Latin America Welcomes China's Rise: Ricardo Lagos

April 23, 2012

China is now the world's second-largest economy and its impact on Latin America has been "very, very big," said Ricardo Lagos, former President of Chile. Lagos, who is Professor-at-Large at Brown, spoke at the Joukowsky Forum last Monday as part of a lecture series co-sponsored by the Watson Institute and the Year of China.

Lagos cited an Organization for Economic Cooperation and Development (OECD) report concluding that every percentage point of economic growth in China contributes 0.4% to growth in Latin America. Trade between China and Latin America is strong, and the region has been an attractive base for the Chinese to secure access to the natural resources required to fuel their economy's rapid expansion.

While Lagos welcomed Chinese investment into Latin America, however, he expressed concern about growing Chinese clout in world resource markets. He said that putting too many resources in the hands of a single country may give that country too much control over prices.

Looking towards the future, Lagos is positive that China-Latin American ties will continue to strengthen. "The real relationship [between China and Latin America] is about to begin," he said.

Lagos said the recent financial crisis highlighted the shift in global power away from the West, and China and Latin America have both been beneficiaries of this move towards a multilateral world order. For example, there are currently three Latin American countries in the G20 — Mexico, Brazil and Argentina — compared to none in the G8, he said. Lagos added that by 2050, China's Gross Domestic Product (GDP) will be 1.3 times the size of US GDP, versus just 22% in 2007, while the economies of Latin America, India and Europe will each be about 80% of the US economy. He said both China and Latin America favor a multilateral world order, and it has not been difficult for the region to find areas of cooperation and agreement with China.

While there is concern that China's rise might eventually lead to a clash with the US, Lagos was optimistic that conflict will be avoided through regular US-China diplomatic engagement in multilateral fora such as the Asia-Pacific Economic Cooperation (APEC). Lagos envisions APEC and the greater Pacific community taking on more importance in the near future, saying that APEC will be a forum for the US, China and other countries to "co-evolve" and understand each other.

By Watson Institute Student Rapporteur Kai Herng Loh '14