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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Good post from FT Beyond BRICS on the Pacific Alliance

Guest post: the Pacific Alliance and why it matters

High quality global journalism requires investment. FT has asked this article be accessed from their website.  Click here to read the complete article

By Jorge Rosenblut of Endesa Chile

In January I had the honor to attend a summit of the European Union and the Community of Latin-American and Caribbean Nations in Santiago, Chile. As with many such meetings, the 45 heads of state and prime ministers captured the attention of the international media. But what went almost unnoticed was a seismic shift in Latin American integration — a group of four countries that stood together in what promises to be a historic breakthrough for the region.

After meandering for centuries looking for a raison d’être, Chile, Colombia, Mexico and Peru are forging a 21st century path to the first world. Though these four nations are competitors in many aspects (in exports, foreign investment, talent mobility, etc), their plan for economic integration under the Pacific Alliance heralds a new kind of economic partnership in Latin America: pragmatic not political, forward-looking not historical.

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

Humala touts Peru as China’s “bridge” to LatAm – EFE

[Source] : EFE / Global Post

[Img] : Courtesy of Wikicommons

The two leaders met in Beijing’s Great Hall of the People on the fourth day of Humala’s visit to China after participating in the Boao Forum for Asia on the Chinese island of Hainan.

In Boao, the Peruvian president had already met with Chinese counterpart Xi Jinping to sign 11 cooperation accords.

“As events are developing, Peru can be the (primary) center for (Chinese) investments in Latin America,” Humala said.

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Chinalco Mining tumbles 6.3pc on trading debut

[Source] : South China Morning Post

Shares in Chinalco Mining Corp International, which is developing a copper mine in Peru, closed 6.3 per cent lower than their offered price on their trading debut yesterday.

The sharp price fall might have been caused by retail investors, who tended to have a short investment horizon and were not familiar with the company’s operations and outlook, analysts said.

Chinalco Mining is the overseas non-aluminium and non-ferrous metals arm of state-owned Aluminum Corp of China (Chinalco).

“Chinalco Mining’s operation in Peru is a long way from Hong Kong and production will only begin late this year, so it’s not easy for local investors to picture its prospects,” said Christfund Securities research director Simon Lam Ka-hang.

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APEC’s supply chain connectivity and its benefit to agro-industry

[Source] : The Jakarta Post

This year, Indonesia will host the Asia-Pacific Economic Cooperation (APEC) Conference in October 2013, and will hold four Senior Officials Meetings (SOMs), 12 Sector Ministerial Meetings, an APEC CEO Summit and the Economic Leaders Meeting. From Jan. 24 to Feb. 8, APEC, SOM I and related meetings are taking place in Jakarta.

APEC is an intergovernmental forum dedicated to promoting free trade, investment and economic cooperation throughout the Asia-Pacific region.

As stated earlier this month by Foreign Minister Marty Natalegawa, Indonesia will include its own national interest issues on the agenda such as economic resilience, improvement of small- and medium-scale business competitiveness, sustainable growth and food security.

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Colombian president hails close ties with Asia

[Source] : NZ Week

BOGOTA, Jan. 24 — Colombian President Juan Manuel Santos said Thursday Colombia would consolidate its ties with Asian and African countries in order to create more business opportunities.

On an annual reception for diplomatic corps, Santos said his country has enjoyed close ties with Asian and African countries and he plans to keep close contact with these countries along his administration.

“Colombia has made significant progress in diplomacy,” said Santos.

Colombia has become more active in working with regional organizations, such as the Association of Southeast Asian Nations (ASEAN) and Asia- Pacific Economic Cooperation (APEC), and it now tops the waiting list to join the Organization for Economic Cooperation and Development (OECD) after two years of “intense and serious” preparation.

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The Economist takes a deeper look at China’s overseas investment

ODI-lay hee-ho – The expanding scale and scope of China’s outward direct investment

[Source] : The Economist

The remote, tribal state of Jharkhand in eastern India is the spiritual home of the country’s steel industry. It is the site of India’s first steel mill, built in 1908 with Indian money and much national pride. But a new steel plant in the same state takes a different approach. Owned by Electrosteels Steel, it has been built by Chinese contractors and fitted out with Chinese equipment, despite the government’s reluctance to award visas to Chinese workers. Now the plant is looking to expand its capacity. It is hoping China will provide the $250m investment it requires.

The hopes are not unreasonable. China is famous for attracting foreign direct investment (FDI). But a growing amount of investment is also flowing in the opposite direction. According to official figures, China’s outward direct investment (ODI) exceeded $77 billion in 2012, an increase of 12.6% on the previous year, even as inflows of FDI fell for the first time since the height of the global financial crisis.

Yet China is still far from buying up the world. It is a relative newcomer to big direct investments, and has yet to boast a large hoard of such assets. Belgium, the Netherlands and Spain all have bigger holdings. And since 2005, though China has ploughed over $50 billion into America, that sum represents less than 2% of America’s total stock of inward investment, according to the Heritage Foundation in Washington, DC.

China’s ODI would be greater if host countries were more hospitable. The Heritage Foundation reckons that over $200 billion-worth of potential deals have fallen through due to “a nasty surprise of some sort”, including political opposition and regulatory obstacles. In the West, Chinese direct investment is viewed with suspicion partly because it is still dominated by state-owned firms. These are considered a threat to competitive markets and, occasionally, to national security.

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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.

Soybean plantation I drove past in Paraguay back in February of 2012. Soy exports remain a powerful driver of the Paraguayan Economy.

• 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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ASIA ONE: The pros and cons of far-reaching trade agreements

The pros and cons of far-reaching trade agreements

[Source] : The Nation/Asia News Network

Amid stagnant multilateral trade talks under the World Trade Organisation (WTO) but fast-moving bilateral and regional negotiations, Thailand is looking at pursuing more free-trade pacts to ensure its competitiveness and level playing fields for Thai enterprises.

The government has been under pressure to consider three major pacts: the US-led Trans-Pacific Partnership, a Thailand-European Union FTA, and a comprehensive Thailand-India FTA. Many enterprises and academics support pushing ahead with talks, claiming that market liberalisation will facilitate trade and investment amid a global economic downturn.

Others, however, have warned against rushing into joining these pacts for fear of losing competitiveness with developed nations.

The Nation has reviewed the pros and cons of these potential FTAs as well as summing up the results of past trade agreements. Should Thailand join every trade pact to grasp the benefits of liberalisation amid the stalling of multilateral talks? Or should we slowly study the possible impacts of such agreements, such as emphasis on intellectual property (IP) rights and liberalisation of trade in services and investment? Should we consider extending the negotiation periods to ensure the readiness of Thai enterprises to compete?

TRANS-PACIFIC PARTNERSHIP

Many Thai enterprises want the country to join the US-initialised TPP. The pact so far involves nine countries: the United States, New Zealand, Singapore, Chile, Brunei, Australia, Peru, Vietnam and Malaysia. Japan, Mexico and Canada have also shown high interest in joining the agreement. Notably, the US is Thailand’s third-largest trading partner, accounting for 10 per cent of total export value. Thai enterprises involved in foods, toys, electronics, garments, sugar, jewellery and ornaments, and footwear support joining the TPP. Exporters share similar views, saying the agreement would entail tariff cuts and lowering of non-tariff barriers to services and trade. Thai exports are facing difficulties amid the slowing economic growth of the US.

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