If The Chinese Economy Drifts, Do Latin American Economies Follow?

The Chinese economy is both opaque and massive. The World Bank currently has it ranked as the world's largest economy, GDP $18,017,073 in millions, ahead of the US at GDP $17,419,000 in millions and third place India at GDP $7,384,099 also in millions. You can find the data here.Chinese economic numbers are notoriously controversial, no fault of the World Bank. However the sheer size of the Chinese economy combined with its famous opacity is cause for a lot of nervousness, particularly for countries that have benefited from Chinese imports over past decades. Several Latin American economies can count themselves among the beneficiaries of Chinese commodity consumption.

This is, of course, a very large topic, the sort of flame that attracts me like a moth. I've decided to dip my toe in the water with a few exploratory charts. For starters I took a look at the correlation between Chinese and Chilean GDP to get a sense of how closely Chile tracks China. I charted GDP data from 2004 to 2014. The data is also from the World Bank and you can find it here.

Chile looks to be following China fairly closely here. This is not a big surprise. Chile's top export for 2014 was copper in various forms. China has been a big enough importer of copper to effect prices and world demand.

I also decided to take a look at Peru, another strong exporter of copper and an oil exporter as well.

Peru looks to be even more closely linked to China. So what to take away from all this?

Not much. Two charts without context don't tell us much, and correlations are problematic to interpret. I do think the China/Latin America link is an interesting story. One worth following. Partly as a way of understanding the past, and partly as a way of measuring whether the world is changing. The Chinese economy is evolving quickly behind a thick layer of fog. The impact of China on Latin America of 5 years ago is unlikely to be the same as that 5 years into the future.