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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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

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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Some stories I would have posted from the past 2 weeks (part 3)

Latin America: Latin America Faces a Risk of Complacency, Fitch’s Shetty Says

Colombia: Colombia Starts Talks to End Half a Century of Armed Conflict

BRICS: Goldman Sachs’s O’Neill Sees Bank of BRICS Gathering Momentum

China: Chinese Show Deepening Concern at Officials’ Corruption

Brazil – Turkey: Beating Stagflation Lifts Brazil to Turkey Bids for Linkers

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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Asia Pacífico: una tarea pendiente

[Source] : La Republica – Colombia

Bogotá_En la fase actual de transición en que han ingresado la economía y la política mundial, existe cada vez un mayor acuerdo entre analistas de diversas tendencias, en el sentido de que el mundo de los próximos 50 años tendrá un comportamiento de carácter cada vez más multipolar, aunque no necesariamente más equilibrado.

La causa de esta realidad es el declive que hoy se expresa en el liderazgo de Estados Unidos y de la Unión Europea. Esta tendencia ocurre, además, en el contexto de una gran incertidumbre sobre la eficacia de los escenarios multilaterales para favorecer el avance hacia una gobernanza global que ofrezca certidumbre en temas clave como el comercio, el desarrollo sostenible y la seguridad de las naciones.

El surgimiento reciente de los llamados Bric (Brasil, Rusia, India y China) promete consolidar un sólido bloque de países que, fundamentado en su nuevo protagonismo económico, contribuirá de manera significativa a cimentar, sobre una base más diversa, las deliberaciones políticas en torno a un eventual nuevo orden mundial. Y, en todo caso, incidirá para que las expectativas de los ‘países emergentes’ adquieran mayor peso en las negociaciones del G-8 y el G-20, que hoy se han fortalecido como espacios de convergencia entre las naciones, frente al debilitamiento de los mecanismos formales de discernimiento multilateral.

En este contexto, América Latina podría adquirir una mayor relevancia en las corrientes globales de la política, el comercio y la inversión, dada la caracterización de varios de sus países como economías emergentes. En esta dirección, no deberían existir, a nuestro juicio, plataformas excluyentes de inserción internacional.

Es claro que en una transición global marcada por la incertidumbre, Colombia tiene un amplio margen para avanzar en acercamientos más decididos con los países emergentes de su propia región y, al mismo tiempo, con aquellos del Este asiático que se han convertido en el escenario de mayor dinamismo en la economía global.

Haga clic aquí para leer el artículo completo

Soy Rally Sends South American Growers Into Pastures

[Source] : Bloomberg

By Matt Craze and Mario Sergio Lima - Sep 13, 2012 4:00 PM GMT+0800

SoyBean Field – Paraguay, Photo taken in March 2012 by Bennett Reiss (Webmaster and author of CSA)

Leonildo Bares, a soybean grower near the Amazon farming frontier town of Sinop, said he’s so confident prices for the commodity will stay near record highs that he’ll extend his crop to neighbors’ boggy cattle pastures.

Confined by Brazil’s crackdown on logging in the Amazon, the farmer talked his neighbors into growing soybeans on their cleared land and sharing the profit. Bares, whose 420-hectare (1,038-acre) farm in the center-western state of Mato Grosso extends on what was untouched rainforest in the 1970s, plans to boost planting to 650 hectares. About 1 million hectares of the state’s pastures, an area the size of Jamaica, probably will be converted to soybean crops in coming years, he predicts.

“The pastures of Mato Grosso can be turned into soybean plantations and probably will,” Bares, who’s also the president of Sinop’s farmers association, said in a telephone interview from the city. “Anyone with the knowledge and money who’s willing to come here and do it, can do it.”

South American farmers like Bares have become the counterpoint to the worst drought in the U.S. Midwest in 76 years as they sow record crops during a global shortage of the oilseed used as animal feed in Asia. Brazil, Argentina, Paraguay, Bolivia and Uruguay will boost output by 34 million metric tons to 148.5 million in the 2012-2013 season, more than offsetting a decline of about 11.5 million tons to 71.7 million in the U.S., the Department of Agriculture said yesterday.

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Asia eyes Brazil’s growing consumer market – Focus

[Source] : GMA News

SAO PAULO — With Europe and the United States in the economic doldrums, Asian manufacturers are setting their sights on Brazil’s lucrative consumer market ahead of the 2014 World Cup and the 2016 Olympics.

This week, the manufacturers took their roadshow to Sao Paulo, Brazil’s economic capital, for a three-day trade fair showcasing samples of products – such as electronics, textiles, home goods and building materials – they hope to sell across the region.

China Sourcing Fairs, the first such event to be held here, drew 340 suppliers from mainland China, 41 from Hong Kong, 29 from India and seven from Taiwan, as well as potential buyers from across Brazil and South America.

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COHA Articles worth a read

1/ Brazil Playing Chess in Latin America

2/ Spanish Enterprises Need Latin America for Economic Expansion

More updates to come once I am back in Ho Chi Mihn City (Saigon).