China’s Rebalancing: Opportunities and Challenges for LAC Exporters

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

No 2020/239, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: China’s rebalancing; Latin America and the Caribbean; trade integration; WP; Asia-Lac trade linkage; export category; trade competition index; exports of goods; export dependency; exports of service; Exports; Competition; Comparative advantage; Imports; Real exports; Asia and Pacific; North America; Global; Central America (search for similar items in EconPapers)
Pages: 51
Date: 2020-11-13
New Economics Papers: this item is included in nep-cna and nep-int
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