Sino-Latin American Economic Relations

Sino-Latin American Economic Relations

Author(s): Fung, K. C. and Alicia García-Herrero

ISBN:          978-0415681728

Publisher: Routledge

Year:          2012

Price:         $135.00

Reviewed by Kai Chen, Post-doctoral Research Fellow, the Centre for Non-Traditional Security and Peaceful Development Studies, Zhejiang University, China

Sino-Latin American Economic Relations is a timely edited volume consisted of nine chapters, which are important research papers written by well-known scholars in international economics, economics and policymakers across Asia, Latin America and Europe. In this edited volume, the editors and contributors utilize updated data and proper methodologies to examine the rapidly evolving economic relations between China and Latin America, study the policy lessons learned from both parties, and advance a set of suggestions for the economic integration between China and Latin America in the future.

Chapter One, by Masahiro Kawai and Fan Zhai, reviews the development of China and Latin America and evaluates the economic effects of the economic cooperations through the gravity model analysis. As they conclude, the economic ties between China and Latin American countries are “still in their very early stages”, and both parties should focus on “FDI-based, modern intra-industry trade” (p.27). In Chapter Two Rolando Avedaño and Javier Santiso argue, most Latin American countries are not particularly threatened by the exports from China and India. It’s important for Latin American countries to “focus on competitive advantages and capitalize on favorable geographic positioning” (p.37), for example, investment in infrastructure. Moreover, Avedaño and Santiso advance several policy recommendations, such as focusing on “high value-added niche” and “product segments with high volatility of demand and high customization needs” (p.64-65).

In contrast with China, the bilateral trade between India and Latin American countries (LAC) are still limited. Could India replicate the explosive economic achievement between China and Latin America? In Chapter Three, Antoni Estevadeordal, Mauricio Mesquita Moreira, Christian Volpe Martincus and Juan S. Blyde give a positive answer. They consider that “India has the potential to replicate China in providing a significant boost for LAC’s exports and imports” (p.83). Concerning the challenges for India in the future, the contributors analyze the relevant limitations, including tariff barriers, non-tariff barriers and transport costs.

On the basis of globally consistent international trade data, K.C. Fung, Alicia García-Herrero and Alan K. F. Siu analyze the trade in parts and components in East Asia and Latin America in a comprehensive way, including the United States, China, Mexico and Brazil. As they note, “East Asia gained comparative advantage over the production operations of parts and components from 1985 to 2006, while North and Latin America registered a modest increase” (p.154).

Chapter Five and Chapter Six draw policy lessons in a comparative perspective. In Chapter Five, Jing Gao deeply explains the typical difficulties faced by the small and medium enterprises (SMEs) in China concerning financial access, including “banks’ snobbish behavior”, “off-balance financing remains backwards”, “unsustainable guarantee system”, “blurred legal status of contracted right to farmland management” and “infant capital market for SMEs” (p.170-172). As Jing Gao highlights, though the SMEs in both China and Latin America are lacking of access to finance, “the success of Latin American countries in dealing with this issue may guide China to avoid mistakes” (p.158).

Chapter Six, by Daniel Titelman, Cecilia Vera and Esteban Pérez Caldentey, focuses on the pension system reforms in Latin American countries (including Chile, Costa Rica and Argentina). As they conclude, “the non-contributory element is an essential part of any pension system” (p.202). Moreover, on the basis of analyzing Latin American countries, the contributors try to “draw general implications that may be of use when analyzing the Chinese current experience with pension reform”(p.179). In a country like China, where labor markets issues lead to “low contribution densities may leave a vast proportion of affiliates inadequately covered by the contributory pillar”, the “fiscal requirements from the non-contributory pillar will continue” (p.203).

Next, the focus is shifted to examine China’s FDI outflows and compare the relevant determinants (market-seeking, natural-resource-seeking, technology-seeking and labor-quality hypothesis) with ODI from other Asian economies, including Japan, South Korea and Taiwan. In Chapter Seven, K. C. Fung, Alicia García-Herrero, Ya-Lan Liu and Alan K. F. Siu find that “the market-seeking hypothesis seems to hold well: Chinese investments tend to go to destinations with poorer labor quality” (p.221).

As the last part of this edited volume, Chapter Eight and Chapter Nine develop case studies on Brazil-China and Mexico-China economic relations. In Chapter Eight, Enestor Dos Santos and Soledad Zignago analyze the data of foreign direct investment and trade between Brazil and China, then predict the evolution of their economic relations. As they suggest, “the impressive evolution observed in the trade between Brazil and China” is “likely to be replicated in other economic arenas” (p.247). Chapter Nine, by Cecilia Posadas Pérez, explains the geo-economic factors influencing the location of manufacture in the US, China and Mexico. In addition, Pérez notes that “good-quality infrastructure for strategically connecting production centers” (p.271) would be a key factor for investors in both Mexico and China.

Sino-Latin American Economic Relations fills a gap in the current literature, and provides practical policy recommendations for both China and Latin American countries. In short, this edited volume is a thought-provoking work to policy-makers, scholars, students and anyone interested in Sino-Latin American economic relations and international economic relations.

Suggested citation:

Kai Chen (2013). Review of “Sino-Latin American Economic Relations” edited by Fung, K. C. and Alicia García-Herrero, East Asian Integration Studies, Vol. 6, no. 3, Internet file: