1. The Emergence of China: Opportunities and Challenges for Latin America Mauricio Mesquita Moreira. Principal Economist Integration and Trade Sector China, Latin America and the United States: The New Triangle. Woodrow Wilson International Centers for Scholars, Washington, D.C. May 26, 2010

2. Outline China the market and partner China the competitor Policy implications

3. The opportunities

4. Natural resources: strong complementarity…

5. …means a boom to LAC exports

6. …which benefit from a strong “transmission effect”

7. But the gains are not evenly distributed…

8. and the pattern of trade is based on the “ore-for-textile” model

9. There are cross investment opportunities, but they have yet to acquire a critical mass China’s FDI in LAC (excluding tax havens) in 2008 was US$ 48.9 million (LAC’s overall inward FDI was US$ 122 billion) and the stock (excluding tax havens) was US$ 1.4 billion (US$ 604 billion overall).

10. The challenges

11. Competing in Manufacturing is the Major Challenge

13. The Policy Agenda

14. Trade Costs & Investment Opportunities for LAC in natural resources are hard to overestimate….but there also challenges particularly in market access. agricultural exports still face relatively high tariffs, tariff-rate quotas, import licensing, unduly stringent sanitary and phytosanitary requirements and centralize state trading. Greater emphasis on manufacturing FDI to take advantage of the size of LAC’s regional market and its proximity to the U.S. could be an effective way of reducing painful dislocations and, therefore, alleviating trade tensions

15. Adapting to Compete In manufacturing the challenge could not be more daunting…response involves: higher productivity, “resource-intensive”, “speed to market”, “transport-intensive”; better use of low-wage areas such Brazils’ northeast or Mexico’ south; more functional government to tackle market failures in education, infrastructure, finance and technology;