China (& India) – Latin America News Attack

Over the past few days my news radar has exploded with China-LatAm related news. Here are a few excerpts from the English articles.

Chinese investors become responsible in Latin America – study

LONDON (Thomson Reuters Foundation) – Chinese investors in Latin America are showing greater awareness of the social and environmental impacts of their business activities, and have started applying standards to make trade more sustainable, a research report said on Thursday.

The study from the International Institute for Environment and Development (IIED) looked at investment by Chinese state-owned enterprises in Peru, Brazil and Chile, in the mining, agriculture and forestry sectors. China is expected to overtake the European Union to become Latin America’s second-largest trade partner next year, after the United States, it noted.

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China to the rescue of Argentina with a 10 billion dollars equivalent swap

Argentina is negotiating with China a new 10 billon dollars equivalent swap of international reserves support based on the experience of 2009 when the global financial crisis. The new accord should theoretically help Argentina strengthen its international position vis-à-vis the run on the dollar (or the flight from the Peso) and which has cost the Central bank 4 billion dollars so far this year.

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Chinese Vice-president in Argentina to strengthen long-term strategic partnership

China is determined to advance in mutually beneficial cooperation with Argentina visiting Chinese Vice President Li Yuanchao said on his arrival on Thursday to Buenos Aires. He underlined that the new Chinese leadership will continue to perceive and develop bilateral relations from a long-term strategic perspective.

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China In Latin America: Why Is Vice President Li Yuanchao Visiting Argentina And Venezuela This Week?

Chinese vice president Li Yuanchao arrives in Caracas this week to meet with Venezuelan leader Nicolás Maduro and National Assembly President Diosdado Cabello after having spent the second part of last week in Buenos Aires. In recent years, China has expanded its economic links with Latin American countries, with Chinese manufacturers establishing their presence throughout the region, while China has become a main source of growth in exports of raw materials like petroleum, copper, iron and soybeans. But Argentina and Venezuela are the two countries with which China has had an uncertain relationship.

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Venezuela-China Trade Jumps

BY JOACHIM BAMRUD

Venezuela and Central America gain most in China trade.

Venezuela led the way in Latin American growth of exports to China and imports from the Asian country, according to a Latinvex analysis of data from the International Monetary Fund (IMF).

In percentage terms, three of the top four trade growth winners are from Central America. And when it comes to Latin American exports to China, the top three countries in percentage increases are from Central America.

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Chinese Vice-president asks Venezuelan government for efficiency in joint-projects

“We have to take care that these projects are effective and efficient, in the sense that they can play a positive role in employment and economic and social effects,” Li told Venezuelan Foreign Minister Elias Jaua while touring the site.

“I hope the efficiency factor will be taken into consideration.”

The plant is for pasteurizing milk and producing other dairy products and is being constructed in Valles del Tuy, near the capital.

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India’s Hero MotoCorp launches brand in Latin America

The country’s largest two-wheeler maker Hero MotoCorp today said it has launched the ‘Hero brand’ and its range of two-wheelers in Guatemala, El Salvador and Honduras in Central America.

Hero MotoCorp also announced a partnership with the reputed Indy Motos Group of Guatemala to bring its two-wheelers to these markets. Under the alliance, Indy Motos has been appointed as the authorised distributor of Hero MotoCorp range of two-wheelers in Guatemala, Honduras and El Salvador.

Pawan Munjal, managing director and chief executive officer, Hero MotoCorp, said: “This launch is a significant milestone for us considering this is the first of the new international markets, where we are starting our operations.”

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Peru’s non-traditional exports to China rise 92% in 2005-12

The Peruvian Exporters’ Association (Adex) has reported that China-bound exports of non-traditional products worth over US$ 1000 a year increased by 92 percent between 2005 and 2012.

According to official data, the number of these goods jumped from 108 to 207 in the period.

Adex said that exports of non-traditional products to China were valued at US$ 332.1 million in 2012, an increase of 29.3 percent compared to US$ 255.7 million in 2010.

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Peru’s non-traditional exports to India up 389.22% in 2010-12

Peruvian exports of non traditional products to India grew by 389.22 percent to US$ 83.6 million between 2010 and 2012, the Peruvian Exporters’ Association (Adex) said Tuesday.

This sum accounts for 21.64 percent of total exports to the Asian country in 2012, when they amounted to US$ 386.6 million.

According to Adex, the increase shows that Peruvian exports are entering markets with sustained economic growth like India and China in a context of global crisis.

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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

Bajaj Auto eyeing Brazil and ASEAN nations to expand its Kawasaki venture

[Source] : Cartrade.com

Banking on its successful tie-up with Japanese partner Kawasaki in Philippines, Bajaj Auto is looking ahead to introduce the business model in Brazil and other ASEAN countries. The regulating authorities of both the auto companies have approved the proposed venture in the third week of September 2012.

In Philippines, together Bajaj and Kawasaki kicked off their operations in 2004 and have grabbed a market share of 45 per cent till now. The Managing Director of Bajaj Auto, quoted, “Between the developed and developing markets, there are these smaller markets where our bikes are extremely relevant. We believe Bajaj and Kawasaki have reached a right (business) model in the Philippines.”

The model introduced in Philippines will be now showcased in Indonesia by mid 2013. Under this programme, Bajaj designs and develop motorcycles in the Indian Territory and then delivers them to Kawasaki, which further configures them according to the local regulations. The motorcycles are then introduced in the markets under the moniker of Kawasaki-Bajaj.

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Chile remains Australia’s popular gateway to South America… why?

It is due time Peru, Ecuador and Colombia step up their game. I can not count the amount of time I’ve read that Peru, Ecuador and Colombia want to be the “Window to Latin America” for Asia…” Yet Chile remains Asia’s #1 choice.

Why?  I’m not giving answers, it’s up to every Peruvian, Ecuadorian and Colombian to ask themselves… Why?

Your author says this with all the love in the world for his Latino brethren in Chile, but we must create a united Pacific Coast which can serve as Asia’s gateway to the greater region of South and Latin America.  There’s no one country takes all in this equation. The Andes and Amazon divide the Pacific coast of South America from the Atlantic Coast. The time has come to work together and not create situations/ rifts where there are winners and losers.

Chile remains Australia’s popular gateway to South America

[Source] : The Australian

BRAZIL’S size and economic success over the past decade, plus its potential to continue growing into an even more significant player on the world stage, may underpin its star billing within the Latin American region, but Chile remains Australia’s most popular gateway into this emerging region.

Although coverage of Chile in Australia’s media has more recently tended to focus on the nation’s wave of student protests in support of improved access to education and of greater equality within Chilean society generally, in economic terms Chile continues to punch above its weight and to attract increased Australian investment.

The strength of the bilateral relationship was reinforced during this week’s visit by Chile’s President, Sebastian Pinera.

Mr Pinera’s two-day visit maintained a tradition that has seen every Chilean president since the nation’s return to democratic rule in 1990 visit Australia during their term in office. Apart from New Zealand, few nations boast a comparable record.

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Noticias de Argentina y China en foco

China confirmó que comprará más soja argentina

[Source] : Primera Edicion

El Gobierno de China confirmó la compra de 2,4 millones de toneladas de productos de soja argentinos, lo que significó un incremento del 10 por ciento en lo que va del año en comparación con igual período de 2011.

Así lo indicó el ministro de la Administración Estatal de Granos (AEG) de China, REN Zhengxiao, durante un encuentro con el titular de Agricultura argentino, Norberto Yauhar, quien resaltó que se recuperaron las ventas de aceite de soja a China.
También señaló que existe interés de la Argentina por “consolidar su posición como proveedor de granos y sus derivados a China”, expresó un comunicado oficial. Durante la reunión ambos funcionarios enfatizaron en la firma del “Memorando de Entendimiento sobre Cooperación en Materia de Granos” que tuvo lugar entre ambos Ministerios en junio pasado. Fue durante la visita del primer ministro WEN Jiabao a la Argentina. “Asimismo, Yauhar remarcó que se encuentra plenamente operativo el Protocolo Fitosanitario para exportar maíz argentino a China, esperando que las grandes empresas estatales de China (SINOGRAIN, COFCO, Chinatex, entre otras) comiencen prontamente a realizar las primeras órdenes de compra”, se explicó. Se buscó agilizar los procesos de comercialización mediante reuniones de referentes de la delegación argentina con empresarios.

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China ya superó a la Argentina como proveedor de autopartes a Brasil

[Source] : La Cronista

EDUARDO LAGUNA San Pablo

Con precios competitivos y escala de producción suficiente para abastecer su mercado local de vehículos -el más grande en términos globales-y enviar productos al resto del mundo, China está entre los cuatro mayores proveedores de autopiezas de Brasil.

Este año, los chinos superaron a Argentina, tradicional socio de la industria automovilística local, pero que perdió la cuarta posición por las barreras comerciales que impuso Brasil en respuesta a las trabas levantadas por el gobierno de Cristina Kirchner a la entrada de productos brasileños al país vecino.

Los proveedores nacionales se quejan por los bajos precios de los productos chinos, que aseguran se obtienen, muchas veces, sacrificando la calidad. Los importadores, a su vez, destacan el papel de los importados como regulador de precios y calidad de los productos brasileños, forzando a la industria nacional a aumentar la competitividad.

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Argentina está más cerca de exportar embriones bovinos a China

[Source] : Punto Biz

El Ministro de la Administración General de Supervisión de Calidad, Inspección y Cuarentena (AQSIQ) de China, ZHI Shuping, le confirmó hoy al Ministro de Agricultura, Ganadería y Pesca de la Nación, Norberto Yauhar, la realización a partir del mes de octubre de auditorías en nueve centros de inseminación artificial y transferencia de embriones bovinos. “Es el último paso para poder comenzar a exportar a China estos productos”, afirmó Yauhar luego de la reunión en la sede de la AQSIQ, en Beijing.

En este sentido, ZHI Shuping aseguró que “la relación con Argentina está viviendo una etapa muy exitosa. Hay una necesidad de ambos países de fortalecer esta relación estratégica”.

Las inspecciones servirán para hacer operativos los Protocolos Sanitarios firmados en la visita de mayo. “Argentina no sólo transfiere productos con alto valor agregado, sino también tecnología, conocimiento y desarrollo agropecuario”, remarcó Yauhar.

Como resultado del encuentro, el titular de la cartera agropecuaria nacional además confirmó: La inspección veterinaria a nuestro país para concluir el análisis de riesgo para la exportación de caballos vivos a China. “Existe una gran demanda de caballos para actividades deportivas y esparcimiento, y esta visita es un requisito esencial para poder completar la negociación y firmar el Protocolo Sanitario que abra el mercado chino a nuestros caballos”, resaltó Yauhar.

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