Over the past two decades China's impact on Latin America has gone from being marginal to highly significant, a trend that is likely to be reinforced by the Covid-19 pandemic. This has led to a rapidly growing body of literature on Sino-Latin American relations to which these three studies make a welcome contribution. Two of the studies are by senior academics (Barbara Stallings and Carol Wise) with an extensive record of research on Latin American political economy. They use the rise of China as a lens through which to look at the process of economic development in Latin America and the ways in which it has been interpreted more broadly. The third study, by Nicholas Jepson, has its origins in a PhD thesis and takes a broader canvas, covering 15 countries from Asia, Africa and Latin America. However, since half the cases come from the region, the book is of considerable interest to Latin Americanists.
All three books address the relationship between external and internal factors in Latin American development. This is a central theme of the more sophisticated analysis of dependency that is the focus of Stallings's short book. She is particularly concerned with the mechanisms linking external and internal developments. Wise, although critical of dependency theory, does not dismiss it entirely, highlighting the role played by domestic economic policies and institutions in determining the impact of external factors on economic performance. Jepson too is concerned with the internal effects of global changes, with a focus on the role played by state–society relations and domestic class composition in determining the type of policy responses that have occurred in different countries.
The authors all take the growth of China in the global economy as their starting point. As the ‘Asian Drivers’ literature makes clear, this has had both direct and indirect effects on countries in the Global South (Raphael Kaplinsky and Dirk Messner (eds.), special issue of World Development, 36: 2 (2008)). At the global level China is now the second largest economy in the world in terms of total GDP and is predicted to overtake the United States before the end of the decade. It is the dominant player in many key commodity markets such as iron ore, copper and soybeans, and an increasingly significant source of demand for oil and gas, which are all important Latin American exports. It is also a major global supplier of an expanding range of manufactured goods, such as garments and electrical and electronic products, that compete with some Latin American countries’ exports. Thus even countries that do not have extensive bilateral relations with China are affected by the indirect impacts of its economic rise.
For many countries in the region there has also been a significant growth in bilateral economic relations with China, which is now the main export market for Brazil, Chile, Peru and Uruguay. Bilateral trade between Latin America and China has increased more than twentyfold since China joined the World Trade Organization (WTO) in 2001. Following the global financial crisis in 2008, China has also become an important source of capital for the region, both through Foreign Direct Investment (FDI) and loans from its policy banks, although the latter have dropped significantly in recent years. These bilateral relations have direct economic and other impacts on the countries of the region.
Wise and Stallings focus on the direct impacts of increased Sino-Latin American relations, while Jepson is primarily concerned with the indirect effects arising from China's impact on global commodity markets. The studies also complement each other by addressing different questions. Dragonomics, as the sub-title makes clear, sets out to explain why some Latin American countries have done better than others in taking advantage of the opportunities created by China's international expansion. In China's Wake, in contrast, analyses why the commodity boom led some countries to move away from neoliberal development strategies while others did not. Finally, Stallings sets out to show the continuing relevance of dependency theory in explaining Latin American development in the twenty-first century.
In common with the authors of the vast majority of the recent literature on Sino-Latin American relations, Wise concentrates mainly on the period since 2000, but she also provides a valuable discussion in Chapter 2 of earlier relations with the People's Republic of China (PRC), reminding the reader that China's emergence as a market for Latin American commodities is not entirely new and that the PRC's trade links with the region go back to the 1960s. Wise also provides a comparison of the economic reform processes in China and Latin America since 1980 (Chapter 3).
The core of the book consists of case studies of six Latin American countries that are classified by China as strategic partners. These are divided into three groups: small open economies (Chapter 4: Chile, Costa Rica and Peru); larger more diversified economies that suffered an ‘institutional resource curse’ (Chapter 5: Argentina and Brazil); and Mexico, which has ‘ratcheted down the industrial ladder’ (Chapter 6). Although recognising that part of the explanation of differences in the impacts of China arises from whether the Latin American economy is complementary to, or competitive with, China in terms of its comparative advantage, the main emphasis is on internal differences and local agency. The success stories for Wise are the small open economies that had already achieved substantial reforms by 2000 when economic relations with China began to take off, and extended their reforms subsequently, signing Free Trade Agreements (FTAs) with both China and the United States. These three countries grew faster than the three larger economies after 2001 and were less badly affected by the ending of the commodity boom. In contrast, Argentina and Brazil had less thoroughgoing reform and weaker institutions that deteriorated further during the commodity boom. Mexico, because of its relationship with the United States, and the fact that it competes with China in the US market, rather than benefiting from exports of commodities to China, is a different case. Here the abandoning of industrial policy in favour of adherence to neoliberal policies, combined with a failure to undertake extensive institutional reform, undermined Mexican competitiveness and saw it lose out to China.
Despite recognising the asymmetry of Sino-Latin American trade relations, Wise argues that dependency theory cannot explain the variations in political economic outcomes that are the main focus of Dragonomics. In contrast, Stallings's short study is couched explicitly in terms of the insights that she draws from dependency theory. She uses Fernando Cardoso and Enzo Faletto's approach (Dependency and Development in Latin America, University of California Press, 1979) to dependency rather than the cruder versions that focus simply on external factors. The key to understanding ‘concrete situations of dependency’ (p. 5) is to analyse the mechanisms that link external and internal factors. Stallings distinguishes between markets, leverage (hard power) and linkages (soft power), contrasting the relative importance of the three mechanisms in relation to Latin American dependency on the United States and China at different times. She argues that, in contrast to the United States, China has used linkage more than leverage in its relations with Latin America.
Since this is a relatively short study in the Cambridge Elements: Politics and Society in Latin America series, there are no detailed case studies of particular countries of the kind found in the other two books. However, Stallings does provide a broad classification of Latin American countries, distinguishing between those characterised by transparency and upholding of international standards (Chile, Colombia, Costa Rica, Mexico, Uruguay and Brazil) and those which are not and which lack access to international capital markets (Venezuela, Bolivia, Ecuador, Argentina and possibly Peru under Ollanta Humala, 2011–16). The latter have been more dependent on China because of a combination of external and internal factors. Stallings makes a convincing case for the continued relevance of a sophisticated version of dependency theory in analysing Latin America's relations with China.
Jepson's study is a tour de force in terms of its breadth and ambition. Unlike the other two, its aim is to explain differences in economic strategies, rather than differences in economic performance. Specifically he asks why, during the commodity boom of the early 2000s, some countries broke with neoliberalism while others stuck to a neoliberal path. In contrast to Wise and Stallings, who focus on direct relations between China and Latin America, Jepson is concerned with the indirect impacts arising from China's growing effect on global commodity markets, particularly for minerals, energy and soybeans. As he points out, this affects all countries that rely heavily on exports of these products, whether or not they have close bilateral relations with China.
The commodity boom created conditions, in terms of the availability of foreign exchange and increased government revenues, that made it possible for states to exercise greater autonomy in their economic policies. Some countries used the opportunity to break with neoliberalism while others did not. Jepson develops a fivefold typology of political economic trajectories during the commodity boom, based on different patterns of state–society relations. Two of these consist exclusively of Latin American examples: the neo-developmentalist type (Argentina and Brazil) and the extractivist-redistributive type (Bolivia, Ecuador and Venezuela). A third group characterised by home-grown orthodoxy includes two Latin American cases (Colombia and Peru) along with Jamaica, South Africa and Indonesia. The other two categories – the extractivist-oligarchic and the donor-dependent orthodoxy types – do not include any examples from the region. Since the study concentrates on the impact of the commodity boom, only resource exporters are included, thus excluding Mexico and Costa Rica. As is suggested by the names of Jepson's categories, those countries which followed home-grown or donor-dependent orthodox paths continued with neoliberal policies, while the other three groups broke with neoliberalism.
All three studies agree on the economic significance of the growth of China for Latin America, emphasising the favourable conditions that the commodity boom created for many countries in the region. However, they go beyond simplistic debates about whether China is an ‘Angel or Devil’ in Latin America (Jorge Blázquez-Lidoy, Javier Rodríguez and Javier Santiso, ‘Angel or Devil? China's Trade Impact on Latin American Emerging Markets’, in Javier Santiso (ed.), The Visible Hand of China in Latin America, OECD Publishing, 2007, pp. 45–83) or broad generalisations that differentiate between South America on the one hand and Mexico and Central America on the other. The so-called ‘China boom’ has created new opportunities for the Latin American countries, but the uses that are made of those opportunities depend on internal conditions and agency, and the mechanisms linking external and internal factors.
Where they differ is in terms of their theoretical perspectives. Wise draws on institutional political economy and the post-Washington consensus emphasis on institutions and good governance. She uses the World Bank's World Governance Indicators to support claims that good institutions were the key to the economic success of the small open economies, while deteriorating indicators explained poor performance in Argentina and Brazil. Though this may fit the story that she puts forward for Latin America, it does expose the paradox that China also performs poorly in terms of many governance indicators while at the same time achieving stellar economic growth.
Jepson's approach is in the World-Systems tradition elaborated by Immanuel Wallerstein, as developed by Giovanni Arrighi (I. Wallerstein, ‘The Rise and Future Demise of the World Capitalist System: Concepts for Comparative Analysis’, Comparative Studies in Society and History, 16: 4 (1974), pp. 387–415; G. Arrighi, The Long Twentieth Century: Money, Power and the Origins of Our Times, Verso, 1994). He analyses the internal differences between Latin American countries in qualitative terms of the balance of class forces to explain why some countries turned away from neoliberal policies during the commodity boom while others did not. In contrast to Wise, he focuses on explaining the differences in policy responses between countries. There are similarities here with Stallings's approach, although, as already mentioned, she situates her analysis within a particular strand of dependency theory, emphasising the mechanisms through which external conditions influence internal development.
These differences in perspective are reflected in the analysis of individual country case studies, most clearly in the cases of Argentina and Brazil, to which both Wise and Jepson devote a chapter. For Wise the commodity boom led to the reversal of necessary reforms and deteriorating institutions exemplified by high levels of corruption in both Argentina and Brazil, whereas Jepson portrays them as examples of a serious attempt to break with neoliberal orthodoxy that failed as a result of underlying structural economic weaknesses, ruthlessly exposed when the commodity boom came to an end.
It would have been interesting to compare Jepson and Wise's views on the regimes that the former describes as extractivist-redistributive (Bolivia, Ecuador and Venezuela), but unfortunately Wise explicitly ruled out their inclusion in her book on the grounds that they provided nothing new in terms of insights since they were examples of the traditional ‘resource curse’ that had already been extensively analysed ‘by pioneering scholars like Terry Karl and Michael Ross’ (p. xiv). One can infer however that Wise would have a more negative view of these three countries than Jepson.
The other country that the two books have in common is Peru, cited as an example of home-grown orthodoxy, along with Colombia, by Jepson, and as a successful small open economy, along with Chile and Costa Rica, by Wise. There is a degree of agreement here since Jepson considers that Peru continued a neoliberal strategy during the commodity boom, while Wise emphasises the openness of the Peruvian economy. However, Peru's inclusion in the group alongside Chile and Costa Rica is open to question. In terms of some of the institutional indicators that Wise uses, its performance is more like that of Argentina or Brazil, despite significantly better economic outcomes.
No doubt China's impact on Latin America will continue to grow in future as will studies on the subject. There are many gaps still to be filled, particularly in terms of the social and environmental impacts that these three studies barely touch on. However they all make an important contribution in analysing the links between the global and the local and the role of domestic actors, institutions and policies in explaining differences in the way in which the changes that China has brought about play out in Latin America.
