Latin America is experiencing its worst economic growth — projected to be negative this year – since the lost decade of the 1980s. At this crucial time, the United States is turning its back and stepping backward from Latin America while China takes further steps forward in its economic relations with the region.
President elect Trump has pledged to walk away from the Trans-Pacific Partnership (TPP) and the North American Free Trade Agreement (NAFTA), as well as steeply raise tariffs on Mexican manufacturing. He also says he will scrap the Dodd-Frank financial reform bill and engage in questionable fiscal and monetary policies. To top it off, he pledges to deport Mexican and other Latin Americans from the United States and build a wall so they can’t come back.
From 2003 to 2013 Latin America experienced a “China Boom” registering economic growth of 3.6 per annum — higher than any period since the 1970s. The region sent iron ore, soybeans, petroleum , copper and other commodities to China at unprecedented rates. Now that China’s economy is in transition, however, demand for those commodities are down, and so are Latin American economies.
This week Xi Jinping, China’s president, travels to Latin America for the APEC summit and for meetings in Ecuador, Peru, and Chile to engage with Latin Americans in this new era. China has already surpassed the United States as South America’s largest trading partner, and Xi has plans to increase commerce even more— pledging to increase trade to $500bn and foreign investment to $250bn by 2025. China will also discuss a new renminbi clearinghouse in Chile, and investments in Ecuador on infrastructure and energy.
To read more, please visit the Financial Times.