Myth of the Interregional Trade Relationship between East Asia and South America

There seems to be a general consensus that trade between East Asia and South America has been increasingly important. However, we know little about the actual dynamic development of this interregional trade. This paper examines whether the trend of East Asia-South America trade is a general phenomenon or a country-specific/product-specific issue and whether the increase in trade values has a solid basis in terms of product diversification and/or price/quantity effects. While South America has a trade surplus with East Asia, overall, detailed by-country and by-product analyses of interregional trade reveal several potential weaknesses that South America has with regard to trade with East Asia. Our research findings are: (i) the increase in trade between the two regions can be, mainly, explained by the increase of China’s trade with South America; (ii) the increase of China’s import from South America is limited to a few number of commodities; (iii) the increase of East Asia’s imports from South America is, partly, due to commodity price increase; (iv) China started to export various types of electronics and machinery products to South America. Overall, East Asia’s export to South America seems to have promising growth than South America’s export to East Asia.