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.

 

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

Peru to set up sovereign wealth fund

Img courtesy of Wikicommons

Peru plans to set up a sovereign wealth fund, taking advantage of record foreign reserves and metal prices to finance investments in infrastructure and education, Finance Minister Ismael Benavides said.

The Andean country may tap its $44 billion in foreign currency reserves and tax revenue to create the fund before the President Alan Garcia’s term ends in July, Benavides said in an interview in New York today.

“We have not only reserves but extraordinary revenues from mineral exports,” the 65-year-old Benavides said, without providing details about how the fund would work. “We might come up with something in the first quarter next year.”

The fund would be modeled after a $12.8 billion fund Chile created in 2006 to hoard windfall profits from surging copper prices, Benavides said. Peru is the world’s largest producer of silver and second-largest producer of copper after Chile. Metals accounted for 62 percent of exports in the first half of 2010.

Click here to read the full article, direct from Bloomberg

Interview with Dr. Kevin P. Gallagher, author of the “Dragon in the Room: China and the Future of Latin America”

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

David Lowell, perhaps the greatest treasure hunter in the world

David Lowell - Bloomberg

In the snake-infested jungle of southeastern Ecuador, the American explorer David Lowell found himself sliding over a waterfall and heard his head bounce off a rock “like a melon being hit by a hammer,” he says.

Lowell was 72 and prospecting for copper that day in May 2000. He stepped into the slippery streambed for a vantage point free of vipers and vines. A broken rib and throbbing head diverted him to a nearby hamlet in search of help.

“There was one man in the village who was a combination chiropractor and mortician,” Lowell says. “We decided to just buy a little tin of liniment with the picture of a dragon on it.” The expedition carried on.

In the clear water of the stream, Lowell saw enough to help him find one of South America’s richest copper deposits. This May, a joint venture of Chinese state-owned companies paid $652 million to buy Lowell’s partner in the exploration, Vancouver- based Corriente Resources Inc. Lowell kept a stake there for himself, though local opposition has prevented mining.

In a career spanning six decades and 44 countries, Lowell has made 14 major discoveries, including the world’s largest copper deposit in Chile. He found treasures where others detected nothing worth mining. Lowell revolutionized exploration and unearthed metals that helped the U.S. build the world’s largest economy. He also made investors billions.

Click here to read the entire article direct from Bloomberg

Peruvian Villagers Resist China’s Claim on $50 Billion Mine: Bloomberg Video

Before Aluminum Corp. of China, known as Chinalco, can mine the more than $50 billion of copper ore buried in the Toromocho mountain in Peru, the company must get the residents of the nearby town of Morococha to leave their land.

Some residents are resisting the move, despite the offer of a free house in a newly built town. They want a greater share of the spoils. The problem illustrates the challenges global mining companies face as copper resources decline, consumer demand increases and exploration is pushed to the frontiers of the earth. (Source: Bloomberg)

Click here to watch the video from Bloomberg

Running time 06:54

South American Cocaine??? Spain continues to “deal gold,” as it has since the 16th century

To realize why I titled this post the way I did, you must for your own good watch this Reuters video which gives a good outline of the gold market to the very end.  Anyone who has ever walked the streets of Madrid or Barcelona between 1995-2010, knows the image of a Peruvian/ Bolivian/ other South Americans with big card board signs which say : “we buy and sell gold/silver.”

Well, like the Japanese, Spain is also inventing machines/ robots to do the work– the work being, the exchange/ commerce of gold bars.

For the record I know very little about the machine and welcome clarification from any reader.  However, the fact that Reuters mentions Spain as the first country to do this, makes me think back to the Spanish history lessons I learned from my mother and grandmother growing up as a Peruvian-American in NYC–which are of the same yolk as the history lessons taught to US-Americans about the British/ French in North American schools.

I had to learn this “Iberian” history from my family, because the US public school system gives two $h!ts about the fact that more than half the American CONTINENT (singular) was not actually colonized by English speakers.

Good evening to all from Shanghai.

Peru Expects to Rival in Copper on Output Gains to outpace to Chile

Bloomberg reports Peru expects to quadruple copper output by 2020, rivaling Chile as the world’s largest producer, as companies build new mines to meet rising demand.

The country will produce 4.8 million metric tons per year by the end of the decade, compared with 1.25 million metric tons in 2009, Deputy Mining Minister Fernando Gala said today at an event in Lima. Peru is the world’s second-largest producer after Chile, which had output last year of about 5 million tons.

Click here to read the full article direct from Bloomberg

China passes US as #1 destination for Peruvian Exports

Bloomberg reports China has surpassed the United States as Peru’s top destination for exports.

Additionally, Peruvian exports may rise to record levels as Chinese demand alone has helped boos Peruvian exports by 17%, totaling $31.6 billion USD.

Chinese demand will help boost Peru’s exports 17 percent to $31.6 billion after last year’s 15 percent decline, Juan Carlos Mathews, export director at the government’s trade promotion agency Promperu, said in an interview in Lima yesterday. Exports may rise 9 percent next year, he said.

China overtook the U.S. as Peru’s top export destination for the first month on record in July, aided by a free-trade agreement signed in 2009, Mathews said. China accounted for 17 percent of Peru’s exports according to preliminary data for July, compared with 16.8 percent for the U.S., as the world’s second-largest economy increased purchases of fruit, fresh fish and wood products, Mathews said.

“We’ve found an alternative market at a time of global crisis,” Mathews said. “The Asian market has been one of the ways out.”

Click here to read more direct from Bloomberg

One month underground in Chile

Sep 5 (Reuters Video) – Chile marks one month anniversary for 33 trapped miners. Deborah Lutterbeck reports. (01:03)