Exploring new spaces for cooperation between Latin America, the Caribbean and China

[dropcap]T[/dropcap]he Second Ministerial Meeting of the Forum of the Community of Latin American and Caribbean States (CELAC) and China, which will be held in Santiago, Chile on Monday, January 22, marks a new milestone in the economic, political and cooperation-related ties between the region and China. During the first meeting held in January 2015 in Beijing, both sides adopted a cooperation plan for the 2015-2019 period. Its targets include reaching by 2025 a total trade exchange of at least $500 billion dollars and mutual foreign direct investment near $250 billion dollars.

The Second Ministerial Meeting of the CELAC-China Forum is taking place at a time when humanity faces enormous challenges, such as growing inequality, climate change, geopolitical tensions, migratory crises, and the disruptive impacts of automation and the digital revolution. All of this in the context of great uncertainty regarding the prospects for multilateral cooperation and of the emergence of isolationist views among some central actors in the international system. In this complex scenario, China has expressed a firm commitment to the quest for economic growth centered on shared prosperity, environmental protection, multilateralism and the principles of the 2030 Agenda for Sustainable Development. These are the values that inspire the ambitious “One Belt One Road” initiative (known as OBOR), a civilizing proposal in which Latin America and the Caribbean must get involved. Although a vast ocean separates us from China, OBOR opens the door to growing closer by improving our aerial, maritime and digital connectivity. The second meeting in Santiago will be an opportunity to evaluate progress on its implementation and to define new orientations for the coming decade. As part of the preparations for this momentous meeting, last October, ECLAC had the privilege of hosting the First CELAC-China High-level Academic Forum at its headquarters.

For this Second Ministerial Meeting of the CELAC-China Forum, ECLAC has prepared a new document entitled: “Exploring new forms of cooperation between China and Latin America and the Caribbean”. It explains that China and Latin America and the Caribbean multiplied by 22 times their trade exchange between 2000 and 2013.  Also, after recording three consecutive years of declines in its value, trade in goods between the region and China sharply recovered in 2017, with an expansion estimated at 16% and totaling about $266 billion dollars. Beyond this good news, the diversification of the export basket to China continues to be a pending issue for the region: just five products, all of them basic, represented 70% of the total value of shipments in 2016. In this context, the food sector offers great potential for diversifying and adding value to exports to China, since here the region keeps a trade surplus close to $23 billion dollars.

Foreign Direct Investment (FDI) can play a central role in generating a more balanced and diversified economic relationship between the region and China. In fact, in 2016 China became the second biggest foreign investor at a global level. Two good bits of news are that Chinese FDI in our region increased substantially in 2017, surpassing $25 billion dollars, and that an incipient diversification of these flows toward sectors such as telecommunications, food and renewable energy can be seen. We need for this process to continue and deepen, with greater Chinese investment in industrial and service sectors that generates larger chains with providers from the region, especially Small and Medium-sized Enterprises (SMEs).

At the Second Ministerial Meeting of the CELAC-China Forum, ECLAC will stress the urgency of agreeing upon actions that allow for diversifying trade and foreign investment flows and deepening cooperation on the issues of energy, natural resources, infrastructure, industry, innovation in 4.0 technologies and connectivity. In all these areas, it is possible to identify common challenges and possibilities for sharing experiences and knowledge from a perspective of mutual benefit. In sum, this is about both parties taking a leap forward in terms of the quality of their relationship, placing innovation as a pillar of development and moving toward inclusive and sustainable development through an environmental big push.