Notes from talk on China-US rivalry for Latin America
Florida State University - Panama
6-13-2023
Global Tectonic Shifts, Asia and Latin America
Alicia Garcia Herrero
Chief Economist – Asia Pacific
hyperglobalization vs. slowbalization
-Slowbalization – slowing of globalization, increasing fragmentation
The WTO and other international organizations regulating trade have been
increasingly ineffective
-Why?
-What can we do about it?
US approval rate for export licenses: China’s % has been dropping fast
FDI and M&A (mergers and acquisitions) are targeted through FDI screen
mechanisms
-including outbound investment screening
From de-coupling to de-risking – difference not really clear
EU only wants to talk de-risking not decoupling
EU is looking for a de-risking strategy going forward
EU has trade issues with China like competition over cars and solar panels
Taiwan has elections in January – DPP, KMT, TPP
could be protests
The QUAD
BRICS+
One China Policy (China’s) vs. One China Principle (US – strategic ambiguity)
Bipolarity vs. multipolarity
Poles: EU, US, China Japan, Brazil, Mexico, Saudi Arabia
*China is trying to pull the Global South together, but it may not work
-India is a key pivot point
Will USD remain the main international currency?
RMB used increasingly for trade settlments
Argentina, Brazil, UAE settling trade imports from China in RMB
pay for imports in RMB, get RMB exports is the problem bc they prefer dollars
China can impose its currency for trade because of its major economic power,
but that’s different from the renminbization of the world
but no advancement in percent transactions in RMB beyond Chinese loans overseas
India trying to internationalize the rupee, but far off, perhaps after a supercycle
10 years in the future
Al Jazeera – Technological decoupling
https://www.linkedin.com/posts/aliciagarciaherrero_china-activity-6993146762987266050-Jn4W/
-Painful for China
Technology more disruptive than ever
Trying to control tech standards
Structural deceleration
China growth 5% today à
projected at 2.3% bv 2035
still reach $25K GDP
Fast-growing public debt will become a burden as growth decelerates
How much innovation can mitigate structural deceleration?
China fertility rates dropped from 2.8% 1980 to 1.7 today
China can ban major companies like Microsoft, make their own ecosystem
Not at same level but can still operate and upgrade
*Ecosystems bifurcation
By 2035 aging will have a major negative impact on China’s labor supply
-currently mitigated by urbanization/rural-to-urban migration – which brings
more workers to factory areas
When China makes bold statements they pass through many filters, unlike bold
statements by US/Trump
https://www.aljazeera.com/news/2022/6/10/china-tells-us-it-will-not-hesitate-to-start-war-over-taiwan
China’s anti-spy law has decreased the number of expats leaving China
How many Chinese coming across US border?
China’s youth unemployment is 20.4% worse than Spain
China’s investment in Latin America
-Is mostly in transport and energy projects, especially involving SOEs
-Very little FDI in manufacturing to Latin America
In contrast to Latin America, ASEAN and India are well-positioned for more FDI
-Have cheap wages ex. Vietnam
-Manufacturing FDI is rising in India and Vietnam, falling in China
China is not the cause of Latin America’s low % share of global FDI
EU 36% and US 34% are the largest FDI investors in Latin America
China is not among the top 10 in FDI to Latin America
Key point:
China invests in the West, but gives loans to emerging markets
Before the pandemic, China favored the EU; now East Asia and India
