Over the past few years, China has become both a threat to and an opportunity for emerging markets. In the context of Latin America, it looks very much like the latter, being an outlet for huge amounts of commodities, raw materials and agricultural products. But the resulting prosperity should not blind policymakers to the potential for problems further down the line.

The degree to which countries are benefiting from China's increasing integration into the global economy varies. A recent study by Banco Bilbao Vizcaya Argentaria*, which analysed the impact of trade competition from China on 15 Latin American economies (and others) from 1998 to 2002, showed that Venezuela, Bolivia and Chile suffered least, while some Central American countries faced the strongest competition. Brazil, Colombia and Peru fell somewhere in the middle.