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

Documental incredible de los paises – BRIC

Documental incredible de los paises – BRIC-episodio-1

Del canal Argentino – Infinito

China / India/ Russa (ASIA) – Latin America News Feast with a dash of US for dessert

My daily news radar (online subscriptions / searches) for all that is China – South America went off like wild fire today. Here’s some articles worthy giving a read.

Article 1: Russia Lends Venezuela $4 Billion in Return for Oil Projects - By Daniel Cancel of Bloomberg News

Russia agreed to lend Venezuela $4 billion through 2013 for defense spending in return for gaining access to heavy crude and offshore gas fields in the South American country.

Russia’s OAO Rosneft and OAO Gazprom signed a cooperation accord with Venezuelan state oil company Petroleos de Venezuela SA late yesterday at a ceremony in Caracas led by President Hugo Chavez and Russian Deputy Prime Minister Igor Sechin.

“We’re working on large-dimension projects from oil, gas and petrochemicals to finance, banking and trade,” Chavez said on state television.

Click here to read the full article direct from the Bloomberg

Article 2 = China’s JAC Motors to build plant in Brazil - By Vivian Pereira and Brad Haynes of Reuters News

To Note:
* 80 pct of capital will come from local SHC Group
* Government driving up the cost of imported carsBy Vivian

Pereira and Brad HaynesSAO PAULO, Oct 7 (Reuters) – The Brazilian operator of China’s JAC Motors brand announced a 900-million-real ($510 million) investment to build a factory producing affordable cars in the world’s No. 4 auto market.

JAC Motors will provide 20 percent of the capital, with the rest coming from the local SHC Group run by businessman Sergio Habib, SHC said in a statement on Friday.

The plant in Bahia state, expected to produce 100,000 vehicles annually beginning in 2014, will be the second producing Chinese-branded cars in Latin America’s largest economy, where authorities are pushing up the cost of imported cars.

Click here to read the full article direct from the Reuters News

Article 3: Friction between China & Bolivia

Bolivian energy minister alleges deception by Jindal Steel in big iron ore mining deal, courtesy of the Associated Press via the Washington Post

LA PAZ, Bolivia — A senior Bolivian official is threatening to end the government’s contract with India’s Jindal Steel & Power Ltd. over its alleged failure to meet investment commitments in a huge iron ore mine.

Energy Minister Jose Luis Gutierrez says Jindal deceived Bolivia in failing to honor its end of the biggest mining investment of President Evo Morales’ nearly six-year tenure.

Click here to read the full article direct from the Associated Press via the Washington Post

Article 4 = Ecuador firm wants to sell rice in the name of Gandhi - By Maneesh Chhibber of the IndianExpress.com

An Ecuador-based company has attempted to use the name and photograph of Mahatma Gandhi for marketing its rice. But an Indian lawyer has challenged the move before the Trademark Office of Ecuador. The case is scheduled to come up for hearing tomorrow.

According to Lalit Bhasin, who is also president of the Society of Indian Law Firms, the owner of the Ecuadorian company, Valverde Munoz, applied for grant of trademark for the name and label of “Arroz Gandhi” (Arroz means rice).

Click here to read the full article direct from IndianExpress.com

Article 5: Mitt Romney on Mexico, China and defense – By Dr. James M. Lindsay and courtesy of CNN News

Dr. James M. Lindsay you would think knows about the topic, as CNN makes a special point to note — Dr. James M. Lindsay is a Senior Vice President at the Council on Foreign Relations and co-author of America Unbound: The Bush Revolution in Foreign Policy, and whom writes his own blog, which you can access by clicking here.

By James M. Lindsay, CFR.org

Mitt Romney has taken exception to Rick Perry’s comment over the weekend that he would consider sending American troops into Mexico to help end the drug war raging there. Romney told the New Hampshire Union Leader that Perry’s suggestion is “a bad idea:”

Let’s build a fence first, and let’s have sufficient border patrol agents to protect it. And if the Mexican government wants us to help it with logistics, intelligence, satellite images, I’m sure we can provide the sort of support we provided in Colombia.

You can expect to hear more about Mexico at next Tuesday’s GOP debate. If Romney makes the Colombia comparison again, he probably should explain what the United States did there. Most people don’t know.

Click here to read the full article direct from CNN

China revives The Silk Road

Guest post from Calipe Chong, founder of VipoAsia and author of VipoAsia’s blog

The Ancient Silk Road - Wikicommons

China adopted West Development Strategy since January 2000 to beef up the economic development in the western region to close the gap with the prosperous eastern region at the coast line. In the last 10 years, the central government had financed more than 3.5 trillion yuan ($512.4 billion) to support development of the western region which consists of 12 western provinces, autonomous regions and municipalities with a combined population of about 370 million. They include Sichuan, Yunnan, Gansu and Shaanxi provinces. This year alone, China planned to invest 468.9 billion yuan ($69 billion) for projects in this region.

President Hu Jintao announced on May 21 at the central work conference that Xinjiang Uygur Autonomous Region would receive 2 trillion yuan ($295 billion) in next 5 years for fixed asset investment to double up its GDP to national average by 2015. The purpose is to improve Xinjiang’s infrastructure, self-development capacity, ethnic unity and social stability. Premier Wen Jiabao also proposed a series of preferential policies to boost Xinjiang, among which was the resource tax reform launched on June 1. The government is trying hard to reduce regional income disparities which have escalated into a big social problem. It hopes to harmonize the strife tension between ethnic Uyghur and Han Chinese.

The vast natural resources on minerals, oil and gas would also provide the return on this vast investment. Central state-owned companies and large private corporations are becoming a powerful engine for the rapid economic growth in Xinjiang.

Kashgar, an ancient Silk Road trading post located in western Xinjiang, has been singled out as an economic development zone meant to increase trade with nearby Central Asian nations. It is to be modeled after the special economic zone (SEZ) of Shenzhen with preferential policies in addition to becoming a comprehensive reform experimental zone. The 50 square kilometer SEZ is planned to boost the city’s economy and population to one million but also drive the economies of the surrounding cities and countries.

To further enhance the connectivity of Xinjiang, the government had begun constructing the second high speed railway line linking it with the inland cities and Beijing. This would make the journey from Urumqi, provincial capital of Xinjinag, to Beijing an awesome 12 hours compared with the current 40.

China has developed her high speed train to a remarkable speed of 350 Km per hour. And she now has the longest high speed train network in the world. She is experimenting train with speed of 500 Km per hour which will be delivered in less than 5 years time. The engineers and scientists are researching train with speed up to 1,000 km per hour. They hope the super high speed train would be operational in 10~15 years time. If that happens, it will revolutionize the whole transport industry and a major threat to short distance flight. The whole supply chain will have to be remodeled.

With the success of her high speed train, she now embarks on a very aggressive ambition to develop transcontinental high speed rail lines spanning across 17 countries. She is planning to develop 3 major rail lines as follows:

(a) Southern route – Kunming in southwest China with Singapore passing through Myanmar, Vietnam, Cambodia, Thailand and Malaysia

(b) Western route – Urumchi in northwest China with Germany passing through Kazakhstan, Uzbekistan, Turkmenistan, Pakistan, Iran and Turkey

(c) Northern route – Heilongjiang in northeast China with South-Eastern Europe through Russia

The whole network links 28 states with 81,000 km railroads. This massive network connecting China with Central Asia and Eastern Europe looks so much like the ancient Silk Road. I call it the Metallic Silk Route. It is mind-boggling and breathtaking for China to visualize such almost impossible feat. China has meticulously setting her plan to rekindle the ancient trading with Central Asia, Eastern Europe, Russia and South Asia.

She plans to build it with her own money in exchange for resources from the respective states. This would help her to tap opportunities and resources from the resource-rich Central Asia and less dependent from her current overseas suppliers. It will probably bring tremendous trade opportunities and wealth to the under-developed Central Asia which has been deprived from the global economy for centuries. Many states may find it hard to resist the China offer. Without the high speed railway, it is difficult for them to sell their resources to finance the nation building and welfare development.

The direct access to Middle East and Eastern Europe without using the sea lanes would mean that China can depend less on the narrow, congested and pirates infested Malacca Straits and controversial India Ocean and South China Sea. Any hiccups at these sea lanes could bring China economy to her knees. Chinese does not like someone holding his throat. The massive man power and resources to build and maintain the Great Wall to deter the invasion from the West is a good example of what China would do to keep her safe.

We need to understand the impact of ancient Silk Road to the countries involved to conceptualize what the Metallic Silk Route would bring to the region. The ancient Silk Road was an important path for cultural, commercial and technological exchange between traders, merchants, pilgrims, missionaries, soldiers, nomads and urban dwellers from China, India, Tibet, Persia, Arab and Rome for almost 3,000 years. The eastern road was made safe from bandits by the Han Dynasty in early 200 BC. Han Wudi managed to foster a safe passage with the various kingdoms in the region.

The road which was reputed as 6,400 Km long enabled trade in silk, slaves, spice, perfumes, medicines, jewels, artifacts, glassware, etc. More importantly it allows the spread of knowledge, ideas, teachings, culture, food, music, language and religion. All the countries not only gain wealth from the immense trading but also intellectual development from the diverse countries. Many inventions and thoughts were developed. It had flourished the civilizations at both ends of the continent. Buddhism was brought to China from India while Islam was brought to Central Asia from Arab. There are many Chinese Muslims living in western China right till now.

The Turks who came into power after the fall of Mongol Empire had literally cut off the Silk Road around 1400 AD. It had deprived the West from access to beloved silk and spice from the East. This had compelled Portugal and Spain to find an alternate sea route to the East. The success of the maritime explorers brought Europe to Asia and had helped it to become colonial powers for centuries. Without the quest to the East to acquire the commodities, the global development would not be what it is today.

In ancient time, the Romans would pay gold for the silk from China. And now China is buying resources from Central Asia with her huge foreign reserves. The Metallic Silk Route allows her vital oil and gas import from Middle East and Russia to flow in through an alternate route. This is a very critical strategy to sustain her huge consumption of energy. And she is also less vulnerable on the negotiation table with the less friendly countries.

China attempts to revitalize trading with her western neighbors is sensational and formidable in this new century. She cannot do it alone. Besides the contiguous states along the railway lines, she also needs the investment and involvement from the well developed nations to succeed. This spells great opportunities for companies willing to venture in this new frontier. This will be a new chapter in global trading.

In twenty years time, the whole Asia will revive her glory, might and global dominance once again after a millennium gap. The impact would be far greater than the ancient Silk Road era. The wind of power and influence never stop circulating around the globe.

* This entry has been published with the permission of the author, Calipe Chong of Vipo Asia.  Please visit VipoAsia to access his blog directly and read more of his insight on Asia and the world.

New Silk Road Built by China Connects Asia to Latin America – Bloomberg

Bloomberg just published a fascinating article about the growth of inter-emerging market trade.   I highly recommend read the complete story, direct from Bloomberg’s website.  Below, CSA presents a few excerpts from the article, which highlight some of the exchange between fellow emerging markets.

“There are now massive trade connections within the emerging markets and they’re becoming increasingly important,” said King in a telephone interview. “It means in one sense the emerging world is protected from the worst ravages of the developed world.”

Shenzen-based Huawei Technologies Co., its biggest maker of phone equipment, had orders of $1.7 billion from India in 2008 and said in January that it will invest $500 million in its research center in Bangalore.

China Mobile Ltd. of Hong Kong, the world’s biggest phone carrier, is “interested in doing business in Africa,” where it can boost services in rural areas, Chairman Wang Jianzhou said in a June 26 interview.

Vale in 2009 acquired stakes in three copper projects, in Zambia, Africa’s largest producer of the metal, and the Democratic Republic of Congo. In April this year, the company agreed to pay $2.5 billion for iron ore deposits in Guinea, including assets the country confiscated from the Rio Tinto Group.

There is still scope for ties to strengthen. In a study released last week, the Washington-based Inter-American Development Bank concluded “massive bilateral trade” could develop between Latin America and India if tariffs are cut.

Click here to access the complete article from Bloomberg

Asia in Focus

APEC nations call for free trade

Nov 14 (REUTERS) – APEC leaders tackle climate change negotiations and economic integration, as Japanese Prime Minister Yukio Hatoyama stresses the need for free trade zone.
Penny Tweedie, Reuters

Obama seeks stronger links in Asia

Nov 14 (REUTERS) – United States President Barack Obama pushes for greater U.S. involvement in Asia, welcoming a “strong, prosperous” China.
Penny Tweedie, Reuters.

China to lead Somalia piracy fight

Nov 13 (REUTERS) – China will assume a leadership role in an international coalition fighting maritime piracy off Somalia, signaling its navy’s growing ambitions beyond Chinese waters.
Stefanie McIntyre reports.

China’s seemingly unending quest for resources continues

Sinopec Corp. announced today that it expects to incorporate parts of its overseas assets from its parent company Sinopec Group into its listed listed company in China.

Wang Xinhua, chief financial officer (CFO) of the oil firm  said “the good overseas assets of the Sinopec Group, the parent company of Sinopec Corp., would be injected into the listed company before the end of the year.”

CSA smell’s a bid to strengthen the traded shares, especially once Chinese investors jump on the bandwagon.

The assets in question are found in countries ranging from Russia, Australia and Canada.   Company data indicates that by the end of 2008, Sinopec’s overseas recoverable reserves reached 160 million tons.

According to this ChinaMining.org article Sinopec Groups oil equity production in 2008 was 9.01 million tons, accounting for up about one-third of Sinopec’s total output.  This year overseas oil equity output will rise to roughly, 17.40 million tons, almost double the previous year.

Qiu Xiaofeng, an analyst with Merchants Securities, reckon that the Sinopec Group’s overseas assets are able to generate about 11.2 billion yuan of profit or 0.13 yuan EPS, if the oil price stays at 75 US dollars/barrel.  On the news, Founder Securities maintains its rating of “overweight” on Sinopec Corp.  A-stock.

Here’s a look at the two year performance of this growing Chinese energy giant’s shares on the NYSE.

SHI - NYSE

Newswire: Asia-Pacific

international.gc.ca

U.S.’s Treasury’s Geithner to attend Singapore APEC meeting – Reuters

WASHINGTON, Oct 23 (Reuters) – U.S. Treasury Secretary Timothy Geithner travels to Singapore to attend a meeting of finance ministers who are members of the Asia Pacific Economic Cooperation forum for one day next month.

China Minmetals eyes gold mines in Australia, Canada – Reuters

* Company to start construction at Peru copper mine next yr

* Production at Peru mine scheduled to begin in 2012 (Adds background, bylines)

By Rujun Shen and Joseph Chaney

TIANJIN, Oct 22 (Reuters) – Chinese state-owned metals trader China Minmetals Corp. [CHMIN.UL] is looking to buy gold mines in Australia and Canada, a senior executive said on Thursday.

Huang Dongmei, deputy general manager of China Minmetals Exploration and Development Ltd, made the remarks at an industry forum in China’s port city of Tianjin.

Separately, a Minmetals executive at the China Mining conference here said on Wednesday that the company would launch construction at its Galeno copper mine in Peru next year, with production due to start in 2012. [ID:nPEK200915]

Ecuador Seeks Cash to End Three-Year Oil Output Drop (Update1) – Bloomberg

Oct. 27 (Bloomberg) — Ecuador, the smallest member of the Organization of Petroleum Exporting Countries, is seeking to attract investment from state-run companies in Latin America, Russia and China to reverse a three-year drop in crude output.

Ecuador is forging alliances to explore and produce crude as lower investment by privately-owned companies causes production to drop as much as 6.6 percent this year, Julio Gonzalez, undersecretary of hydrocarbons policy at the Ministry of Non-Renewable Natural Resources, said in an interview.

“The government’s priority is to do this with state companies,” Gonzalez said yesterday at the ministry in Quito.

Kevin Rudd’s vision for Asia-Pacific community evolves – The Australian

KEVIN Rudd’s concept of an Asia-Pacific community by 2020 has been canvassed at the weekend’s East Asia summit in Thailand together with a rival vision from new Japanese leader Yukio Hatoyama.

East Asian leaders meeting in Hua Hin yesterday discussed the broad regional architecture, with the Prime Minister promoting his plan both at the formal leaders’ meeting and in a series on bilateral discussions.

“What I detect across the region is an openness to a discussion about how we evolve our regional architecture into the future,” Mr Rudd said yesterday.

“It’s important that we are in a conscious discussion and a conscious process to evolve options for regional institutions in the future rather than just sitting back and waiting for big problems to emerge.”

October fire sale! Russian credit & Rubles accepted

Rigzone reported today that a Russian oil consortium would not have the pay the $1 billion usd Venezuela had previously requested as a down payment in order to partake in tapping Venezuela’s Orinoco oil fields.

Instead, the Russian consortium will only have to pay $600 million usd. Sounds like a nice 40% bargain to this blogger. It’s a nice deal if you ask me, which coincidentally comes on the heels of Venezuela’s securing a large credit line from Russia to buy military equipment.

Orinoco Belt Regions – [Rigzone, 10-6-09]

According to this Dow Jones Newswire published by Rigzone,

The Chavez-led government has talked about plans for nearly $70 billion in oil investments over the coming years as this oil-rich nation seeks to ramp up dwindling production numbers and boost its sagging economy.

But so far, nearly all those plans are based only on memorandums of understanding, with no solid investment commitments from foreign oil companies.

Sounds like Venezuela is becoming increasingly hungry not only for foreign investment, but also to cement its relations with a geopolitical power like the Russian Federation.

Click here to read the newswire article from Rigzone, which I must admit does a far better job at detailing the situation than the concise, and slightly cynical analysis published here at China South America (CSA).

Newswire: South-South / Emerging Market Cooperation

[China - ASEAN] - China to Boost Cooperation With Asean on Investments – Bloomberg

China wants to boost cooperation with members of the Association of Southeast Asian Nations to develop trade and increase investment, said Chinese Commerce Minister Chen Deming.

[ASEAN] - Five Asean Nations May Form Rice-Trade Body, Thai Official Says - Bloomberg

Five Southeast Asian nations may set up a rice-trade association next year to cooperate in stabilizing rice prices, a Thai official said.

Thailand, Vietnam, Cambodia, Laos and Myanmar will also cooperate on other issues related to food security and production, said Chiya Yimvilai, a spokesman at a meeting of Asean economic ministers in Bangkok. The countries would also work together on developing rice products, he said.

[Venezuela - Russia] – PDVSA, Russian Group to Start $30 Billion Oil Venture – Bloomberg

Petroleos de Venezuela SA and a group of Russian oil companies plan to spend $30 billion on a joint venture in Venezuela’s Orinoco region.

The 40-year venture will seek to produce crude in the Junin 6 area and may expand to other Orinoco blocks, Russian Deputy Prime Minister Igor Sechin told reporters in St. Petersburg today after meeting with Venezuelan Vice President Ramon Carrizalez. Russian investors will include OAO Gazprom, OAO Rosneft, OAO Lukoil, TNK-BP and OAO Surgutneftegaz. The venture will be signed “in the coming months,” Sechin said.

[Mexico - Uruguay] – Mexico/Uruguay sign strategic association accord and advance trade – MecroPress

Mexico president Felipe Calderón and Uruguay’s Tabare Vazquez signed on Friday in Montevideo a Strategic Association accord to strengthen political dialogue and bilateral trade relations in the framework of the 2004 free trade agreement.

[Mexico - Colombia - Venezuela - Ecuador] - Mexico offers to mediate between Colombia and Venezuela and Ecuador – MecroPress
Mexican president Felipe Calderón on an official visit to Colombia offered his country’s mediation in the conflict between Bogotá and neighbouring Ecuador and Venezuela.

[Peru - Brazil] - Brazilian President to visit Peru to strengthen strategic alliance – Andina
The next arrival to Lima of Brazilian President Luiz Inacio Lula da Silva will contribute to create a new strategic alliance to face Asian markets when signing several trade agreements, the President of Peru-Brazil Integration Chamber Miguel Vega Alvear.

“The arrival of Brazilian President will strengthen the progress achieved up to now in this Peru-Brazil strategic alliance and it will create a new stage in which both countries can face Asia-Pacific markets,”

a2a_linkname=”Newswire – South South Emerging Market Cooperation”;a2a_linkurl=”http://chinasouthamerica.blogspot.com/2009/08/newswire-south-south-emerging-market.html”;