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
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