Must read article about Sino-Latin American relations

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 [...]

Please visit SeekingAlpha to read the full article

Peru in focus; Pisco in asia, GDP, Cooperation with Ecuador

Andina News reported a few blog worthy news bites on Peru today. Visit their site to browse more stories, including the complete version of the excerpts posted below.

Peru prepares pisco promotional campaign in Asia

Lima, Jul. 12 (ANDINA). In a bid to boost pisco exports, Peru will launch a promotional campaign for increasing consumption of its national drink in the Asian continent.

“Pisco has enormous potential in the Asian market but we still have a lot to do. Commercial offices in the region are making progress and we must design an aggressive campaign,” said the director of the Commercial Office of Peru in Taipei, Gycs Gordon.

Peru’s GDP likely to post two-digit growth rate in second quarter

Lima, Jul. 12 (ANDINA). Peru’s Gross Domestic Product (GDP) growth rate would have registered a two-digit increase in the second quarter this year, Peru’s Minister of Economy and Finances Mercedes Araoz said Monday.

Peru, Ecuador discuss tourism cooperation

Lima, Jul. 12 (ANDINA). Peruvian Trade and Tourism Minister Martin Perez will meet Monday with Ecuador’s Tourism Minister Freddy Ehlers to address issues relating to tourism facilitation, investment, community-based tourism and handicrafts, among others.

Peru to encourage business community to travel to China

Following the coming into force of the FTA between China and Peru this past March, Peruvians are being encouraged to invest roughly $5,000 usd on trips to China.

This was the announcement made by Jorge Chiang the Peruvian Economic and Commercial Counselor in Beijing today.

“It’s necessary to have more Peruvian business people in that country, who know their partners and participate in trade shows and missions,” said Chiang.

Click here to read more about this from Peruvian News Agency, Andina

Chinese companies step up their game; plan $3.1 billion investment in Argentina

Hot off the presses — CNOOC, has announced plans to step up its overseas acquisitions with a planned purchase of a 50% stake in Argentina’s second largest oil producer Bridas Corp, a subsidiary of Bridas Energy.  If the deal goes through Bridas Energy would become equal partners with CNOOC in Bridas Corp.

Bridas is controlled by the wealthy Argentine businessman Carlos Bulgheroni who also owns a nice 40% stake in Pan American Energy LLC, Argentina’s largest crude oil exporter.  Pan American Energy LLC also owns energy assets in Chile and Bolivia–which China may eventually like a piece of as well.

As the worlds second-biggest energy consumer, after the United States, China is searching for oil assets across the world.  This however, would be the first major purchase by CNOOC, China’s biggest offshore oil explorer in Latin America.  Since 2008 Chinese companies have spent around $13 billion usd on energy acquisitions and are currently bidding for assets in countries ranging from Ghana, Nigeria and Uganda.

Analyst, Neil Beveridge of Sanford C. Bernstein & Co., told Bloomberg in this article, “This seems like a relatively attractive valuation and the acquisition is entirely in keeping with the Chinese government’s policy of increasing oil reserves.”

Once again, China is on the move people.  As I sit here typing this post I can feel the cold air blowing back into Shanghai and I am thinking to myself how if this entire country had two space heaters running like I do right now the world might self-implode… (just a bit of sarcasm incase you didn’t catch it).

Peru-China FTA to induce 10,000+ Peruvian companies to pursue exports to China

Peru and China’s bilateral Free Trade Agreement became effective March 1st.   According to officials at Peru’s Foreign Trade and Tourism Ministry (Mincetur) the agreement could potentially prompt some 10,000+ companies to begin exporting to China.  Read more about it in this article from Andina

All in all, the official message expressed by major media is that trade with China = good. I personally this doubt this is the full story. I’m pretty sure a great many Peruvian industries are not so happy they will be competing with “made in China.”

For example, I’m sure the companies which make all the cloths sold at Lima’s Gamarra Market are shaking in their boots right about now.

On the other side, as Michael Reid explains in his book, The Forgotten Continent: The Battle for Latin America’s Soul, the rise of China and other countries which offer Latin America countries alternative markets for their exports has empowered Latin America with far more freedom to develop on their own terms than every before in history.  With new markets, Latin America is no longer as heavily dependent on the United States, and China is at the center of this shift.

There’s always two sides to the story and I’m barley scratching the surface here.  I’m sure readers from Peru to China have many other reasons to argue both sides of the equation.

China-ASEAN FTA – CCTV

China-ASEAN Free Trade Agreement came into effect at the start of the new year.  CCTV9 reports:

Sino-Venezuelan Cooperation; mining and energy in focus

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?

According to this Chinamining article,

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.

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.

New world food crisis looms – Reuters

Nov 12 (Reuters) – The U.N. is warning the world is on the brink of another food crisis ahead of a major international summit in Rome.

Paul Chapman reports.

A valuable bridge between Latin America and China

[Source] - Andean Development Corporation

• The CAF President, accompanied by an official delegation, visited the Asian country to deepen trade and investment links between Latin America and China.

• The Corporation is playing its characteristic catalytic role attracting funds from other latitudes for the progress of the region.

CAF President & CEO Enrique Garcia visited Peking, accompanied by a delegation from the Corporation, with the objective of deepening trade and investment ties between Latin America and China.

The working agenda included CAF participation in the Latin America-China Investors Forum (LA-CIF), organized by Latin Finance Magazine, along with a series of meetings with China Development Bank (CDB), EximChina, China Construction Bank, Industrial and Commercial Bank of China (ICBC), and Sinocapital, among others.

Promoting investment and trade between the two regions

At the LA-CIF Forum, CAF President Garcia, along with the president of HSBC China, Richard Yorke, and the deputy governor of the China Development Bank, Jian Gao, was one of the keynote speakers at the inaugural session which was attended by a large number of business leaders, bankers, investors, government representatives, academics and media.

During his remarks, Garcia spoke of the important role that China is playing in the current international economic and financial situation and its contributions to mitigating the effects of the global crisis. He emphasized the complementarity of the economies of the two regions and the positive impact which China’s accelerated growth has had on Latin American investments and exports.

He underlined the enormous potential of bi-regional relations and CAF’s interest in deepening them with a view to building a valuable bridge between Latin America and China. “The Corporation is committed to supporting Latin American countries in opening of new horizons in Asia and strengthening a long-term integrated development agenda. Its catalytic role will help attract new actors to channel additional resources, both economic and technological, in order to achieve sustained development and move toward stronger economies stimulated by competitive advantages.”

China Development Bank: a strategically

One of the most important high-level meetings held by the mission was with the China Development Bank Corporation (CDB), represented by its Governor Chen Yuan.

The two institutions, based on the excellent level of relations and successful joint work which has led to increased knowledge of China and of Latin America, agreed to sign a new cooperation agreement in the near future. The accord will define new lines of credit; move forward with cofinancing operations to benefit small, medium-sized and large enterprises; set up a trust fund; and promote exchange of personnel.

“Through CAF we have come to know more about Latin America,” Governor Yuan said. “We recognize the potential which the region represents and we have worked hard to make this into real cooperation. CAF is the best partner for us.”

Garcia said bilateral relations began in 2006, following identification of a series of common interests. He expressed his satisfaction that CAF had contributed to the important work which CDB is doing in Latin America, and the joint financing of projects in the region. “Our activities during this visit to China – the CAF president concluded – mean we are playing a catalytic role by contributing ideas and resources from other regions in favor of regional development.”

New steps in expanding relations with China Eximbank

As part of its strategy of deepening relations with Asia, the CAF mission also met with the Export-Import Bank of China (China Eximbank) which has become an important source of financing for capital goods, technology and infrastructure projects around the world.

At the meeting, the two institutions reaffirmed their interest in working jointly in areas of common interest. They agreed to sign a framework cooperation agreement in the near future which will cover lines of credit and joint operations with a view to actively promoting trade and investment initiatives in the framework of horizontal cooperation between developing countries.