MercoPress. South Atlantic News Agency

China, the locomotive for Latinamerican expansion

Latinamerica could experience a trade boom in the next five to ten years if China sustains its current rates of growth said Andres Solimano from the UN Economic Commission for Latinamerica, CEPAL.

"If China sustains during five to ten years the current rate of growth, Latinamerica will experience a large trade boom", said Solimano who nevertheless cautioned that this "won't be enough to ensure sustained economic expansion in the region". Speaking in Havana, Cuba during an international economists' forum on globalization and development problems, Solimano said that "there are no signals that the Chinese economy might be facing a deceleration, since the per capita income is still in the range of 3.000 US dollars". This grants China a large space for investment and expansion compared to the members of the Organization of Commerce and Economic Development countries that on average have a per capita income of 30.000 US dollars. Solimano said that "Chinese imports since 2004 have helped to push the Latinamerica economy cart wagon" with a substantial increase in commodities prices which the region exports such as aluminum, copper, oil and soy beans. However Solimano said that this year world growth rate as well as Latinamerica's will suffer a contraction in the range of 0.5%. "Economic growth in Latinamerica has been quite variable" in the last 25 years and during that period it suffered decelerations, "a tendency which could be repeated if other problems are not addressed". But on the positive side, if this happens Latinamerica has positive fiscal accounts, with low inflation and decreasing foreign debt ratios. But current levels of investment and productivity remain insufficient. "The social area must be addressed more energetically", underlined Solimano who recalled that 220 of the 550 million Latinamericans live "below the poverty line". In related news Brazilian authorities revealed that China had become the country's second supplier behind United States and pushing Argentina to third place. The US figures with 15 billion US dollars exports to Brazil in the January 2006/February 2007 period, followed by China with 8.3 billion and Argentina 8.2 billion. In the last twelve months Chinese sales to Brazil increased 33%; Argentina's 22% and the US 27%. Ten years ago China exported 1.2 billion US dollars to Brazil which was equivalent to 2% of the country's total imports. Argentina in the same period dropped from 13% to 8.8%.