Goals (MDGs), an
Argentine expert said during the Latin Economic
Forum held recently at United Nations
headquarters.
"The relations between China
and Latin America today represent a historic
opportunity, given the enormous growth in Chinese
demand for commodities and fuel," professor of
statistics Graciela Chichilnisky said.
"On
the other hand, the current historical
circumstances make it
necessary for these countries
to stop specializing in exports of natural
resources and to enter the knowledge economy,"
said Chichilnisky, the director of Columbia
University's Center for Risk Management, after
moderating a panel on the MDGs at the forum, held
last Wednesday and Thursday.
The Latin
Economic Forum Inc, founded in 1996, is a leading
international non-profit organization dedicated to
serving the US Latin American community. This
week's event brought together Latin American
business, government and community leaders,
academics and key representatives of Latino
non-governmental organizations to "focus on how to
reduce poverty; use corporate social
responsibility as a business contribution to
sustainable development, implement new business
strategies and technologies to ensure a prosperous
economy; and strengthen governance".
The
need for raw materials is growing faster in China
than in any other country. The Asian giant is
already the world's biggest consumer of copper,
tin, zinc, platinum, steel and iron. In 2003, it
absorbed nearly 40% of the cement produced
worldwide, 30% of the coal and steel, and 25% of
the aluminum and copper.
And it is Latin
America that is China's biggest supplier of these
commodities. Chile is the world's top producer and
exporter of copper, which accounts for a full 40%
of its total exports. A large part of Chile's
copper is shipped to China, which is now the South
American country's second-largest buyer. China
also imports enormous amounts of iron ore from
Brazil.
China, the world's second-largest
oil importer, has also become one of the top
buyers of oil from Venezuela, the fifth-largest
exporter of petroleum. Oil represents 85% of
Venezuela's exports and oil revenues cover 50% of
government expenditure, according to statistics
from HSBC Bank International. The political
tension between Washington and Caracas has led the
Venezuelan government of President Hugo Chavez to
review its oil-export policies. Venezuela is
interested in increasing oil exports to China and
reducing sales to the US market, its biggest
client, Jose Sojo, head of the economic affairs
section at the Venezuelan Embassy in the US, said
at the forum.
But that path will not lead
to development in the region, argued Chichilnisky.
"Exporting commodities is a bad foundation for
development, and is an unsustainable policy ...
There are two regions of the world that have
failed to grow since World War II: Africa and
Latin America - the two that have specialized in
commodities. That is not a coincidence," she said
in an interview.
As a consequence, Latin
America is facing a "schizophrenic" dilemma: while
opportunities for exporting raw materials are
better than ever, this "boom" is actually the
worst thing that could happen to the region,
because it ultimately entails the exhaustion of
its natural riches. "We are destroying our
environment, and in doing so, releasing much more
carbon dioxide into the atmosphere," Chichilnisky
said. Carbon dioxide is one of the main so-called
greenhouse gases, linked with global warming and
climate change.
The speakers at last
week's meeting included numerous diplomatic
representatives from throughout Latin America,
including the ambassadors to the United Nations
from Argentina, Bolivia, Chile and the Dominican
Republic, who addressed the region's progress in
meeting the MDGs, offering largely optimistic
forecasts.
Chile's ambassador to the UN,
Heraldo Munoz, said three Latin American countries
will succeed in meeting the goals while another
five have a good chance of doing so, although he
did not specify which countries these are.
The eight MDGs, established by the UN
General Assembly in the year 2000 and intended to
be fulfilled by 2015, are to reduce extreme
poverty and hunger; achieve universal primary
education; promote gender equality and empower
women; reduce child mortality; improve maternal
health; combat AIDS, malaria and other diseases;
ensure environmental sustainability; and develop a
global partnership for development.
So
far, only Chile has met the target set under the
first goal: to reduce by half the proportion of
people living in extreme poverty, with 1990
poverty rates used as the baseline.
Latin
America and the Caribbean form the region with the
largest gap between rich and poor in the world. In
2005, there were 213 million people living in
poverty, which represents 40.6% of the region's
total population, according to the Economic
Commission for Latin America and the Caribbean
(ECLAC). Munoz said the keys to development "are
social policies for the elimination of poverty and
for the inclusion of women in the labor market".
Erasmo Lara-Pena, the UN ambassador from
the Dominican Republic, emphasized the need for
foreign investment "so that we can stop exporting
fruit and move on to exporting fruit juices".
Nevertheless, he recognized, the situation is not
that simple. "We cannot attract capital when, on
the other hand, we do not have technology or
skilled personnel."
For her part,
Chichilnisky said it would be very difficult for
the region's countries to meet the MDGs, and
commented that the positive outlooks expressed at
the meeting were to be expected, given that the
speakers were official representatives of their
countries' governments.
As for the
question of modifying Latin America's trade
relations with an economic power such as China,
Chichilnisky noted: "One solution is to create
small and medium-sized enterprises in the region
and thereby generate employment and respect the
environment." This strategy would lay the
foundations for building trade relations based on
the entire production chain, including "the
exchange of products and the export-import of
technologies", she explained.
