China’s Latin moves cause concern in Washington

Dr Adrian Hearn

Mexico’s burgeoning trade deficit with China is being seen in Washington as an indicator of further problems on the horizon for the US, says ARC Future Fellow Adrian Hearn.

The deficit currently stands at $41 billion - already the largest in Latin America - and is set to increase as Chinese car manufacturers led by Geely edge in on the Mexican auto sector.

Across the border in the United States, Mexico’s predicament is viewed with growing trepidation, said Hearn.

"There’s a fear that US manufacturers may soon be unable to compete with China, even in sensitive high-technology sectors like automobiles. General Motors and Chrysler were only recently rescued from the GFC by the US government, and now face the prospect of direct competition with China."

Hearn, from the Department of Sociology and Social Policy, recently visited Washington DC, where he and two leading policy analysts briefed the Inter-American Dialogue and the US Department of State on the trajectory of Chinas economic relations with Mexico. (A video of the event can be viewed here.)

China’s trade with Latin America grew to $180 billion in 2010, said Hearn, but it is unbalanced to the detriment of manufacturing economies like Mexico, and environmentally unsustainable for commodity exporters like Argentina, Brazil, and Peru.

"So far most of the research has sought macro-economic solutions to these problems,"he said. "As a social scientist, my message is that we also need to look at human relationships, including dialogue with people affected by the regional boom in mining and agriculture, and Chinese diaspora communities who can help to diversify trade flows."

Hearn is part of an international research initiative, funded in part by Open Society Foundations, to integrate economic and social policy approaches to Chinese foreign engagement. A follow-up to the Washington DC event will take place on 22 May 2012 at the University of California-Berkeley in conjunction with the annual meeting of the Latin American Studies Association. (Details of the event are available here.)

The University of Sydney has supported the initiative through its International Program Development Fund (IPDF), which has enabled a research partnership with Mexico’s National Autonomous University. Under the IPDF scheme, Mexican economist Enrique Dussel Peters will visit the University of Sydney on Tuesday 1 November to deliver a Sydney Ideas public lecture on China-Latin America trade, and potential opportunities for comparative research on China-Australia relations.

The University of Sydney China Studies Centre has also identified China-Latin America relations as a future nexus of global change. In December this year the Centre will holda symposium called The China Impact: Asia-Pacific Policy and Responses at the University of Guadalajara in association with the Worldwide Universities Network (WUN). One of the events objectives is to develop comparative regional approaches to economic engagement with China.

"Australia," says Hearn, "is well placed to cooperate with Latin American commodity exporters, since we face similar challenges and opportunities in our relations with China."

Hearn recently published a book, China Engages Latin America: Tracing the Trajectory (Lynne Rienner Publishers 2011), and will explore China-Latin America relations in a forthcoming article for The China Quarterly.