China's role in helping some Latin American countries weather the global economic crisis highlights its growing footprint in a region long considered the "backyard" of the United States. Pamela Cox, the top World Bank official for Latin America and the Caribbean, told Reuters in an interview on Tuesday that China's increasing ability to flex its economic and financial muscle, especially in South America, was more than welcome after the crisis that erupted a year ago on Wall Street.
"China's growth is a good thing for the region in many ways. It has led to a lot of growth in the region," Cox said, when asked why Brazil and some other South American nations were emerging in more favourable conditions from the crisis than many of their neighbours to the north.
Brazil, Peru, and to a lesser extent Chile and Argentina, have benefited from strong trading ties with China and their ability to cash in on a revival in its demand for raw materials, she said. At the same time, Mexico and countries across Central America and the Caribbean are more linked to the US market and have been harder hit by the crisis, Cox said.
Cox spoke on the sidelines of a meeting in Miami, co-sponsored by the World Bank, on the economic and political outlook for Latin America. The resurgence in China's primary commodities market was fuelled, at least in part, by the Chinese government's huge fiscal stimulus as it sought to contain the spillover effects of a crisis that began with the collapse of investment bank Lehman Brothers a year ago on Wall Street.
Cox said perhaps the biggest lesson Latin America can learn from the global crisis, in a region where half the growth from 2002 through 2008 was due to rising commodity prices, is the need to hedge your bets. That was especially true because the United States was in no position to import all the commodities Latin America needed to export, she added "Ninety-five percent of the people that live in Latin America live in a country that exports commodities.
And so it's very important to the region, and of course, China has been a huge importer of these commodities," Cox said. "While the US has maybe traditionally seen Latin America as their backyard, the reality is that we live in a much more global world than we did 20 or 30 years ago," she said.