A must read article for anyone interested in Sino-Latin American relations was published today on SeekingAlpha’s website. It is written by Erik Bethel, one of the four founders and CEO of Sino-Latin Capital. I highly recommend it to anyone even mildly interested in the growth of Sino-Latin American relations.
Click here to access the full article direct from SeekingAlpha.
Travel to any country in Latin America and you will see the visible hand of China at work: a computer manufacturing plant in Mexico, a copper mine in Peru, a football stadium in Costa Rica. In the year 2007, the thought of China in Latin America would have appeared, at best, improbable. But in a three-year stretch, China signed free trade agreements with Chile, Peru and Costa Rica, inked billions of dollars worth of deals in oil and mining projects throughout the region, and supplanted the US as Brazil’s biggest trading partner. Once almost unseen in Latin America, China’s bilateral trade has risen from $12bn in 2000 to well over $150bn today.
Given the importance of its new Asian friend, Latin Americans are rolling out the red carpets to Chinese business delegations and jumping on planes not only to Beijing but also to Shanghai, Shenzhen, and Tianjin.
Rationale Behind Chinese Investments in Latin America [...]
In line with China’s outbound investment strategies in Africa and Asia, China is now planning to create a $5 billion usd investment fund for Latin American investments.
The funds target investments will include, infrastructure (probably to help the Chinese get commodities out), agriculture, mining and energy.
CSA a bit late on bringing this news to you, but it’s no less the exact kind of newsbites this website scavenges the news world for.
Mining Deal
China Development Bank Corp has agreed to provide a $1 billion usd credit line to Corp Venezolana de Guayana, a.k.a, Venezuela’s state owned mining giant and aluminium producer, in exchange for a guarantee of access to any newly discovered mining resources in the future.
China’s rolling the dice on this one. Most of the mining world knows Venezuela is sitting atop abundant mineral wealth, nonetheless, the country has always lagged its South American neighbors like Chile, Peru and Argentina when it comes to exploiting its mineral wealth.
Dishing out $1 billion usd, in a moment when China is searching for world to secure new sources of commodities and Venezuela is desperate for dollars/ cash this is a logical investment which could pay dividends if Venezuela can provide the institutional framework to develop a robust mining industry using Chinese capital.
Energy Deals
Dec 22 (Tuesday) – Caracas and Beijing sign a framework agreement to set up and manage a new JV (joing venture) to develop the Junin 8 Block in the Orinoco Belt. The set goal is to produce 200,000 barrels per day of extra-heavy crude, according to an official report.
Dec 23 (Wednesday) – China National Offshore Oil Corp signed agreements with PDVSA to assist with deep water and ultra-deep water drilling and to evaluate reserves in the Orinoco Belt block known as Boyaca 3.
What is China getting in exchange for this “olive branch,” it is offering Venezuela?
The agreements included a one-year contract – signed by Venezuela’s PDVSA and Petro China – that calls for Venezuela to ship 500,000 barrels per day of crude and related products to China. As for the mining agreement, China will receive supplies of iron ore for their generosity.
Chinese ambassador to Peru, Gao Zhengyue, said that relations between his country and Peru “are at their best moment” in history.
According to him, both countries have deepened the confidence in the political, economic, technological educational, cultural, tourism and justice areas, among others.
The Chinese diplomat noted the increase of the economic, trade flow and bilateral investments, and highlighted the increase of the Chinese investments in Peru, with over seven billion dollars.
“I am convinced that with joint efforts the relations between our two brotherly countries will enter a new stage of development and reach a higher level in the two peoples’ benefit,” said Zhengyue.
Chinese telecom-gear makers Huawei and ZTE have already conquered Africa and Asia. Next stop: Latin America.
(Fortune Magazine) — At phone operator Movistar’s sales offices in Buenos Aires, customers line up to buy high-speed wireless services to access the web on their mobile phones. Most Argentines don’t realize, though, that the company providing the gear for their broadband connections isn’t a longtime supplier to Latin America like Alcatel-Lucent, Ericsson, or Motorola, but a relative newcomer called Huawei.
China’s telecom suppliers are coming to the Americas. Pursuing the same formula they’ve used to win business throughout Asia and parts of Africa (selling cheap gear in low-income countries), equipment makers Zhong Xing Telecommunication Equipment (also known as ZTE) and Huawei are now getting a foothold in countries such as Argentina, Chile, and Colombia. Says Leandro Musciano, project director at Movistar Argentina, a unit of Spain’s Telefónica: “Price is important.”
The recent visit of Brazil’s President Luiz Inacio “Lula” da Silva to China in May 2009 reflected the Asian nation’s expanding economic and political influence in Latin America and the Caribbean (LAC). One year ago, the Brazilian government had announced that China would surpass the United States as its major business partner. The results of da Silva’s visit verified this after the two nations signed 13 agreements, including a $10 billion loan from the China Development Bank to Brazil’s state oil company Petrobras. Petrobras also concluded a deal with a subsidiary of China’s oil refiner Sinopec for the export of crude oil. A major commercial agreement will also see the beginning of huge poultry exports to China.
Brazil’s two-way trade with China, one of the few economies still growing despite the global crisis, reached US$3.2 billion in April, surpassing the $2.8 billion trade total with the US. So far this year, Brazilian exports to China grew 65 percent over the same period in 2008, rising from $3.4 billion to $5.6 billion.
[China - Venezuela] — CNPC, Venezuela Plan to Build Two Oil Refineries in China China National Petroleum Corp. and Venezuela plan to build two oil refineries in China, Jiang Jiemin, the president of the Chinese company, told reporters in Beijing today.
[China - Trinadad & Tobago] – Alutrint: Chinese labor needed due to lack of local expertise China’s EXIM bank placed as a condition on its consent to provide a US$400mn loan to the Trinidad & Tobago government to build the Alutrint aluminum smelter – in the La Brea region of Trinidad island – that the project hire Chinese contractor CMEC to provide labor and technology for the plant, Alutrint manager of communications and community relations Josieann Richards told BNamericas.
[China - Russia] – Chinese Envoy to Russia: Oil Pipeline Serves Strategic Goals of Both Sides The construction of the China-Russia oil pipeline conforms with the strategic goals of China and Russia to diversify the former’s energy imports and latter’s energy exports, Chinese Ambassador to Russia Liu Guchang has said.
[South Korea - Peru] — Peru hopes to complete 70% of FTA talks with Korea this week Peru hopes to complete 70 percent of free trade negotiations with South Korea this week because of the similarities found between the two negotiating teams, allowing them to progress quickly, Peruvian chief negotiator Nathan Nadramija said Monday.
During the first round of FTA Negotiations in Seoul on March 16, both countries successfully concluded four chapters relating to electronic commerce, border services, as well as two other chapters related to institutional issues.
Luis Carlos Kinn, manager of Jindal subsidiary Gas to Liquids Internacional S.A., confirmed the successful completion of the first production test at the well drilled in the El Palmar field, some 50 kilometers (31 miles) from Santa Cruz, the capital of the likenamed eastern province.
[Chile - Bolivia] – Chile Open to Tunnel Proposal Giving Bolivia Access to Sea The Chilean government is willing to study the proposal by a group of architects that would provide landlocked Bolivia with access to the sea through a tunnel to an artificial island in the Pacific Ocean.
[Venezuela - Angola] — Venezuelan Government Bank BANDES To Open Branch in Angola Jesus Alberto Garcia, Venezuelan ambassador to Angola, stated in an interview with Radio Nacional de Angola that Banco de Desarrollo Económico y Social de Venezuela (BANDES), the state development bank of Venezuela, will open a branch in Angola. He added, “This is one of the main things President Chavez wants to do with Africa.” Branches of BANDES outside of Latin America and the Caribbean include Syria and the Republic of Mali.
[Latin America - Spain] — Spain Wants Closer Ties with Latin America Spain’s King Juan Carlos and Prime Minister Jose Luis Rodriguez Zapatero said Monday that the upcoming bicentennials of Latin American independence should be used to promote Spanish and European Union ties to the region.
