China in Latin America: The Whats and Wherefores by R. Evan Ellis (review)

For those of us who teach comparative political economy, international development, and global business, Evan Ellis has single-handedly filled an enormous gap in the literature on the rapidly growing relationship between the People's Republic of China (PRC) and Latin America. In his book China in Latin America: The Whats and Wherefores, Ellis emphasizes the complexity of China-Latin American ties in the twenty-first century, as well as the diversity that is unfolding in the nature of China's interaction with countries in different subregions of Latin America. The author methodically analyzes the dimensions of China's involvement with countries located within the Southern Cone, the Andes, Mexico, the Caribbean, and Central America. In doing so, he covers a full range of subjects, which together provide one of the most thorough political economy profiles ever depicted of China's activities in Latin America.

According to Ellis, China's interest in Latin America is largely rooted in its voracious demand for the kinds of primary products— copper, iron ore, soybeans, fish meal, and petroleum—that are needed to fuel and sustain its high-growth industrial model. At the same time, Chinese policymakers are looking to secure new export markets for the country's increasingly sophisticated manufactured goods. On the political side, China has pursued its objective of isolating Taiwan (in a region where a high number of countries continue to recognize Taiwan and not the PRC), and it has sought strategic alliances with such countries as Argentina, Brazil, Chile, and Peru. The latter, Ellis argues, has been enacted in low-key ways as China seeks to avoid provoking the United States within its long-established 'sphere of influence'. Here, Ellis points to the combination of diplomacy and determination that Chinese leaders have displayed in crafting China's relationship with Latin America.

While providing a wealth of information on China's growing cultural, political, and social links with various Latin American countries, Ellis pays special attention to the nature of the economic ties that are evolving between China and these countries. The author highlights a pattern of trade specialization based on traditional comparative advantage, whereby Latin American nations are exporting mainly primary materials to China and in exchange importing manufactured goods that are high up on the value-added chain. Ellis raises two notes of caution with regard to this scenario: first, is the risk of Latin America's 'deindustrialization' as China has quickly become the top trade partner of Argentina, Brazil, Chile, and Peru, perhaps inadvertently encouraging the dependence of these countries on revenues, related to the export of natural resources?; second, is the growing competition from China that some Latin American countries now face in exporting to third markets, especially the United States? The phenomenon of being abruptly displaced by China in such US sectors as electronics, machinery, and textiles has been especially acute for Mexico and the Central American countries.

Nevertheless, the South American countries, in particular, seem to have embraced this old-fashioned comparative advantage arrangement with China, which has spurred unprecedentedly high growth rates for many of these countries in the 2000s. Across the region, there are also strong hopes that closer trade ties will garner hefty inflows of Chinese foreign direct investment (FDI). Thus far, however, it is the trade bonds that have dominated and readily towered over Chinese FDI in Latin America. In fact, Chinese FDI has been minimal in the region, leaving these countries just as susceptible as they have always been to the vicissitudes of price and demand fluctuations for raw materials on international commodity markets. This point, along with the red flag waved over the threatened phenomenon of deindustrialization in Latin America, is something about which Ellis could perhaps have been a bit more critical in his analysis of the much tighter economic ties that have been formed between China and Latin America in the 2000s.

In his analysis of the Southern Cone countries...