Will China's Economic Slowdown Affect Latin America Trade?

Erik Bethel, of SinoLatin Capital addressed the question at recent Latin America China Investors Forum in Shanghai.

Amidst much speculation regarding the slowdown of China’s GDP, with 2012 estimates likely to fall below 8%, SinoLatin Capital dispelled fears of a “China Meltdown” to an audience of 500 delegates from Latin America and China.

“Latin America will continue to be an indispensable commodities supplier for China. More specifically, countries such as Brazil, Peru, Chile and Colombia present some of the best opportunities for Chinese investors due to relatively low inflation, stable governments and a strong growth rate.”

“The majority of the China analysts in the western media are focused on the short-term,” noted Bethel. “Will China’s GDP growth decline by one percent or by two percent this year? I think people are missing the more important medium and long-term picture. The China story is about demographics and urbanization.

Despite the short-term expected drop in China’s GDP growth rate, the Chinese government has been facilitating the largest wave of human migration in the history of the world. For the last twenty years, hundreds of millions of people have moved from rural to urban areas. And there is still a long way to go. China is 50% urbanized, therefore there are still 700 million people living in the Chinese countryside!”

China is not only urbanizing, but the country is creating a massive urban middle class. This middle class requires commodities such as copper, oil, and soybeans to keep up with urbanization.

Mr. Bethel went on to explain the link between China and Latin America, “Latin America will continue to be an indispensable commodities supplier for China. More specifically, countries such as Brazil, Peru, Chile and Colombia present some of the best opportunities for Chinese investors due to relatively low inflation, stable governments and a strong growth rate.”

This is the fourth consecutive year SinoLatin Capital has sponsored the Latin America China Investors Forum in continued support of investment relations between China and Latin America.