How Important are Sino-Latin American Trade for Economic Growth? A Trade in Value-Added Perspective

Abstract

Sino-Latin American trade have increased substantially for decades. However, the increasing trade imbalances between China and several Latin American countries have yielded growing trade frictions. In this paper, we re-calculate the bilateral trade balance using the value-added content in trade and measure the contribution of Sino-Latin American trade to economic growth. The results show that gross trade statistics seriously overestimate the real bilateral trade imbalance, and China’s trade surplus with Mexico decreased by over 50%. The composition of Sino-Latin American trade suggests that most Latin American economies are complementary with Chinese economy. The South-South trade has been increasingly important for both China’s and Latin America’s economic development. We foresee an optimistic future of relations and continuously increasing trade between China and Latin America. Meanwhile, more efforts should be made to settle trade frictions and intensify Sino-Latin American relations.

Keywords:

• China
• Latin America
• trade in value-added
• global multi-regional input-output model
• hypothetical extraction method

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

The authors acknowledge the financial supports by the National Natural Science Foundation of China (NO. 72373141 and NO. 72074208), Major Program of National Fund of Philosophy and Social Science of China (NO. 19ZDA062), and the Alliance of International Science Organizations (NO. ANSO-SBA-2021-03).