Happy New Year! Feliz Año Nuevo! 新年快乐！
Brazil's President Dilma Rousseff toasts with China's President Hu Jintao after a signing ceremony at the Great Hall of the People in Beijing, April 12, 2011. Credit: Reuters/Jason Lee
Last month when US President Obama visited Brazil, a lot was expected from the visit in that he was meant to focus on ways to work with Brazil to counter China’s control of the RMB, which both seem is undervauled. The visit fell way short of expectations, and was even lambasted by most US media as a unnecessary and untimely trip in light of the crisis in the middle-east the US actions in Libya.
Last week, Brazilian President Dilma Rousseff visited China, and it now seems Brazil interests are leaning more towards cooperation with China than the US. Rousseff’s trip is being hailed as a major success both in China and back in Brazil. She left with promises and new contracts for China to purchase billions of dollars of Brazilian made industrial goods–not soy beans or iron ore.
Where will Brazil’s interests eventually lean — the US or China? Is there a way for the three to work together in a productive, positive way for the better of all? Or will Brazil eventually have to choose? Between the US, who has long ignored it rising clout and is considered by most Brazilians to not respect the country as much as it should? Or will it choose choose China, which for better or worse is more interested in Brazil’s raw natural resources than it is in buying its industrial goods like jets? Furthermore, if Brazil wants to speed up development of its high tech and industrial sectors–it’s number one competitor will come from China, not the US…?
This is a foreign policy soap opera in the making people.
I suggest all those interested in the topic, go over to Reuters and read a great analysis published today about this all.
Dear readers,
As your author currently resides in the “dragon” of the East, a.k.a., as China, and is a very busy young lad, I frequently post more news links related to China South America on this sites Linkedin Group.
For long time readers you’ll find the articles posted on the Linkedin Group more reminiscent of this site back in 2007-2008.
Click here to request to join the Linkedin Group!
Nonetheless, for all my other readers, and those not on Linkedin, this site will continue to operate and be updated on a periodic basis.
Cheers,
Benito
Finally, FINALLY… an article which logically presents the incredible opportunities for the US in Latin America… it’s neighbors — [ http://www.latinbusinesschronicle.com/app/article.aspx?id=4809 ]
Obama it’s time as we say in Peru to “ponte las pilas” and look South to your long ignored neighbors.
” For Obama, a New World to Discover — “The Americas will remain a new world of opportunity for U.S. workers and farmers if Washington is prepared to lead. There’s no time like the present for American business to get a piece of the action — or for President Obama to help open the door.” ~~ Latin America Business Chronicle
Last week, China South America was fortunate enough to meet and interview, via a skype, Dr. Kevin P. Gallagher, author the new book The Dragon in the Room: China and the Future of Latin American Industrialization (with Roberto Porzecanski).
Dr. Gallagher is a Professor at Boston University in International Relations and is faculty coordinator for Boston University’s Global Development Policy Program. Furthermore, In 2009 he served on the investment subcommittee of the US Department of State’s of the Advisory Committee on International Economic Policy. Professor Gallagher writes regular columns on global economic and development policy for The Guardian, Financial Times, and POLITICO. He co-chairs the Triple Crisis blog.
In the roughly 30 minutes we talked, we discussed
What motivated you? Dr. Gallagher to write the Sino-Latin American dynamic and motivated him to write The Dragon in the Room: China and the Future of Latin American Industrialization
Mr. Gallagher’s inspiration emerged from the 3 years he spent living in Guadalajara, also known as Mexico’s Silicon Valley. During his time in Mexico, it became very clear there was a “new kid on the block.” When speaking with Mexican professionals, the US market and future significance for the Mexican economy had to Mr. Gallagher’s surprise taken a back seat to the emergence of China.
It was around this time in 2005, Dr. Gallagher began to investigate what the rise of China meant for both Mexico, and the greater Latin America region. Would China’s high speed growth and fast rising competitiveness undermine Latin America’s capacity to develop their own competitive industries, or would China’s rise breed new possibilities and growth in Latin American countries? This formed foundation for his book, which you can click here to purchase a copy of.
Next we discussed the general importance of the growth of Sino-Latin American relations and trade.
Similar to the perspectives often presented here at ChinaSouthAmerica.com, Dr. Gallagher feels the rise of China and its penetration in Latin America comes with a significant amount of uncertainty for the region, offering both opportunities and dangers. The opportunities are clearer for some countries than others.
For major commodity producers down in South America; Venezuela, Peru, Chile and Argentina the rewards are being felt tangibly, and NOW. China has presented itself as a new market for their raw materials exports, and Chinese demand has helped push the prices of raw materials to record highs. However, the danger is that history may well repeat itself if the income generated from selling raw materials to China are not re-deployed efficiently and strategically to create sustainable, globally competitive industries.
The panorama for Mexico and Brazil, Latin America’s economic giants share some similarities because both countries have well a relatively broad range of developed, competitive industrial sectors. In this case, China is a challenger to their own industries. The positive and negatives effects of being forced to compete with their Chinese counterparts is debatable, but thus it seems Mexican and Brazilian companies have managed to meet the challenge and it seems Chinese competition will in the long-run catalyze innovation and economies of scale.
On the other hand, there are also major differences for Mexico and Brazil when considering China. The major difference, and one that is impossible to overlook, is undoubtedly Mexico’s proximity to the United States. Mexico competes almost directly with China’s manufacturing sector. The major factor which will dictate how the future unfolds concerns how well Mexico can capitalize off the geographic competitive advantage of being at the door step of the world’s largest consumer market. It will be important to monitor:
- Rising wages in China vs. Mexico.
- Raw material costs
- The total costs of producing increasingly sophisticated manufactured goods in both countries vs. total time it takes to produce and deliver the goods to the end buyers.
What’s next? Right now the majority of interaction between China and Latin America is occurring at a two levels—government to government, and major company to company. What are your perspectives on the future of growth of a third level of exchange—that being personal ones between Chinese and Latin Americans down on the ground in both China and Latin America? What types of opportunities does the future hold for the next generation that is able to form these links?
Like your author of ChinaSouthAmerica.com, Dr. Gallagher believes this to be the “million dollar question,” and one that is not easy to answer. We will sadly have to wait for his next book which will focus on this question, and which your author hopes to help Mr. Gallagher answer when the time comes.
To conclude, I asked Dr. Gallagher about if he had any thoughts to share on the specific countries of Peru, Chile, Brazil, Argentina, Venezuela, Colombia– the countries which your author most closely follows.
“These are a very diverse set of countries, and I wouldn’t dare generalize across the entire set of them. The one thing I can say about each of these is that in terms of copper (Peru and Chile), Iron (Brazil), soy (Brazil and Argentina), and crude oil (Brazil, Colombia, Venezuela) this particular set of Latin American nations and the respective commodities is very strategic for China. China will continue to purchase imports of these commodities and to invest heavily in them. These country’s governments should be strategic in return. In order to get the broadest set of benefits from this new market player in China, Latin Americans have to see to it that they can also provide stable supplies over time, create jobs for their people, and manage their exchange rates so that commodities exports don’t crowd out more productive and employment creating activity. If these nations see China as an opportunity, by bargaining hard with the Chinese and put in place parallel policies in terms of jobs, industrialization, and environmental policy, China may turn out to be a boon.“
As I am currently writing this post from China, where this book is not yet available, I unfortunately have not yet been able to get my hands on a copy of this book. In the 30 minutes I spoke with Dr. Gallagher he exhibited great insight on all that is the growth of Sino-Latin American relations and economic exchange. I look forward to reading the book for myself after I get my hands on a copy in January when I travel to the US and South America. If you the reader seek a rich and comprehensive analysis on the growth of China and Latin America’s relations, ChinaSouthAmerica highly recommends you pick up your own copy of The Dragon in the Room: China and the Future of Latin American Industrialization.
CLICK HERE to buy your own copy (hardcover) from Amazon.com of The Dragon in the Room: China and the Future of Latin American Industrialization
or, CLICK HERE for the soft cover edition
Seven Sages - Courtesy of Wikicommons
After reflecting on my walk home today of a few potential pieces I was considering posting, I decided instead to share with the readers of CSA some blogs I believe to be worth following. These blogs are written by fellow globally minded, intelligent, and wise individuals.
Inca Kola News – Otto Rock (his pseudo name), is wise man #1. He’s a British national / mining analyst / linguist / comedian / good person, who lives and breaths South America. He’s far more attune with the country of Peru and the greater South American region than I can ever hope to be. If you want a English language view into South American politics and economics this is site you you must check out.
Vipo Asia – Written by Mr. Calipe Chong, who is also the owner and founder of Vipo Asia, a Suzhou, China based company which provides a valuable service for small to medium sized businesses throughout North America and Europe who want to do business with China. Calipe is a honest man of integrity from Singapore, who provides fascinating views on topics ranging from Chinese culture, the role of government, China’s place in the world and more. These views don’t come from books, they come from his 30 + years of experience working in Singapore, China, the US, Puerto Rico and other places.
Wandering China – Bob Xiansheng’s (Mr. Bob), Wandering China Blog mainly collects articles and information from news sources based in three countries – China, Singapore and Australia. They are then presented with a palatable, easy-to-read synopsis. Bob’s blog are the chronicles on the journey of understanding the imagination of China by overseas Chinese. His views are insighful, beautifully written and magically logical. Bob is a 3rd generation overseas born Chinese (in Singapore), who currently resides in Melbourne, Australia . As described on his blog, he was brought up with Western lenses and in fact considers himself so westernized that he could hardly speak or read Mandarin. He has now rediscovered his roots and humbly shares his views with the world on Wandering China.
Transcending Culture Shock – Written by my good friend, Mr. Justin Calderon, whom I consider Shanghai’s guru on accessing, dissecting, and analyzing pan-Asian culture and geo-politics. Justin has traveled in 13 countries and regions in the Far East and lived and worked in many of them for extended periods of time. He is a passionate journalist who strives to understand the world with unbiased eyes. In addition to this blog, you can also discover and learn about the incredible places he has traveled by reading his travel blog, The Expenditioner.
Happy reading folks.
To all readers… I apologize for the time delay on posting about this story. I was traveling for the past 4 days and literally out of touch with the world in the Chinese countryside.
CSA’s perspective? The recent news from Ecuador does not necessarily translate into a coup d’état, but rather a very well orchestrated protester with the help of both international players and Ecuador’s classic oligarchy. Compared with the left-leaning politics in other countries, Correa is no crazy communist (to be frank), and is actually quite a clever well trained economist who knows that markets work.
He is Ecuador’s democratically elected official, and for better or worse, Ecuador’s democratic institutions stood their ground today and for that Ecuador deserves a pat on the back.
Oct 4 (Reuters) – A rebellion by police officers that ended with a fierce shootout to rescue President Rafael Correa revived memories of Ecuador’s volatile history and concerns about stability in the oil exporting nation.
The role of the military, a struggling economy, slow-moving oil negotiations and a possible move by Correa to dissolve Congress, rule by decree and call elections are all points to watch this year:
CORREA’S FIGHT WITH CONGRESS
Correa had threatened to dissolve Congress, rule by decree and call new elections shortly before the police rebellion. Although he appears to have since backed away from the move for now, it is still a clear policy option. It would allow the government to pass tough new rules for investors and increase its short-term financing options, although it would also anger Correa’s opponents and raise the risks of new protests.
…continue reading direct from Reuters
Oct 2 – Ecuador undergoes a shake-up after an alleged coup attempt.
October 1 – Ecuadorean President Rafael Correa stands defiant in the face of an
attempted coup,following unrest brought on by unpopular austerity measures.
Reuters reported on Aug 30, Colombia’s government has presented Congress with its proposals on reforms for both oil and mining royalties. The country is seeking to regain investment grade status lost during the chaotic 1990′s–to accomplish this creating the
Bogota, Colombia - Wikicommons
legal framework and modern institutions for attracting new investment to its mining and energy sectors is crucial.
Newly elected president Juan Manuel Santos will focus on centralizing how exactly royalties are managed to insure the roughly $3 billion collected yearly are is more evenly distributed. He also announced plans to create a Chile and Norway like Sovereign Wealth Fund which could help the country avoid slowdowns int he future by setting aside cash during boom cycles.
It is estimated the constitutional reforms on royalties will need at least one year to complete. Managing economic growth, improving savings and reducing fiscal deficits are key for Colombia if it hopes to meet the requirements of rating agencies and analysts for achieving investment grade.
Colombia is currently the #5 global producer of coal, #4 oil producer in Latin America and hopes to raise its rankings in other commodities as well.
Bloomberg’s story, Landowners Shout `Bingo’ as West Australia’s Mining Towns Boom, grabbed my attention earlier
Karratha, Western Australia - Wikicommons
today, which was odd because my “news radar,” doesn’t usually sound for real estate related content.
The article describes a interesting catch 22 which has developed in the North Western State of Karratha in Australia. This region which is home to 62% of Australia’s mineral production, 75% of its natural gas and 64% of its crude oil is experiencing a massive boom. The region is also known as one of the most inhospitable places in the world to live.
The state is gigantic by most standards (4x the size of France), but is only home to around 15,000 official full time residents. The rest are known as “fly in, fly outs.” Most work in a commodity related industries, and most of the production goes to feeding China’s growth.
The result has been:
We really all do live in a inter-connected world. I doubt the residents of this Australian state would have predicted 20 years ago that China’s boom would be their heart ache as they struggle to afford to keep their homes…
Click here to read the article from Bloomberg.
Peruvians in Shanghai, along with new friends from around the globe, communed to celebrate the first annual National Pollo a la Brasa Day on July 18th.
The celebration was held at Brasa Chicken, notorious in Shanghai for preparing the best rotisserie chicken the city has to offer, and which is owned by Peruvian Chef and long time Shanghai resident, Eduardo Vargas.
The mood was upbeat as friends and family enjoyed a taste of Peru over good conversation on one of the first sunny days with blue skies Shanghai has experienced in weeks. A perfect way to bid farewell to Shanghai’s rainy season, which officially ended only one day prior on July 17th.
