Angel or Devil? China s impact on Latin America

Transcription

1 Agel or Devil? Chia s impact o Lati America Javier Satiso Baco Bilbao Vizcaya Argetaria (BBVA) Chief Ecoomist for Lati America ad Emergig Markets 10 th Aual Meetig - LACEA Paris, October 29 th 2005 Paris, October The impact of Chia Why everyoe talks about Chia? The impact o Lati America The Brazilia ad Mexica cases A blessig i disguise? Paris, October

2 Why everyoe is talkig about Chia? Share of world GDP by coutry ad regio Emergig Asia Chia 4% Japa&ROK 13% EMU 23% USA 29% Chia s ecoomy is some 13% smaller tha the whole of Lati America s LatAm 5% Source: BBVA, WEO 2005 Paris, October The aswer may ot be i the picture but i the movie... % Source: BBVA, WEO Average ecoomic growthrate by coutry ad regio, S.Asia/Pac. World LAC EMU Chia 70 s 80 s 90 s 00 s Nomial share of world s output, e % Latam 8 Chia I the last 25 years, Chia s real ecoomic growth rate was o average 9.5% p.a. whereas Lati America s rate sigificatly lower at 2,7% p.a. Paris, October

3 Chia s ecoomic trasformatio: 1. From a state ecoomy to the rise of the private sector Share of total staff employed by private * ad o-private sector No-private Private *private sector: joit-veture, foreig-owed ad shareholdigcompaies Share of total productiovalue added by private * ad o-private sector No-private Private Source: BBVA, Ecowi Sice 1994, the umber of persos employed i the public sector fell more tha 7 millio p.a. Chia s private sector cotributed 60, of the ecoomy s value added i 2004 compared to just 34% i Paris, October Chia s ecoomic trasformatio: 2. Migratio from rural to urba areas % URBAN POPULATION/TOTAL POPULATION % total CHINA EMPLOYMENT BY SECTOR (% of total persos employed, ) Rural Urba Source: BBVA US Japa Chia Source: BBVA, Ecowi I the last 6 years, urba populatio icreased by 105 millio people. Urbaisatio ratio is some 4 but could surpass 5 i two decades. Paris, October

4 Chia s ecoomic trasformatio: 3. From Middle Kigdom to maufacturig powerhouse 25 Trade opeess (X+M/GDP, 2004) Regio's Average 2004 Chia s trade opeess surpasses that of all Lati America coutries Malaysia Thailad Chia South Korea Idoesia Idia Chile Source: BBVA, WTO, Natioal Statistics Mexico Veezuela Uruguay Argetia Colombia Peru Brazil 7% Chia's share i world merchadise trade (%, ) 5% ad its share i world merchadise trade has duplicated i less tha a decade. 4% 3% 2% 1% Source: BBVA, IMF DOTS Paris, October Chia ecoomic trasformatio: 4. A impressive growth GDP percapita i PPP, e (i US$, costat prices) Chia Mexico Brazil Chia Japa ROK Source: BBVA, WEO, PWT Paris, October

5 The impact of Chia Why everyoe talks about Chia? The impact o Lati America The Brazilia ad Mexica cases A blessig i disguise? Paris, October What data has the study bee based o? Pael data i 3D: 35 coutries, 620 products ad 6 years. The Chiese exportig ad importig structures have bee compared with the oe of 15 Lati America coutries (plus 16 other emergig coutries o LatAm, Spai, Japa ad USA). We have used the UNCTAD database that icludes 620 differet goods. This database usig the oe ad three-digit Stadard Iteratioal Trade Classificatio is the period of time cosidered. Paris, October

6 What is the Chiese export structure? Export compositio to oe-digit. Exports Machiery & trasport equipmet 28,0 31,1 34,2 36,8 40,3 44,0 Miscellaeous maufactured goods 37,3 36,2 33,7 31,9 30,2 28,1 Maufactured goods 16,0 15,3 15,4 14,8 14,5 14,0 Chemicals products 5,4 5,1 4,6 4,7 4,5 4,2 Food & aimals 5,8 5,4 4,9 4,8 4,5 4,0 Mieral fuel & lubricats 2,8 2,3 3,1 3,1 2,6 2,5 Commodities 2,1 2,1 1,9 1,9 1,8 1,6 Crude material (ex. Food&fuel) 1,7 1,8 1,6 1,4 1,2 1,0 Beverages & tobacco 0,5 0,4 0,3 0,3 0,3 0,2 Aimal & vegetable oil/fat/wax 0,4 0,3 0,3 0,3 0,2 0,2 Source: BBVA, Itrace 2003 Over recet years, the driver of its export activity shifted from miscellaeous maufactured goods i 1998 to machiery ad trasport equipmet i Paris, October What is the Chiese import structure? Imports compositio to oe-digit. Imports Machiery & trasport equipmet 38,8 40,5 40,3 42,3 45,3 45,9 Maufactured goods 22,5 21,2 19,0 17,7 17,2 16,2 Chemicals products 13,8 13,8 12,7 12,4 12,3 11,1 Miscellaeous maufactured goods 7,8 7,3 6,1 7,7 7,6 8,6 Crude material (ex. Food&fuel) 7,5 7,6 8,8 9,0 7,6 8,2 Mieral fuel & lubricats 4,9 5,5 9,2 7,2 6,6 7,1 Food & aimals 2,7 2,2 2,1 2,0 1,8 1,4 Commodities 1,1 1,5 1,4 1,3 1,2 1,0 Aimal & vegetable oil/fat/wax 0,6 0,4 0,2 0,1 0,2 0,3 Beverages & tobacco 0,1 0,1 0,2 0,2 0,1 0,1 Source: BBVA, Itrace 2003 Chia s import structure reveals the developmet of a strog itra-idustry trade. Paris, October

7 What products is Chia specialized i? Specialisatio Idex (Balassa) Chia Wood products 0.46 Leather products 4.53 Chemicals 0.50 Processed food 0.60 Textiles 2.48 Mierals 0.27 Basic maufactures 1.03 No-electroic machiery 0.49 Fresh food 0.83 Miscellaeous maufacturig 1.73 Trasport Equipmet 0.27 Clothig 4.16 Electroic compoets 1.05 IT & Cosumer electroics 1.72 Source: BBVA The idex measures the coutry's specializatio idex i exports accordig to the Balassa formula. The idex compares the share of a give sector i atioal exports with the share of this sector i world exports. Values above 1 idicate that the coutry is specialized i the sector uder review. Paris, October What idexes of competitio have we used? We wat to see if the exports of Lati America coutries coicides with Chiese export, i.e. if a potetial cost exists. Coefficiet of specialisatio = a it a jt Where ajt y ait are the share of good over the total exports of coutry j e i i time t (where j is Chia) Coefficiet of coformity = ( a it a ) it 2 a jt ( a jt ) 2 Paris, October

8 Does Chia compete with Lati America coutries? Coutries less harmed by the Chiese competitio CS CC CI Paraguay VJazuela Bolivia Chile Paama Russia Hoduras Guatemala Uruguay Peru Argetia Colombia El Salvador Brazil Costa Rica Coutries most harmed by the Chiese competitio CS CC CI Sigapore USA Malaysia Polad Korea Turkey Mexico Rumaia Hugary Thailad Source: Blázquez, Rodríguezad Satiso, BBVA (2005) Source: Blázquez, Rodríguez ad Satiso, BBVA (2005) Amog the 15 coutries less harmed by Chiese competitio, there are 14 Lati America coutries. Paris, October Does Chia compete with Lati America coutries? Chiese commercial competitio with Argetia 17% % 15% 15% 13% 5% 12% 4% 2% Chiese commercial competitio with Chile 11% 11% 11% 11% 9% 4% Chiese commercial competitio with Paraguay 7% 7% 7% 5% 15% Chiese commercial competitio with Uruguay 19% 17% % 13% 2% 5% Source: Blázquez, Rodríguez ad Satiso, BBVA (2005) Paris, October

9 Does Chia compete with Lati America coutries? 4 3 Chiese commercial competitio with Costa Rica 33% 3 31% % Chiese commercial competitio with El Salvador 3 27% 2 23% 23% 24% 21% Chiese commercial competitio with Guatemala 19% % 17% % 1 15% 14% 13% Source: Blázquez, Rodríguez ad Satiso, BBVA (2005) 14% 12% 4% 2% Chiese commercial competitio with Paama 12% 11% 11% 11% Paris, October Does Chia compete with Lati America coutries? 14% 12% 4% 2% 15% 5% Chiese commercial competitio with Bolivia 11% Chiese commercial competitio with Peru 17% 12% 11% 1 11% 17% 17% 15% 13% Source: Blázquez, Rodríguez ad Satiso, BBVA (2005) 25% 15% 5% 12% 4% 2% Chiese commercial competitio with Colombia 19% 1 Chiese commercial competitio with Veezuela 11% 19% 9% 21% 19% 1 7% Paris, October

10 Does Chia s exports compete with Lati America s? Thailad Asia coutries competitio * vs. Chiese exports to US, % Taiwa Idoesia Malaysia Philippies South Korea Sigapore *Value of exports to US from Chia i same product categories as coutry s exports, as % of coutry s total exports to US Japa México Lati America coutries competitio* vs. Chiese mai export products Brasil Colombia Argetia Perú Uruguay a it a jt *Arithmetic average of the followig idexes: CC= 2 ( a it ) ( a Chile Veezuela ad CS= 1 1 a it a 2 where ajt ad ait equals the share of item over total exports of coutries j (Chia) ad i i time t. jt 2 ) jt Source: C.HJ.Kwa, Nomura Istitute of Capital Markets Research Source: Blázquez, Rodríguez ad Satiso (2005), BBVA Paris, October The impact of Chia Why everyoe talks about Chia? The impact o Lati America The Brazilia ad Mexica cases A blessig i disguise? Paris, October

11 Brazil : i a good positio to feed the drago 32% % Chiese commercial competitio with Brasil % 25% 25% 22% Source: Blázquez, Rodríguez ad Satiso, BBVA (2005) Paris, October Brazilia exports of primary products are geographically more diversified more cocetratio less cocetratio Herfidahl-Hirschma Cocetratio Idex of Brazilia exports by coutry of destiatio Ja-89 Ja-90 Source: BBVA Ja-91 Ja-92 Ja-93 Ja-94 Ja-95 Ja-96 Ja-97 Ja-98 Ja-99 Ja-00 Ja-01 Ja-02 Ja-03 Ja-04 + cocetratio + diversificatio Herfidahl-Hirschma Cocetratio Idex of Brazilia exports by idustry, ,20 0,18 0,16 0,14 0,12 0,10 0,08 0,06 0,04 0,02 0, Source : BBVA, OMC Paris, October

12 Chia has become a major destiatio of Brazilia exports Trade Balace with Chia 3000 US$ millios p Source: SECEX Major coutries of destiatio of Brazilia exports Uited States 22, 1º Uited States 21,1% Argetia 11,2% 2º Argetia 7, Netherlads 5,4% 3º Netherlads 6,1% Germay 5,3% 4º Chia 5, Japa 4, 5º Germay 4,2% Italy 3, 6º Mexico 4,1% Belgium 3, 7º Italy 3, Uited Kigdom 3, 8º Japa 2,9% Frace 2,5% 9º Chile 2, Spai 2,4% 10º Frace 2,3% Mexico 2,2% 11º Uited Kigdom 2,2% Chile 1,9% 12º Spai 2,1% Russia 1, 13º Belgium 2, Paraguay 1, 14º Russia 1,7% Chia 1,4% 15º Veezuela 1,5% Source: BBVA Paris, October The Mexica case: the attack of the drago? 5 54% 52% 5 Chiese commercial competitio with Mexico 54% 54% 52% 52% 51% 49% 4 4 Source: Blázquez, Rodríguez ad Satiso, BBVA (2005) Paris, October

13 Chia competes itesively with Mexico o a global level 0.6 Chiese trade competitio with Lati America Mexico 0.7 Chiese global trade competitio Hugary Thailad Costa Rica Brazil 0.2 Argetia Colombia Peru 0.1 Veezuela Chile Mexico 0.5 USA Czech R. Japa 0.4 Polad 0.3 Spai Source: Blázquez, Rodríguez ad Satiso, BBVA (2005) Paris, October Mexico s competitive advatage: proximity to export markets Mexico beefits from its geographic proximity to its major export markets: Lower trasport ad commuicatio costs Access to FTA Just-i-time delivery 24 Days 4 Days 11,700 Km 160 Km Shippig time Mexico is more competitive i maufacturig more sophisticated products which require frequet commuicatio with the cliet or supplier ad short reactio times. Paris, October

14 Mexico s competitive advatage: lower trasport costs México vs. Chia at differet oil prices Trasport Costs* of US Top 10 Imports (2003) CHINA Average Freight Rate MEXICO Average Freight Rate Office Machies Misc Maufactures Telecommuicatios Electrical Machiery Apparel Furiture Footwear Maufactures of Metals es Geeral Idustrial Machiery Textile Yar 1.7 Road Vehicles Petroleum Electrical Machiery Telecommuicatios Office Machies Apparel Power Geeratig Machiery Geeral Idustrial Machiery Scietific Istrumets Special tras&commodities 2.0 Trade-weighted Freight Rate * Total expediture o freight as a share of total imports of co mmodity, average for all coutries Source: CIBCWM (2005) Source: US Cesus Bureau, CIBCWM (2005) US imports from Chia ted to be more trasport sesitive tha from Mexico. Could trasport savigs offset Chiese lower wages? Paris, October Pedig reforms : the upgrade of port facilities Cargo Hadig Restrictio Madatory Services Price Fixed Agreemets Cooperative Agreemets Media Clearace Port Efficiecy Crime Idex Cotaier Hadlig Charges World Bak US$/TEU CMPCH Idex Coutry Idex Idex Idex Idex time (Days) Idex (1-7) (1-7) Sigapore NA NA Hog Kog NA NA NA NA Taiwa NA NA Japa NA NA Malaysia NA NA Spai NA Korea NA NA NA NA Thailad NA NA Argetia NA 139 NA Vietam NA NA NA NA Chile NA Chia NA NA Idoesia NA NA NA Mexico NA NA NA Veezuela NA NA NA El Salvador NA NA 61 Brazil NA Peru NA 142 NA Idia NA NA NA NA Philippies NA NA Ecuador NA 139 NA Costa Rica NA NA 68 Colombia NA NA NA Bolivia NA NA NA NA NA NA NA Uruguay NA NA NA NA NA NA: Not Available Source: Data for the first 4 colums was kidly provided by Carste Fik, Aaditya Mattoo, ad Ileaa Cristia Neagu* (2002). LSU Idex Paris, October

15 The impact of Chia Why everyoe talks about Chia? The impact o Lati America The Brazilia ad Mexica cases A blessig i disguise? Paris, October Chia : blessig i disguise for Lati America? Exports of primary products over total exports % GDP ad BBVA -MAP Latam GDP growth rate 3 Veezuela 83.1% Per 71. Chile 59.1% Colombia 46.3% Argetia 38. Brazil 29. 4% 3% 2% 1% BBVA-MAP growth - - Mexico % -3 Latam 31.2% Source: BBVA based o atioal statistics Source: BBVA BBVA-MAP Latamidexmoitorsthe tradig prices of commodities i the regio. Primary products accout for the bulk of Lati America exports: Dutch disease symptom? Paris, October

16 Agel or Devil? Chia s impact o Lati America Javier Satiso Baco Bilbao Vizcaya Argetaria (BBVA) Chief Ecoomist for Lati America ad Emergig Markets 10 th Aual Meetig - LACEA Paris, October 29 th 2005 Paris, October