New phase in Sino-Latin American ties

These concerns have been well received by the Chinese leadership, which has laid the foundation for working out a cooperation agenda that will be conducive to diversifying exports from LAC to China, establishing alliances between trade and technological enterprises on both sides of the Pacific, fostering technological upgrade of industry and the agriculture sector, and stimulating Chinese investment in infrastructure which, aside from facilitating trade with China, will also boost intra-regional trade.

The economic reforms underway in China do offer significant opportunities to diversify LAC's exports. But LAC countries have to change their domestic policies for that. The challenge is how to link a domestic agenda focused on innovation and competitiveness with renewed trade and investment ties with China.

LAC countries must first strengthen and harmonize their policies to stimulate productivity, innovation, education, training programs for workers, infrastructure and logistics, and attract foreign direct investment and support small and medium-sized enterprises. With that policy basis, the next step would be to agree upon a regional dialogue and cooperation agenda with China that can face challenges and cash in on the opportunities on offer.

Beyond the obvious differences, China and LAC face similar challenges in building more inclusive societies that are supported by a sustainable productive transformation and anchored in innovation. This creates an interesting area for cooperation by exchanging experiences and in debating which policies are best suited to reach these objectives. It is important to understand the projections of the current reform cycle in China in order to take advantage of the new trade and investment opportunities that it will create. It is likely that the new overarching theme of this new phase of China-LAC relations will be increased investment.

The upturn of Chinese investment abroad will be more focused on private enterprises seeking new and more efficient markets - thus favoring the development of productive, technological and trade alliances between Chinese and LAC enterprises. If these alliances can rely on support from public policies in LAC, they could boost industrialization and management of local and regional supply chains, which, in turn, will strengthen the trade and investment links between China and LAC.

That would not only help modify the Latin American export pattern, but also stimulate intra-regional trade in LAC. Chinese investment in manufacturing, infrastructure and services in LAC will be welcomed and the best route for that continues to be alliances with local investors. Such Chinese investment could be fundamental in modernizing LAC's industries by contributing to productivity, export diversification, fostering intra-regional trade and, finally, regional integration based on value chains.

These issues are fundamental for the regional cooperation agenda with China and could be taken up at the next ECLAC-China Cooperation Forum.

The author is director of International Trade and Integration, Economic Commission for Latin America and the Caribbean.