This presentation presented at Latin America/Caribbean and Asia/Pacific Economics and Business Association (LAEBA)'s 1st Annual Meeting held in Beijing, China on December 3rd-4th, 2004. The paper concludes by discussing, in general terms, the (difficult) policy options available. It shows that endowments, productivity, scale and the government role, all work together to make China a formidable competitor. It begins by dealing with a central issue: Does manufacturing still matter for Latin America's development? It then moves on to examine the scope and nature of the Chinese challenge. This paper, using mainly descriptive production and trade statistics, looks at the nature of this challenge and its implications. China and its "unlimited supply of labor", rapid productivity growth, scale, and extremely interventionist state has brought the practical challenge to unprecedented levels. Once saw as its economic future, the viability of this activity in the region has long been challenged by traditional trade theory and, in practical terms, by at least three generations of Asian Tigers. China's emergence has raised pointed questions about the future of manufacturing in Latin America.
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