China’s Rebalancing: Opportunities and Challenges for LAC Exporters

By Nitya Aasaavari, Fabio Di Vittorio, Ana Lariau, Yuebo Li, Rui Mano, Pedro C Rodriguez

November 13, 2020

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Nitya Aasaavari, Fabio Di Vittorio, Ana Lariau, Yuebo Li, Rui Mano, and Pedro C Rodriguez. China’s Rebalancing: Opportunities and Challenges for LAC Exporters, (USA: International Monetary Fund, 2020) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Asia and Latin America and the Caribbean (LAC), two regions with large growth potential, have become increasingly connected over the last 20 years. China has emerged not only as a top trading partner, but also as an important competitor of LAC exports. China’s retreat from certain markets, due to the ongoing rebalancing process, could open new opportunities for LAC exporters but also entail some challenges. Our results show that China’s rebalancing will have an overall positive effect on LAC’s GDP and exports in the long run, but this effect is small and uneven across countries, leading to winners and losers. We also provide evidence that other countries, such as India, are currently trying to fill the gap left by China and could undermine LAC’s competitive advantage in some export markets. In this context, reduction of trade barriers and further integration within the region and/or with the rest of the world would lead to unequivocally positive outcomes for all LAC countries. The COVID-19 shock might exacerbate the effects identified in our analysis.

Subject: Comparative advantage, Competition, Exports, Financial markets, Imports, International trade, National accounts, Real exports

Keywords: Asia and Pacific, Asia-Lac trade linkage, Central America, China’s rebalancing, Comparative advantage, Competition, Export category, Export dependency, Exports, Exports of goods, Exports of service, Global, Imports, Latin America and the Caribbean, North America, Real exports, Trade competition index, Trade integration, WP

Publication Details

Pages:

51
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2020/239
Stock No:

WPIEA2020239
ISBN:

9781513561141
ISSN:

1018-5941

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