Latin Economies Face a Big China Choice

Turning 15 is a big deal in Latin America -- the moment when girls come of age, often to extravagant fanfare. So imagine the disappointment in Beijing, Latin America's newest best friend, when the region met the 15th anniversary of China’s entry into the World Trade Organization with conspicuous silence and awkward shrugs instead of a gala quinceañera.

Here’s the problem: In 2001, China joined the WTO on the understanding that over the ensuing 15 years it would strive to abide by the rules of free commerce by lowering trade barriers, freeing up its currency, and pricing its exports according to supply and demand. In return, member states would implicitly agree to recognize China as a grown-up market economy, a crucial upgrade for the world’s second-richest nation. That probationary period ended on Dec. 11. Now Latin America faces something of a diplomatic bind: China is the biggest trading partner for many Latin nations and one of the region’s biggest investors; it’s also a fierce competitor whose export juggernaut has steamrolled inefficient Latin firms. Granting China market economy status will in many respects make Latin economies more vulnerable to such pressures. Failing to do so risks damaging a relationship that fueled the region’s growth, which the World Bank estimates will eke along at a paltry 1.8 percent next year.