Help Latin Amer­ica weather the win­ter

China Daily (Canada) - - LIFE -

Weak in­ter­na­tional de­mand and low com­mod­ity prices have re­vealed the vul­ner­a­bil­ity of Latin Amer­ica’s econ­omy. The re­gion’s an­nual growth rate is ex­pected to be only 0.3 per­cent this year, the low­est among all eco­nomic blocs.

The Eco­nomic Com­mis­sion for Latin Amer­ica and the Caribbean and other in­ter­na­tional in­sti­tu­tions have called for an ur­gent change in the re­gion’s de­vel­op­ment model away from de­pen­dence on the ex­port of nat­u­ral re­sources. But some ob­servers say China’s eco­nomic slow­down is to blame for Latin Amer­ica’s eco­nomic woes.

Is it true? Has China stopped buy­ing from Latin Amer­ica?

The fact is, China, with its growth rate of about 7 per­cent, is still the big­gest con­trib­u­tor to global growth and has shown no sign of de­clin­ing de­mand for com­modi­ties. Ac­cord­ing to the Chi­nese cus­toms, from Jan­uary to Au­gust this year, China’s im­port of grains, cop­per and its re­lated prod­ucts, crude oil, and soy­bean in­creased by 24 per­cent, 12 per­cent, 10 per­cent and 24 per­cent.

De­spite the fall in prices, which ex­plains the 2.4 per­cent drop in the to­tal im­port value, China’s to­tal im­port of com­modi­ties is still grow­ing in terms of quan­tity. The de­cline in China-Latin Amer­ica trade is mainly due to low prices in the world mar­ket and the de­pre­ci­a­tion of some Latin Amer­i­can coun­tries’ cur­ren­cies against the US dol­lar. In fact, dur­ing the first nine months of this year, ex­ports from Ecuador, Ar­gentina and Uruguay to China grew by 15 per­cent, 5.3 per­cent and 15 per­cent.

China em­pha­sizes a medium-to-high rate of eco­nomic growth, fur­ther open­ing up the econ­omy and expediting ur­ban­iza­tion. In the long run, the Chi­nese econ­omy can still main­tain a medium-to­high growth rate and its de­mand for com­modi­ties will re­main stable, al­beit with a ten­dency to grow. But why have com­mod­ity prices de­clined? Most in­ter­na­tional in­sti­tu­tions be­lieve that the over­lap­ping of weak­en­ing global de­mand and ex­cess pro­duc­tion are to blame for the de­cline. Take iron ore for ex­am­ple. Global buy­ers, ex­cept China, are re­duc­ing or­ders which in turn have low­ered de­mand and prices in the in­ter­na­tional mar­ket. But ma­jor pro­duc­ers con­tinue to in­crease their out­puts in or­der to squeeze out small and medium-sized pro­duc­ers from the mar­ket.

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