Introduction to Special Issue “the Chinese Economy’s Comparisons and Links with Latin America”

In this special issue with a theme on "The Chinese Economy's Comparisons and Links with Latin America," we have seven excellent papers.The contributors are all experienced academics and researchers with impressive records of publications as well as public policy, national government and international organization experiences.The analysis covers up-to-date and critical issues on the vital role of the Chinese economy in its multifaceted relations with Latin America.Some papers also highlight the impact of such business, economic, and government policy links with Latin America on the Chinese economy itself.This Introduction attempts to provide some comments and critical summaries of these high-quality papers, with a special focus on China.The first paper is titled "How important are Sino-Latin American Trade for Economic Growth?A Trade in Value-Added Perspective" written by Kailan Tian and Xikang Chen.The paper makes at least two important contributions.First, the authors utilize a stylized global multi-regional input-output (GMRIO) approach to provide much better estimates of the bilateral trade imbalances between China and various Latin American economies.The paper employs the most recent 2021 edition of the Trade in Value Added (TiVA) database provided by the Organization for Economic Cooperation and Development (OECD).The data covers 66 economies and the rest of the world, and the industries include 45 different industrial sectors.The years covered are from 1995 to 2018.Some of the highlighted results show that based on valueadded trade, Mexico's and Argentina's trade deficits with China are substantially more modest than those based on gross trade terms.In 2018, Mexican deficit decreased by more than 55%, Argentia's deficit decreased by more than 31% and for Peru, the deficit actually turned into a surplus.The authors provide three explanations as to why in value-added terms, the bilateral Chinese-Latin American trade deficits are smaller than the gross values.First, as is well-known, much of current and recent global trade, including that associated with China, involves trade in parts and components in multiple stages of production.In an era of sequential production across countries, the country that exports the final product should not be credited with having generated all the value of the outputs.Second, China's processing trade further lowers China's domestic valueadded content.Processing trade is mainly conducted by foreign-invested enterprises.Processing trade refers to the business activity of importing all, or a large share of raw materials, and parts and components from abroad in bond, and reexporting the finished products after processing and assembly.Productions for processing exports are duty-free and rely more on imported intermediate inputs.In general, one unit of processing export creates less domestic value-added than one unit of normal export.Third, the characteristics of trade between China and Latin America