Swimming against the tide

Something very similar will happen in China. The Chinese Academy of Social Sciences has forecast that by 2020 the Chinese middle class could double to more than 40 percent of the population. These people, like their counterparts in Latin America and the Caribbean, will aspire to better education, higher-paying jobs, better housing and quality health care.

So, the big question is not just how we will navigate the economic storms of the coming years. Instead, it is to look beyond that to ask how we will reduce income inequality and meet the expectations of this immense number of more prosperous citizens.

Latin America and the Caribbean and China should share ideas on how to make this happen. Latin America and the Caribbean can learn from China's success in improving educational outcomes and boosting investment in research and development. But to provide higher-skilled jobs that our people increasingly demand, they need to become competitive producers and exporters of value-added products. They must reduce their dependency on raw material exports, and that means the region's trade relationship with Asia must move beyond commodities.

There is much more to Latin America than agriculture, mining and oil. Thanks to more than two decades of economic reform, it has become a smart place to invest in everything, from infrastructure to logistics and manufacturing. China has an extraordinary opportunity to build productive bases in Latin America today that could prove very profitable in the future.

We already have some examples of how businesses in China and Latin America can find complementary niches. While a Chinese company is producing cars in Uruguay, Chilean architects are selling anti-seismic architectural services to China. Chinese energy conglomerates are investing in Brazil, while Mexican multinationals are producing consumer goods, pastries and even tortillas in China. While Huawei is providing telecommunication services in Costa Rica, companies in that Central American country are exporting integrated circuit boards and computer components to China.

Their relationship goes far beyond commerce, however. They share many of the same development challenges: rapid urbanization, pollution, fast-growing energy consumption and the ill effects of climate change. They can work together to help solve those problems. Latin America is a world leader in biofuels, and China is an important producer of solar panels and wind turbines. Several Latin American cities have created advanced mass transit systems, while China is pioneering the development of affordable, non-polluting electric vehicles.

This is a win-win situation for both sides. Together, defying the gloomy economic outlook, they should concentrate on taking giant steps toward more widespread and equitable human development.

The author is president of the Inter-American Development Bank.

(China Daily 09/17/2011 page5)