The 21st century’s most important trade network – The Asia-Pacific triangle

Having followed, written about and participated in the growth of China – Latin America’s exchange over the past 10 years, I must say it is refreshing to see the increasing awareness around the globe of the growth of Asia-Pacific cooperation.  Every week news media around the world publish news and analysis pertaining not only to China – Latin America, but increasingly about the geopolitical triangle of the greater Asia-Pacific region.

Aljazeera added to the wealth today by publishing the transcript of a interview they conducted with former Peruvian Ambassador to China, and current Ambassador to the US - Harold Forsyth.  In the interview Aljazeera reporter Eddie Walshe discusses with Ambassador Forsyth his perspective on the growing importance of Asia-Pacific cooperation and more particularly, how Peru fits into the Asia-Pacific triangle of the Greater Asia region (with a special emphasis on China), North America and South America.

As someone who personally believes the growth of trade and exchange between nations of the Asia Pacific and the Americas (North & South) will be the most important network of exchange this century, I highly recommend giving it a read.

Click here to access Peru’s place in the triangle of Asia-Pacific security, published by Aljazeera

What people around the world define as the Asia-Pacific region varies widely, for your author (me) I consider it to include all nations, cultures and territories on both sides of the Pacific Ocean.  This means “Oceania,” despite being a region in itself must naturally be included.  It also tends to include India, because although India is usually not considered a “Pacific” nation, it is a major geopolitical power in this equation.

Within the Asia-Pacific region there is however a level of exchange and interaction which is far more significant when looking at the greater region as a whole — and that, in my opinion is the triangular interaction of North East Asia (China, South Korea, Japan), North America, and South America.  Of course, one could argue discounting Russia, India, Australia and the nations of SE Asia and leaves many players out of the equation. I only do so because their links to the America’s are relatively small when compared with China, South Korea and Japan.

Why is this triangular network so important you ask?  Let’s quickly review some facts which come to mind pertaining to a few specific categories — Economic output & International Trade, Commodity production/ consumption (energy, metals and agriculture), and geopolitical security

• The Asia-Pacific region includes the world’s three largest economies — The United States, China (PRC), and Japan.
• These three economies make up a large portion of global economic output, commodity consumption/production, and trade.
• In terms of commodity consumption & production you find within this triangle (to name a few):
• Top 5 iron ore producers – Brazil, China, Australia, India and Russia
• Top 4 iron ore consumers – China, Russia, Japan and South Korea
• A few of the top energy producers, Russia (#1), the US, China, Venezuela and ever more significant levels of energy production coming from Brazil and Canada
• The top 5 oil consumers – United States, China, Japan, Russia, and India
• The Top 5 copper producers – Chile, Peru, the US, China, Australia
• 3/5 of the top copper consumers – China, India & the US
• Major sources of precious metal production (Gold & Silver) Russia, China, Australia, Peru, Chile & the US
• Major sources of precious metal demand – China, & the US
• Major centers of global food production – Russia, the US and South America as a whole
• Major centers of food consumption – China, India, & the US
• Finally, the Asia-Pacific region includes many of the 21st century’s most potentially volatile geopolitical security issues. To name a few:
• US-China relations
• NE Asia which includes everything from
• The balance of power between China, Japan, and Korea (and Russia) … and ultimately how the US factors into this region
• The Korean Peninsula and all the related issues from re-unification of North & South Korea to proliferation of arms by North Korea
• The South China Seas
• The quagmire of complex inter-country relations in SE Asia
• Taiwan
• ETC

China – Latin America stories bombard the inter-webs

Case Study on Chinese FDI in Peruvian Natural Resources – Americas’ Quarterly

China’s huge appetite for energy and minerals to fuel its expanding economy has strained international markets for oil, natural gas, iron ore, coal, copper, nickel, aluminum, and other resources. To satisfy China’s hunger for raw materials, Chinese companies, backed by the government, have been acquiring

equity stakes in natural resource companies, extending loans to mining and petroleum investors, and writing long-term procurement contracts for oil and minerals in Africa, Latin America, Australia, Canada, and other resource-rich regions.

In fact, more than half of Chinese foreign direct investment (FDI) in natural resources is in Latin America. It is concentrated in 34 major projects that stretch from Venezuela and Ecuador through Brazil, Bolivia and Peru to Argentina and Chile. Since China launched its “going out” strategy, encouraging companies to become more competitive, total Chinese FDI in Latin America has increased nearly sevenfold, from $226 million in 2003 to $1.6 billion in 2009.

Click here for the complete story

For Latin America, China Both Friend And Foe – Forbes

Is China more friend than foe for countries like Brazil and Mexico? A study to be published in Americas Quarterly journal this week shows that the relationship is actually quite well balanced.

By 2004, China’s arrival in Latin America was being felt with the full force of a fire breathing dragon. China imports totaled $17.9 billion to Latin American countries, more than double where they were just four years prior at $7 billion. At the time, I asked Brazil’s Trade Minister at the time, Luis Fernando Furlan, what the country could do to avoid China’s footsteps. His take at the time was basically to design better mousetraps, under the idea that Brazil’s trading partners would buy items like shoes because the design was cool. That might be true to some extent, but the textile and apparel industry in Brazil and throughout Latin America has lost market share abroad and domestically to China competitors. The good news, the ground they are losing is not as bad as some might have thought when China’s presence was just starting to be felt there.

Click here for the complete story

Latam: exporters rue Chinese rivals – FT report on the Quarterly America study

There’s no doubt that China’s growth has created a market ripe for Latin America exports, particularly natural resources. But have Chinese manufacturers – using those same imported raw materials – hurt the sales of their LatAm rivals? The evidence has mostly been anecdotal. Until now.

Click here for the complete article

Christopher Sabatini: China’s Geostrategic Designs on Latin America – Fox News Latino

In the last 5 years China’s military activities in Latin America and the Caribbean have grown at an unprecedented rate. Beijing now regularly hosts officers from Colombia, Chile, Mexico, Peru and Uruguay in its military academies, has expanded arms sales and technology transfers to countries like Argentina, Bolivia, Brazil and Venezuela, and in October last year even sent a navy ship to the Caribbean.

Is China—now Brazil and Chile’s number-one trade partner—buttressing its economic interests in the Western

Hemisphere with military ties and alliances? Is this the Middle Kingdom’s equivalent of President Barack Obama’s Pacific pivot to balance China’s saber rattling in Asia?

Click here for the complete article

China plants bitter seeds in South American farmland – Washington Times

BUENOS AIRES — Few were surprised when Venezuela announced a deal with China last week to restore 1.4 million acres of unproductive farmland across the oil-rich but impoverished South American nation.

China increasingly is buying farmland and agricultural companies in South America to feed its ever-growing population, currently estimated to be 1.34 billion.

The most important aspect of China’s agricultural investment in Latin America is that “it is a part of the increasing physical footprint of the People’s Republic of China that is just beginning to occur,” said Evan Ellis, an assistant professor at National Defense University in Washington.

Click here for the complete article

China’s export to Latin America: Corruption – CNN

By Ariel C. Armony – Special to CNN

Shoes. Toys. Clothing. China has inundated Latin American markets with cheap goods. This flooding has jolted local producers and generated demands for government measures to protect domestic industries. But there is one Chinese export that has not received enough attention among policymakers, media analysts and public opinion: Corruption.

Though China and Latin America have different values and attitudes, both have traditionally lacked transparency in government. They operate according to informal business dealings which, in turn, undermine or further weaken the rule of law. Corrupt practices exacerbate distortions in public administration, impair sustainable development, erode a nation’s legal culture, and worsen inequality and poverty.

Click here for the complete article

Rare question and answer Xinhua Exclusive on China- Latam relations

Thank you Xinhua News. Please click here to access the article from Xinhua News.

Yang Wanming, director-general of the the Department of Latin American and Caribbean Affairs of the Chinese Foreign Ministry, exchanged views with chinanews.com readers online on Tuesday afternoon.

 

Yang Wanming, director-generalof the Department of Latin American and Caribbean Affairs of the Chinese Foreign Ministry, answers questions from chinanews.com readers online on Jan 17, 2012. [Photo/Chinanews.com]

 

Topic: China-Latin America cooperation in culture

Q: How do China and Latin America cooperate in the field of culture?

A: China has opened 32 Confucius institutes in Latin America, covering almost all Latin American countries. Both sides also send art troupes to visit one another and conduct people-to-people exchanges. Many Chinese people like their football, music and dances and engage in studying Spanish and Portuguese. Many Chinese books have also been translated into Spanish and sold in Latin America.

Topic: Cooperation in energy

Q: What’s the current situation with Sino-Latin American energy cooperation? Some people think China is plundering energy resources there and uses it as a way to curb the US.

A: China is trying to carry out comprehensive cooperation with Latin American countries and its efforts have been well welcomed by them. The cooperation not only benefits the two parties, but also contributes to global peace, stability and prosperity. It started late and is on a relatively small scale, but has been developing fast. China imported 20.73 million tons of crude oil from Latin American countries in 2010, which accounts for 8.7 percent of China’s total import in that year. Venezuela has become China’s 4th largest oil provider. The two parties will explore cooperation on new energy. It’s totally based on equality and mutual benefit and will do no harm to the third party.

Topic: US view on China-Latin America relationship

Q: The relationship between China and Latin American countries has developed so fast. What do you think of the feeling in the US to this?

A: In recent years, the independence of Latin American countries is growing and its economic growth momentum becomes more diverse than before.

The rapid development of China-Latin America relations is on the basis of mutual benefit and win-win for both sides and is within the needs of Latin American countries’ diversified diplomacy and development strategy.

It will not only benefit development of both, but also contribute to the world’s stability and development.

China and the US have already established a consultation mechanism on Latin-America, and through four different consultations, the two parties have enhanced their mutual trust on this issue.

And the US has repeatedly stressed in their consultations that strengthening relations between China and Latin American countries will be good for Latin-America’s stability and development.

Topic: Chinese workers kidnapped in Colombia

Q: It was reported that several Chinese employees were kidnapped in Colombia by unidentified armed militants. How are they now? Could you release some information about the rescue efforts?

A: Four Chinese workers were kidnapped by some unknown armed militants in Caquetá province in Colombia on June 8, 2011. We have urged the Colombia authority to spare no effort to carry on the rescue work under the premise of guaranteeing the safety of hostages. Since then, the Chinese embassy in Colombia has kept in close cooperation and contact with Colombia’s relevant departments. The rescue work has not finished yet, but the safety of the four hostages can be guaranteed. Chinese companies are facing more risks as they go global on a larger scale. We need to increase our political backup and diplomatic guarantee to them, strengthen the consular protection and safeguard their legitimate interests. Meanwhile we advise Chinese people in Latin America to improve their sense of safety and precaution.

Q: How about China-Mexico relations?

A: China and Mexico are both developing countries and are working at enhancing people’s living standards. They hold the same positions on many international issues and regularly cooperate on these..

China and Mexico have some trade friction over trade imbalance problems, but we hope both sides can deal with the problems reasonably and from a development point of view.

We hope both can take active measures to promote the diverse, comprehensive and healthy development of the two countries’ economic and trade relations.

February 14 marks the 40th anniversary of diplomatic relations between China and Mexico. We believe the relations can become more comprehensive, steadier and healthier with the two countries’ joint efforts in the future.

Q: Can you talk about the relationship between China and Brazil?

A: Brazil is one of the biggest countries in Latin America and one of the emerging powers in the region. The China-Brazil relationship is one of the most important between China and Latin America.

In recent years, the strategic partnership between China and Brazil has made considerable progress. They maintain a good momentum of high-level exchanges and the political mutual trust is deepened.

Their economical cooperation is also deepening constantly, which has brought tangible benefits to people of both countries. Bilateral trade volume exceeded $80 billion in 2011. Investment cooperation in finance, energy, steel, and machine manufacturing has also made great progress, and is expanding constantly.

China and Brazil have active exchanges in science, technology and culture as well.

The cooperation in the fields of Earth resource satellites, agricultural technology and aviation is progressing continuously. And the cooperation in culture and education is also very close.

China’s Confucius Institute Headquarters opened two Confucius Institutes and a Confucius school in Brazil and Brazil’s important media institutions have sent many journalists to work in China.

China and Brazil are both developing countries and have broad and consistent interests on major international issues. The Chinese government attaches great importance to relations with Brazil and believes the two countries’ cooperation in various fields will make great progress with their joint efforts.

 

Documental incredible de los paises – BRIC

Documental incredible de los paises – BRIC-episodio-1

Del canal Argentino – Infinito

Commentary: U.S. needs bigger thinking on Latin America

ANDRES OPPENHEIMER of the Miami Herald and CNN Español discusses US Foreign Policy towards Latin America

Note the author of this blog (me) does not always agree with what Mr. Oppenheimer says, but his article no less merits a quick read.  Some major points which any reader giving this a quick skim should note –>

1/ The Obama Administration has left the post of Head Latin American affairs vacant for 5 months.  So much for making good on promises back in 2008 to forge closer ties with the region… Big disappointment here, but not any worse or better than the disappointment / let down his predecessor Bush Jr also produced.  It seems the last President to care at all about the region was Clinton who did more than organize summits… He laid the foundation for FTA’s with countries in the region via NAFTA

2/ Obama did not visit Brazil, the growing powerhouse and member of the BRIC club until 3 years into his presidency. When he did visit, he received nothing but criticism for going through with the official visit between the heads of state of the Western Hemisphere’s two largest economies… because the visit happened to coincide with start of Western Military efforts in Libya. For the US media which pointed the finger at Obama, shame on you, the President does not physically need to be in the United States to be “Commander and Chief,” especially for an internationally organized, and initially French lead military mission.  For Obama, shame on you too! It took you three years to visit Brazil!  I think for Brazilians this is an obvious insult, but even for the rest of South America (and Latin America as a whole), Obama, Bush Jr. and the United States… well… Latin America is feeling a bit as if they are being ignored.  One thing is certain – China is not ignoring Latin America, nor is India, Russia or even small players like Singapore which is investing to expand the Panama Canal.  

3/ As Ray Walser,  Senior Policy Analyst for Latin America at The Heritage Foundation very appropriately points in a 2009 publication “U.S Policy toward Latin America in 2009 and Beyond”  From 1996 to 2006, total U.S. merchandise trade with Latin America grew by 139percent, compared to 96 percent for Asia and 95 percent for the European Union. In 2006, the U.S. exported $223 billion worth of goods to Latin American consumers(compared with $55 billion to China). Fifty-one percent of U.S. energy imports originate from Canada, Mexico, Venezuela, Ecuador, Colombia, and Brazil.

Excerpt from Oppenheimer’s article –>

U.S. diplomatic ties with Latin America, which have been in limbo for months, got a small boost last week when President Barack Obama nominated Roberta Jacobson as top State Department official in charge of Latin American affairs. But that alone will not do much to revert the gradual loss of U.S. clout in the region.

Granted, the career diplomat gets high marks from almost everybody in Washington’s small world of Latin American affairs specialists. Unlike her predecessor Arturo Valenzuela, a political appointee whose nomination in 2009 was blocked for several months by Conservative republicans, the Senate is expected to easily confirm her nomination.

Among the most urgent issues Jacobson would have to deal with would be the long-stalled U.S. ratification of the free trade deals with Colombia and Panama, the escalating violence in Mexico, and the April 2012, 34-country Summit of the Americas in Colombia.

On a wider spectrum, she would have to find new ways to improve ties with the region at a time when China has eclipsed much of the previous U.S. economic influence in South America’s commodity producing countries.

Click here to read Oppenheimer’s full article via the Kansas City Star

Global gloom places Latin America on alert – Financial Times

Interesting article written by John Paul Rathbone, Latin America editor of the Financial Times.

Every day Luis Castilla, Peru’s finance minister, says he lights a candle and “prays that China won’t crash”.

His prayers are echoed by many in a region that remains one of the world economy’s few bright spots. South America’s commodity-rich economies grew 5 per cent in the first half of this year. Last year, these new motors of the world economy added half a percentage point to global output.

But slowing Asian demand and plunging commodity prices have raised the spectre that South America, having largely escaped the 2008-09 Great Recession, may not be so lucky this time around.

Main point = Potential new financial crisis in the “Developed World” + slow down in China = Scared Latinos

Click here to read the full article direct from the Financial Times

ECLAC Sees Favorable Conditions for L.America-China Relations

The current economic and trade conditions in the Latin American and Caribbean region are highly favorable to furthering its trade and investment relations with China and the Asia-Pacific, a UN official said Friday.

“China has become a strategic trade partner for Latin America and the Caribbean, and there are many opportunities to achieve export and investment agreements in fields such as mining, engineering, agriculture, infrastructure, science and technology,” said Alicia Barcena, executive secretary of the United Nations Economic Commission for Latin America and Caribbean (ECLAC).

Barcena made the remarks while presenting a report titled “The People’s Republic of China and Latin America and the Caribbean: Towards a new phase in the economic and trade link” to mark Chinese Vice President Xi Jinping’s visit to the region.

The report says China is the main destination of Brazilian and Chilean exports and the second largest for Costa Rica, Cuba, Peru and Venezuela, but the region’s export basket to China remains centered on raw materials.

“It is possible and necessary to advance on trade diversification, the creation of a trade alliance between the Asia-Pacific and Latin America and the Caribbean, and to increase investment between both parties and enhance cooperation in innovation, education, science and technology,” Barcena said.

Click here to read the full article direct from http://english.cri.cn

Real picture of Sino-Latin America ties [China Daily US Edition]

The author is deputy editor of China Daily US edition. He can be reached at chenweihua@chinadaily.com.cn

The Western media continually criticizes China’s role in Latin America as being “neocolonial” and claims it has an “insatiable demand for commodities”, so I was keen to observe the people’s attitude toward China during my trip to the region recently.

Judging from the enthusiasm for China displayed by government officials, businessmen, academics and ordinary people in Chile, the picture presented by the Western media has been seriously distorted.

At the UN Economic Commission for Latin America and the Caribbean, chiefs and experts attributed the fast trade and investment growth from China as a key factor for Latin America not only surviving, but thriving during the global financial crisis.

The same message was heard from top Chilean officials at the 5th annual meeting of the Chile China Business Council, which drew some 500 government officials and business people.

It is true that commodities are an important part of the trade between China and Latin America. However, that trade benefits not only China, but also Latin America and the rest of the world.

By being the world’s manufacturing workshop, China has paid a high environmental cost. Just half a century ago, that job was done in most of today’s developed countries when they were the global manufacturing center.

Many developed countries have an insatiable demand for China’s rare earth and, of course, the country’s cheap labor. But this never seems to bother the Western media.

In fact, China and Latin America are quickly diversifying and elevating their trade and investment as witnessed by the host of agreements signed by China and Cuba, Uruguay and Chile in the past few days.

China has already become Chile’s largest trade partner. Chinese businesses are increasing their presence in the South America country. The billboards on Santiago streets by automaker BYD and appliance firm Haier, and the Chinese businessmen who do trade, operate malls and run convenience stores are proof of China’s presence.

Both countries share a priority in development. Chile aspires to become a developed country and China wants to become a xiaokang (well-off ) society.

Chilean President Sabastian Pinera made constant reminders that the two countries are very close despite the geographical distance between them.

The mood among the ordinary people I met in Chile was also favorable to China. I have never heard the word “Welcome” as often as I did in Chile. Ordinary Chileans I met in cafes, museums, parks in Santiago and Pablo Neruda’s colorful and hilly neighborhood in historic Valparaiso greeted me with “Welcome to Chile”.

What Pinera said was true. China and Chile are very close. In South America, Chile was the first country to recognize China’s market economy status, the first to sign a free trade agreement with China, the first to establish diplomatic ties with China and the first to support China’s WTO accession.

Of course, China and Latin American countries, all belong to the developing world and are going to compete with each other. But we all know that competition is a good thing and there is no need to distort the picture simply because of competition.

Latin American nations are independent countries and they are no one’s backyard. For China and Chile, they are really neighbor countries separated only by the Pacific. You can literally fly from Beijing to Santiago without passing over any other country.

China Latin America Trade Jumps in 2010

Presidents Dilma Rousseff and Hu Jintao in China last month can celebrate rising two-way trade. (Photo: Roberto Stuckert Filho/PR)

China’s trade with Latin America is growing twice as fast as U.S. trade with the region.

BY RUTH MORRIS of the The Latin American Business Chronicle

SHANGHAI — China’s dragon breathed fire into Latin America in 2010, as trade between the two sides shot up by a spectacular 51.2 percent, to $178.6 billion, and memories of the economic recession melted away.

China’s trade with Latin America is growing at nearly twice the level of US trade with the region. It also is significantly higher than the 31 percent increase in trade between the European Union and Latin America last year.

Click here to read more direct from the Latin American Business Chronicle

Lima to host 5th China-Latin American Business Summit

Img: Courtesy of Wikicommons

Andina News Agency has just reported (technically announced) the 5th China-Latin American Business Summit will be held in Lima this year:

Lima, Mar. 30 (ANDINA). The Peruvian capital will host the 5th China-Latin American Business Summit to be held from November 21-22 this year at The Westin Libertador hotel, the China Council for the Promotion of International Trade (CCPIT) reported.

CCPIT Latin America and Oceania Department Director Lei Hong said that Peru was chosen as the venue because of the recent Free Trade Agreement (FTA) signed with China, which is why Peru’s Foreign Ministry is organizing the event.

According to her, some 300 entrepreneurs from the Asian giant attended the previous editions, and a similar amount is expected for this year’s summit.

In addition, an exhibition of products from China and other participating countries, as well as business roundtables and meetings among CEOs will also take place.

The previous business summits have been carried out in Santiago (Chile), Harbin (China), Bogota (Colombia), and Chengdu (China).