China's Call

Sep 1, 2005

China revalued its currency, the renminbi, in July. Joydeep Mukherji, director at Standard & Poor's, explains its long-term effect on Latin America.

What does this move mean for Latin America?China's revaluation will affect different Latin American countries in different ways. The appreciation gives short-term relief to those countries that compete with China in the manufacturing sector. Manufacturing in China will become a little more expensive. Latin American countries that are exporting manufactured products to the US and Europe, such as Mexico and countries in the Central American Free Trade Agreement will have some breathing room. For commodity exporters, such as Brazil, Chile, Venezuela and Peru, the faster China grows the better it is for them. As China's economy strengthens and becomes more productive, it will drive demand for commodities. But commodity-producing countries will also have to improve their productivity over the long term to move up the value chain. What are the challenges for Latin America? Asian countries,...

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