Introduction

This paper explores the competitive threat posed by People's Republic of China (PRC) to Latin America and Caribbean (LAC). It focuses on the impact of PRC's rise as a major exporter of manufactures, but it also considers bilateral trade between LAC and PRC. We explore these issues with trade data for 1990-2002 (2003 data are not available for all relevant countries), analysing and comparing export performance and specialization patterns in the world as a whole and in the US, the main market for both. We do not undertake a detailed analysis of the competitiveness at the industrial or product level: this would require detailed empirical investigation of the main export actors, benchmarking of productivity and capabilities and comparisons of national costs and policies, well beyond our scope. Our paper is thus a preliminary mapping that may offer insights for further, more detailed exploration.

Section 2 discusses the notion of PRC's 'competitive threat' and out a schema for measuring PRC's competitive impact in third markets. Section 3 analyses the 'potential for competition' between LAC and PRC by comparing the structure of their exports in various ways. Section 4 assesses the competitive impact of PRC on LAC in world markets by comparing their relative market share changes in both the world and US markets over 1990-2002 by technology categories. Section 5 deals with bilateral trade between LAC and PRC. Section 6 concludes. The Appendix tables provide more detailed data.

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