Kevin P. Gallagher and Roberto Porzecanski, The Dragon in the Room:
China and the Future of Latin American Industrialization. Stanford, CA:
Stanford University Press, 2010, pp1-148.
The main thesis of Gallagher and Porzecanski’s study on trade relations and government policies in China and Latin America is that there is an inherent danger in the current state of affairs. In addition, many scholars believed that China’s unprecedented economic rise has brought nothing but maybe is good news to many Latin America countries. Also, this book comes to four key conclusions, namely that Latin American countries have an export profile with China that is much too narrow, that Latin American products are coming under increasing pressure on world markets due to competition from
Chinese products, that China is industrializing and diversifying at a rapid pace while
Latin countries are not, and finally, that the impressive growth that China is currently experiencing may well be at the expense of the longer term growth and development of
Latin American countries.
The first chapter describes the ambivalence which many economists are beginning to feel when they observe the rise of China, and its effect on Latin America. On the one hand, China can be seen as a kind of “angel” (p. 1) because its huge appetite for Latin
American goods in recent years has undoubtedly brought much needed trade and investment in these countries and it has fuelled their success when other countries have struggle through the crisis and trade deficits. On the other hand, China’s astonishing growth can be viewed in terms of a monstrous dragon which is eating up these countries in its relentless rise towards world domination. These rather emotive images capture the
imagination, and could be seen as fanciful exaggerations, were it not for the detailed analysis of information that makes up the body of this book.
The book explains how China has pursued a consistent strategy of globalization through trade, gradually increasing its importation of raw materials for its growing industrial and manufacturing base. Chapter two describes the “commodities boom” (p. 11) which followed as Latin American countries scrambled to provide the raw materials that
China required. The immediate consequence of this was a welcome boost to revenues in the six countries which provided the bulk of China’s primary product needs.
In chapter three, the authors demonstrate how China has used these primary products to build up its technical capabilities and produce higher level goods that can compete on the global market. This is clearly very good news for China, and is helped by the country’s interventionist government philosophy based on firm, forward looking economic planning. Increased imports of Latin America raw materials of China have therefore fed directly into vastly increased production and investment in technology. The effect on Latin American countries has, however, been less uniformly good. Some countries and sectors have missed out, since China has chosen only those raw materials which it cannot easily locate in sufficient quantity closer to home, and it has not chosen to import manufactured goods from Latin America. Indeed it turns out that Chinese industrial products are flooding the world market, to the extent that 94% of Latin
American manufacturing exports are now deemed to be “under threat” (p. 39) of losing the global market comparative abilities .
The book delivers considerable detail on the performance of China in comparison with Latin America as a whole and with individual Latin American economies. Chapter five conducts a Mexico-specific analysis which allows the reader to trace the trends that
have been developing between these two countries. For example, a very telling graph (p.
154) based on figures taken from the United Nations Statistics Division (2009)