CAF Announces new common agenda for China and Latin America

UNA AGENDA COMÚN PARA CHINA Y AMÉRICA LATINA

En Beijing se realizó la tercera edición de la Conferencia CAF-ILAS, dedicada este año al tema Desarrollo y Transformación: Una Agenda Común para China y América Latina

El Presidente Ejecutivo de CAF –banco de desarrollo de América Latina– en visita a ese país se reunió con altas autoridades del mundo político, financiero y académico de Beijing y Shanghái.

(Shanghái, 10 de mayo de 2013).- “Desde América Latina y China debemos avanzar conjuntamente en la construcción de una relación estratégica de largo plazo que sea integral, dinámica y equilibrada”, dijo Enrique García, presidente ejecutivo de CAF –banco de desarrollo de América Latina– durante una visita de trabajo de cinco días a China, donde se reunió con altas autoridades del mundo político, financiero, empresarial y académico de Beijing y Shanghái.

Ésta se realizó en el marco de la III Conferencia CAF-ILAS, así como en la labor de este banco multilateral en tender puentes entre ambas regiones, con miras a promover el desarrollo sostenible de América Latina.

En la primera etapa del periplo, en Beijing, se destacaron los encuentros sostenidos con el Ministerio de Relaciones Exteriores, el Ex-Im Banco de China; y el International Economic Club of China. El Presidente Ejecutivo de CAF subrayó las excelentes relaciones entre la institución financiera latinoamericana y el país asiático, cumpliendo así su rol catalítico entre ambas regiones.

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LSL – Survey of LatAm Consumer Trends

CSA Market watch: Soybeans in focus

Soybean prices are on the rise. As this article from Bloomberg highlights, some new interesting trends have emerged in recent years which commodity investors would do well to take note of.

• China, which is currently the world’s largest consumer and importer of Soybeans tends to see demand spike around the Chinese Spring Festival / Chinese New Year Season (also referred to as the Lunar New Year Festival).  Farmers traditionally attempt to fatten their hogs before the season which is one of the few times during the calendar year which sees the great majority of the Chinese population take a holiday to reunite with family.  For thousands of years, Spring Festival in China been a special time of year where Chinese people from rich to poor justify “indulging in eating more meat.”  In the context of today’s interconnected global economy and China’s population of 1.3 billion people, this means when Chinese demand spikes, so will prices unless suppliers can adjust to this new phenomena and better prepare for yearly spikes around the time of Chinese Spring Festival. 
• China’s source of supply for soybeans is increasingly shifting towards South America. The agricultural sectors of Brazil, Argentina, Uruguay, Paraguay and Bolivia have been the major beneficiaries of rising demand from China (potential long-term problems which could arise from the environmental damage of intensive soybean production not withstanding).
• Prices have become increasingly sensitive due to two primary changes underway in the global supply chain of soybeans.
  • First, the USDA notes that supply is increasingly shifting from the US to South America.
  • Second, this shift has not been perfectly matched with an increase in supply from South America. Instead, South American producers are struggling to efficiently increase their production of Soybeans.

China Seen Boosting Purchases of Soybeans as Feed Demand Expands

[Source] : Bloomberg

Crushers in China, the world’s biggest buyer of soybeans, boosted purchases last week as rising demand for livestock feed increased profits from processing, according to a Bloomberg survey.

Companies ordered 30 cargoes from the U.S. or South America, the equivalent of about 1.8 million metric tons, according to the median of estimates from five crushers and one researcher compiled by Bloomberg. That compares with a usual weekly average of 10 cargoes to 20 cargoes, respondents said.
China canceled 1.16 million tons of shipments since Dec. 18, according to the U.S. Department of Agriculture, which increased concern consumption may be slowing. Fresh purchases by China, which buys more than 60 percent of globally traded beans, suggest demand is recovering as U.S. supplies decline.

“Traders are securing more shipments for the next two months” because of the looming shortage in supplies and limited loading capacity in South America, said Monica Tu, analyst at Shanghai JC Intelligence Co., who took part in the survey.

Consumption of soybean meal in China is increasing as farmers fatten hogs before the Lunar New Year festival in February when pork demand rises, Tu said from Shanghai yesterday. Stockpiles of soybeans in the U.S, the biggest producer last year, were 1.966 billion bushels on Dec. 1, 17 percent less than a year earlier, according to the USDA.

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CSA Analysis – Latin America – China in focus

As the spread of article excerpts below will exhibit, the China – Latin America relationship and its future will be more than simple a complementary exchange of Latin American natural resources for Chinese manufactured goods. Although, as the 4th article indicates below, from China’s State Media Giant Xinhua explains, the corner stone of Sino-Latin American relations still remain within the realm of the “complementary exchange,” the two regions offer one another.  However, as CSA attempts to exhibit in this piece, the growth of Sino-Latin American ties also includes:

1/ Cheap Chinese Loans (especially to countries cut off from borrowing  raising money on international markets), which represent new sources in which Latin American countries can borrow money and raise money instead of traditional means they have been forced to reply upon since independence – Loans from European and US Banks, issuing bonds, shares in companies on international stock markets, and other financial market market vehicles where international investors allocate their money in Latin America.

2/ Beyond new markets for China’s manufactured goods, China has began to aggressively expanded into Latin America’s service sectors — Banking, Telecommunications, Logistics, and more.

3/ Defense… A rather sensitive and misunderstood area of cooperation because both China and their counter-parts in Latin America do not go into great detail to explaining very clearly what their ultimate goals for enhancing military cooperation may be.  As the author of this blog who has followed this topic for many years, I am personally of the opinion that is it all about following the money trail. An actual military alliance or very close military ties with a specific country in Latin America would be very difficult for me to imagine.  The US, various countries within Latin America, others and around the world would have serious reasons to prevent such from every being reality. Not to mention, US Presidents throughout history have periodically used the proclamation of the policy outlined in the Monroe Doctrine, signed into being US President Monroe on December 2, 1823 to justify intervention in the hemisphere.

The Monroe Doctrine in short, is a statement made to the world that further efforts by other nation states to colonize land or interfere with independent states in North or South America would be viewed as acts of aggression, requiring U.S. intervention if deemed necessary. 

U.S. presidents, including Theodore Roosevelt, John F. Kennedy, Lyndon B. Johnson, Ronald Reagan have all fallen back on this proclamation to justify action in one form or another.  I don’t doubt for a second that if China’s expansion in the region, militarily speaking reached a tipping point where the a present day US President would find a means in which to justify intervention.  Perhaps again falling back on the policy outlines by the Monroe Doctrine, and adapted within context of current, present day geopolitics of the world.

Instead, as I mentioned above it’s about the money. The US, Europe, The UK, Russia, and now even Japan (which recently passed legislation allowing it to participate in the ever more lucrative market or arms trade), is where China’s primary interest lies. Just like China wants markets for its manufactured goods and services, there is also a great deal of money to made in selling the arms markets of the world, especially when you consider a region which has oddly enough in recent years began to increase military spending (see this article for more information regarding Latin America’s increase in Military Spending.

 

China Grabs Share in Latin America Wind With Cheap Loans

[Source] : BusinessWeek

By Stephan Nielsen on November 20, 2012

Chinese wind-turbine makers have broken into the South American market, the world’s fastest- growing, by offering government-backed loans at interest rates as much as 50 percent lower than local offerings.

The package deals can get buyers to choose Chinese machines over those of Western manufacturers such as Vestas Wind Systems A/S (VWS) of Denmark or General Electric Co., much in the way the U.S. government helps American exporters sell everything from cotton to satellites by guaranteeing loans or insurance.

…

Chinese Loan

Geassa, short for Generadora Eolica Argentina del Sur SA, is seeking a 12-year loan with a two-year grace period and an annual interest rate of 6 percent above Libor, the London interbank offered rate. The financing may be complete by June, he said. The company will use Chinese turbines and hasn’t selected a supplier.

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Correlation Breakdown as Asia, Latin America Diverge: Currencies

[Source] : BusinessWeek

By Ye Xie on November 20, 2012

Asian currencies that once moved in lockstep with their Latin American peers are diverging by the most ever as China attracts investors to the region without boosting commodities, the main exports for Brazil and Chile.

The four-week correlation between the currencies of the two regions reached minus 1 last month, meaning they always move in the opposite direction, according to index data compiled by Bloomberg and JPMorgan Chase & Co. As recently as May, the correlation was plus 1 as the indexes moved in tandem. The Chinese yuan has climbed to 19-year highs amid gains in retail sales and the South Korean won reached the strongest since 2011, while Brazil’s real and the pesos in Mexico, Chile and Colombia weakened over the past two months.

“Usually when people buy China, it boosts currencies in both Latin America and Asia,” Dirk Willer, the head of Latin American local-markets strategy at Citigroup Inc. in New York, said by phone. “But this time around, given that the commodity link isn’t working, people get bought up on Asia but not on Latin America. There’s a long-term structural story.”

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China Construction Bank Still Looking to Expand Into Latin America

[Source] : The Wall Street Journal

By Ryan Dube November 21, 2012, 1:37 p.m. ET

LIMA, Peru–State-run China Construction Bank Corp. (CICHY, 0939.HK, 601939.SH) is still looking to expand to Latin America and could announce plans to open an office in the region “quite soon,” a company executive said.

China’s second-biggest bank by assets is looking at acquisition targets and expansion opportunities throughout the region but especially in Brazil, said John Weinshank, head of corporate banking and trade finance at China Construction Bank’s U.S. branch.

Chinese companies are investing heavily in Latin America as they look to develop natural resources needed to fuel the Asian country’s rapid growth. One of the biggest Chinese investments in the region was the $7.1 billion deal by state-owned China Petrochemical Corp., or Sinopec, to purchase a 40% stake in Repsol YPF SA’s (REP.MC, REPYY) Brazilian unit.

In Peru, one of the world’s top mineral producers, Chinese companies are developing several copper and iron-ore projects. Together, these projects will require investments of about $11.4 billion, according to figures from Peru’s Mines and Energy Ministry. Chinese-owned projects represent about 20% of the total pipeline of investment projects in Peru’s mining sector.

“The bank is very keen to expand into the region and set up a foothold,” Mr. Weinshank said in an interview during the Latin American Banking Federation’s annual conference in Lima, which ended Tuesday. “Our customers are here and are doing business, so we have to follow our customers.”

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Economies of China, Latin America complementary: bank official

[Source] : Xinhua / China People’s Daily

LIMA, Nov. 20 (Xinhua) — The economies of China and Latin American countries are highly complementary, and bilateral trade has enjoyed rapid growth, a Chinese bank official told the 46th Annual Meeting of the Latin American Federation of Banks here on Tuesday.

The expansion of China’s domestic demand has been a driving force of Latin American economies, Ma Suhong, deputy division chief of Urban Finance Research Institute at the Industrial and Commercial bank of China said on the last day of the two-day event.

Ma noted that China invested a total of 12 billion U.S. dollars in Latin America in 2011. She attributed the fast development of China-Latin America cooperation partly to China’s large domestic need and economic woes suffered by the United States and European countries.

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Chinese defense minister meets with Latin American guests

[Source] : Xinhua / China People’s Daily

BEIJING, Nov. 20 (Xinhua) — Defense Minister Liang Guanglie met with delegates to the 1st China-Latin America high-level defense forum on Tuesday.

Liang hailed the increasingly close relations between China and Latin American countries in recent years, noting that the two sides have enjoyed frequent high-level visits, deepening political mutual trust, strengthening communication and cooperation, as well as effective coordination on major international affairs.

He said the forum shows that China attaches great importance to developing military relations with Latin American countries.

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CNN Reports: China-Latam economic ties tightening

[Source] : CNN China-Latam economic ties tightening  

By Shasta Darlington, CNN November 19, 2012

Sao Paulo (CNN) — The rise of China in Latin America, long considered the United States’ “backyard,” took many by surprise.

Now, its economic influence in the region is only expected to grow.

For the past decade China has fueled high growth in major commodity producing countries like Brazil, Chile, Argentina and Peru with its appetite for raw materials such as iron ore, soybeans and copper.

In fact, China replaced the United States as the top trading partner in Brazil and Chile and is on the way to doing so in many others countries in Latin America.

Click here to read the complete article direct from CNN

Some stories I would have posted from the past 2 weeks (part 2)

Global: As Global Economy Sags, Political Leaders Are AWOL

US – Latin America: Obama and Romney forget Latin America

Latin America – China: Los latinoamericanos de origen chino (parte I)

Latin America – China: El Libro Blanco chino sobre América Latina y el Caribe

Cuba: Cuba Lifts Exit Visa Requirements on Travel for Residents

Peru – China: Perú comienza a pensar en el turismo chino

Soy Rally Sends South American Growers Into Pastures

[Source] : Bloomberg

By Matt Craze and Mario Sergio Lima - Sep 13, 2012 4:00 PM GMT+0800

Leonildo Bares, a soybean grower near the Amazon farming frontier town of Sinop, said he’s so confident prices for the commodity will stay near record highs that he’ll extend his crop to neighbors’ boggy cattle pastures.

Confined by Brazil’s crackdown on logging in the Amazon, the farmer talked his neighbors into growing soybeans on their cleared land and sharing the profit. Bares, whose 420-hectare (1,038-acre) farm in the center-western state of Mato Grosso extends on what was untouched rainforest in the 1970s, plans to boost planting to 650 hectares. About 1 million hectares of the state’s pastures, an area the size of Jamaica, probably will be converted to soybean crops in coming years, he predicts.

“The pastures of Mato Grosso can be turned into soybean plantations and probably will,” Bares, who’s also the president of Sinop’s farmers association, said in a telephone interview from the city. “Anyone with the knowledge and money who’s willing to come here and do it, can do it.”

South American farmers like Bares have become the counterpoint to the worst drought in the U.S. Midwest in 76 years as they sow record crops during a global shortage of the oilseed used as animal feed in Asia. Brazil, Argentina, Paraguay, Bolivia and Uruguay will boost output by 34 million metric tons to 148.5 million in the 2012-2013 season, more than offsetting a decline of about 11.5 million tons to 71.7 million in the U.S., the Department of Agriculture said yesterday.

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What are the ecological costs of China’s future food imports?

[Source] : China Dialogue

Tom Levitt
September 10, 2012

China’s growing agribusinesses and demand for soybeans and meat is bringing intensive farming and the risk of further deforestation in Brazil and beyond. Tom Levitt reports.

The dynamics of Chinese agriculture are changing. While it may still be largely self-sufficient in food, the country is expected to enter an era of rising food imports and in particular, animal feed. But how ready is China to take responsibility for the environmental impact of this growing overseas footprint?

Over the past two decades, China has seen a monumental surge in soybean imports. By 2030, China is expected to consume 72 million tonnes of soybeans from overseas – more than one-quarter of the world’s total soybean production today.

The impact, environmentalists fear, is greater pressure on uncultivated forested land in Brazil, the world’s second largest soybean producer after the United States and a major exporter to China. In 2011, more than 67% of Brazil’s soybean exports were sent to China. By no coincidence, the South American country is now emerging as a major focus of investment for China’s expanding agribusinesses.

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Book Review, The Final War: Avoiding It through a New Harmonic Society

Being distracted by the blitzkrieg onslaught of “news stories,” makes it quite easy to get distracted in this day and age. To name a few headlines from around the world sucking in people’s limited attention span we have –>

• Election season in the US, along with Hurricane Isaac and drought in much of the US heartland of farming
• Droughts in Russia and India as well, causing a rise in fear around the world of a possible repeat of the 2007-2008 food crisis.
• Eurozone Crisis, will the Eurozone survive? Will the PIGS be forced to leave? Etc…
• Talk of leadership change in Canada and a possible referendum on succession of the French Speaking regions.
• The beginning stages transition of power in China
• … and many more which deserve mention but as the title of this entry states, this is a book review, not a recap of Global News. You can tune into any 24/7 news station or open your chosen News App on your tablet or phone to be blitzed with more “global news.”

This entry is about a new book which has just hit the presses: The Final War: Avoiding It through a New Harmonic Society. Co-authored by Fernando Morote Solari (a military hero, expert in geopolitics, professor), Dr. Sofia Morote (his daughter and also a professor and expert in geopolitics), and a colleague of theirs Patricia Bowens McCarthy.

I am a professor at Dowling College (www.internationalprofessor.com), and I wrote this book in a team with my father Fernando Morote Solari (a military hero, expert in geopolitics, professor) and my colleague Patricia Bowens McCarthy.

The first part of the book discusses the role of several countries in a possible World War and why we may have one. The second part, discusses a way to impending a world war through creating a new Harmonic Society. The book also praises China president statements in the UN about Harmonious World, instead of dismissing them as US Media often does as simply political jargon.

The authors initially discuss the precarious and ongoing situations throughout the Middle East- Israel – Pakistan and finally how the emergence of China begins to factor in. It also encompasses Africa, Central and South America (Latin America), where Chinese interests are growing.  The authors asset that the projected confrontation can be avoided by The Law of Universal Harmony, which is undergirded by Judeo-Christian precepts, Eastern concepts and principles such as dynamic balance, static equilibrium, ascending and descending transformation, and synchronized movements. 

The goals are objects of Universal Harmony as discusses in the book are achievable when nations take ownership for development strategies, policies and programs.  In sum, The Final War: Avoiding It through a New Harmonic Society, reveals the realities of what a confrontation could mean for the world, and offers solutions and steps which can be taken to prevent. Overall a very worthwhile and interesting read for geopolitical intellectuals out there, specifically ones interested in transpacific relations.

The book is currently available through multiple mediums in both English and Spanish.  Please visit the home of the page of the book http://thefinalwar.net/ to learn how to purchase wither E-Book or hard copies ranging from $7 USD – $20 USD in price.

Latin America’s China Addiction: Part 1 – China’s Soft Landing Impacting Regional Growth

[Source] : Seeking Alpha

Over the past decade many Latin America countries have experienced phenomenal economic growth as a result of one of the greatest commodities booms of all time. The phenomenal boom was created by China’s rapid modernization, growing industrialization and ensuing economic growth. This has not only seen China’s economy expanding at growth rates in excess of 10%, but created a commodities super-cycle with commodities prices marching ever upwards to new highs. This became a tremendous driver of economic growth in resource rich nations stretching from developed economies like Australia to the emerging and frontier economies of Latin America. Over a series of three articles, the effects this has on the economic outlook for some of Latin America’s largest economies will be explored. It will also analyze the outlook for China and the impact this has on the region’s economies and opportunities for investors in Latin America stocks.

The emergence of China and how it fueled Latin American growth

The Chinese economy up until the late 1970s was centrally planned and locked in a state of autarky. Much of this was driven by a mix of Cold War communist ideology and political pragmatism, with China finding itself caught in the cut and thrust of Cold War politics as the world’s third largest military power and most populous state. However, when Deng Xiaoping took over the leadership in 1978, he started a series of broad reforms that saw the gradual easing of the political shackles of centrally controlled state economic planning.

China entered a period of rapid economic development, an economic revolution where the country’s massive population and preponderance of natural resources, combined with substantial technology transfers, saw its economy rapidly modernize. All of which created rapid industrial and urban growth as China connected with the global economy and entered a phase of “catch-up growth.”

The process was marked by China joining the World Trade Organization (WTO) in December 2001 and a drastic reduction in tariff rates and protectionist measures as the country sought to encourage foreign investment. As a result foreign investment inflows from 2001 to 2002 surged by 17% to $53 billion and by almost 320% over the decade to $185 billion.

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