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.

Click here to read the complete article

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.

Click here to read the complete article

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.

Click here to read the complete article

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

Beijing, Apr 8 (EFE).- Peruvian President Ollanta Humala met here Monday with Chinese Premier Li Keqiang, to whom he expressed the important role the Andean nation can play as a “bridge” of understanding between Latin America and China.

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.

Click here to read the complete article

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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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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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.

• 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.

Click here to read the full article

Economic & trading blocs in focus

Headlines galore, with a great deal of political drama hidden behind the scenes.   Below CSA presents a few excerpts from recent news on the ever continuing development of economic and trading blocs between the East and West.

 

EU, Singapore agree free-trade deal

[Source] : The European Voice

By Andrew Gardner – 16.12.2012 / 16:05 CET

The agreement is the EU’s first with an Asean country and its second in Asia.

The European Union and Singapore today (16 December) announced that they have reached agreement on a free-trade deal, 33 months after they began formal negotiations.

This is the second free-trade agreement struck by the EU in Asia; the first – with South Korea – came into force in July 2011.

The EU began negotiations with Singapore in March 2010 after its hopes of lowering barriers with the ten-country Association of South-East Nations (Asean) were dashed in 2009, and Karel De Gucht, the European trade commissioner, said today he hoped the deal would “open the doors for FTAs [free-trade agreements] with other countries in the Asean region”.

Click here to read the complete article

 

Vietnam sees value in TPP

[Source] : Published: 17/12/2012 at 09:47 AM – Newspaper section: Asia focus

Two competing regional trade plans, while sharing the aims of liberalising trade and improving economic integration, are making many Asean countries nervous at the same time.

The Trans-Pacific Partnership (TPP) has the backing of the United States while the Regional Comprehensive Economic Partnership (RCEP) is favoured by China.

Smaller countries might resent being put in a position where they feel they have to choose between the two. But Vietnam has confidently embraced the TPP, believing it could increase its exports while helping the country attract more foreign investment.

Click here to read the complete article

 

Trade power play

[Source] : Published: 17/12/2012 at 09:44 AM – Newspaper section: Asia focus

China’s attempt to convince Asean countries to support the Regional Comprehensive Economic Partnership (RCEP) reflects the country’s aim to become the real economic leader of Asia Pacific and keep the United States at bay, say experts.

While Beijing drums up support for the 16-country RCEP (Asean plus China, Japan, South Korea, India, Australia and New Zealand), Washington is making its case for the Trans Pacific Partnership (TPP).

Both countries went all-out at the Asean and East Asia Summit meetings last month in Phnom Penh, with newly re-elected President Barack Obama talking up the TPP with individual leaders. However, the RCEP now has some real momentum following its formal endorsement by the leaders of the 16 countries involved. They hope to start negotiations in 2013 and finish by 2015. A successful outcome would lead to the creation of the world’s largest regional trading bloc.

The TPP has been on the drawing board for a long time and has proved to be a tougher sell. It envisages a trading bloc covering all of the countries on the Pacific including those in North and South America. Singapore, Chile and New Zealand were original signatories back in 2005, followed by Brunei, while the United States didn’t even enter the picture until 2008. Since then there have been several rounds of talks and six more countries — Australia, Peru, Vietnam, Malaysia, Mexico and Canada — have entered negotiations.

Click here to read the complete article

CSA Analysis – Latin America – China in focus

As the spread of article excerpts below will exhibit, the China – Latin America relationship and its future will be more than simple a complementary exchange of Latin American natural resources for Chinese manufactured goods. Although, as the 4th article indicates below, from China’s State Media Giant Xinhua explains, the corner stone of Sino-Latin American relations still remain within the realm of the “complementary exchange,” the two regions offer one another.  However, as CSA attempts to exhibit in this piece, the growth of Sino-Latin American ties also includes:

1/ Cheap Chinese Loans (especially to countries cut off from borrowing  raising money on international markets), which represent new sources in which Latin American countries can borrow money and raise money instead of traditional means they have been forced to reply upon since independence – Loans from European and US Banks, issuing bonds, shares in companies on international stock markets, and other financial market market vehicles where international investors allocate their money in Latin America.

2/ Beyond new markets for China’s manufactured goods, China has began to aggressively expanded into Latin America’s service sectors — Banking, Telecommunications, Logistics, and more.

3/ Defense… A rather sensitive and misunderstood area of cooperation because both China and their counter-parts in Latin America do not go into great detail to explaining very clearly what their ultimate goals for enhancing military cooperation may be.  As the author of this blog who has followed this topic for many years, I am personally of the opinion that is it all about following the money trail. An actual military alliance or very close military ties with a specific country in Latin America would be very difficult for me to imagine.  The US, various countries within Latin America, others and around the world would have serious reasons to prevent such from every being reality. Not to mention, US Presidents throughout history have periodically used the proclamation of the policy outlined in the Monroe Doctrine, signed into being US President Monroe on December 2, 1823 to justify intervention in the hemisphere.

The Monroe Doctrine in short, is a statement made to the world that further efforts by other nation states to colonize land or interfere with independent states in North or South America would be viewed as acts of aggression, requiring U.S. intervention if deemed necessary. 

U.S. presidents, including Theodore Roosevelt, John F. Kennedy, Lyndon B. Johnson, Ronald Reagan have all fallen back on this proclamation to justify action in one form or another.  I don’t doubt for a second that if China’s expansion in the region, militarily speaking reached a tipping point where the a present day US President would find a means in which to justify intervention.  Perhaps again falling back on the policy outlines by the Monroe Doctrine, and adapted within context of current, present day geopolitics of the world.

Instead, as I mentioned above it’s about the money. The US, Europe, The UK, Russia, and now even Japan (which recently passed legislation allowing it to participate in the ever more lucrative market or arms trade), is where China’s primary interest lies. Just like China wants markets for its manufactured goods and services, there is also a great deal of money to made in selling the arms markets of the world, especially when you consider a region which has oddly enough in recent years began to increase military spending (see this article for more information regarding Latin America’s increase in Military Spending.

 

China Grabs Share in Latin America Wind With Cheap Loans

[Source] : BusinessWeek

By Stephan Nielsen on November 20, 2012

Chinese wind-turbine makers have broken into the South American market, the world’s fastest- growing, by offering government-backed loans at interest rates as much as 50 percent lower than local offerings.

The package deals can get buyers to choose Chinese machines over those of Western manufacturers such as Vestas Wind Systems A/S (VWS) of Denmark or General Electric Co., much in the way the U.S. government helps American exporters sell everything from cotton to satellites by guaranteeing loans or insurance.

…

Chinese Loan

Geassa, short for Generadora Eolica Argentina del Sur SA, is seeking a 12-year loan with a two-year grace period and an annual interest rate of 6 percent above Libor, the London interbank offered rate. The financing may be complete by June, he said. The company will use Chinese turbines and hasn’t selected a supplier.

Click here to read the complete article

 

Correlation Breakdown as Asia, Latin America Diverge: Currencies

[Source] : BusinessWeek

By Ye Xie on November 20, 2012

Asian currencies that once moved in lockstep with their Latin American peers are diverging by the most ever as China attracts investors to the region without boosting commodities, the main exports for Brazil and Chile.

The four-week correlation between the currencies of the two regions reached minus 1 last month, meaning they always move in the opposite direction, according to index data compiled by Bloomberg and JPMorgan Chase & Co. As recently as May, the correlation was plus 1 as the indexes moved in tandem. The Chinese yuan has climbed to 19-year highs amid gains in retail sales and the South Korean won reached the strongest since 2011, while Brazil’s real and the pesos in Mexico, Chile and Colombia weakened over the past two months.

“Usually when people buy China, it boosts currencies in both Latin America and Asia,” Dirk Willer, the head of Latin American local-markets strategy at Citigroup Inc. in New York, said by phone. “But this time around, given that the commodity link isn’t working, people get bought up on Asia but not on Latin America. There’s a long-term structural story.”

Click here to read the complete article

 

China Construction Bank Still Looking to Expand Into Latin America

[Source] : The Wall Street Journal

By Ryan Dube November 21, 2012, 1:37 p.m. ET

LIMA, Peru–State-run China Construction Bank Corp. (CICHY, 0939.HK, 601939.SH) is still looking to expand to Latin America and could announce plans to open an office in the region “quite soon,” a company executive said.

China’s second-biggest bank by assets is looking at acquisition targets and expansion opportunities throughout the region but especially in Brazil, said John Weinshank, head of corporate banking and trade finance at China Construction Bank’s U.S. branch.

Chinese companies are investing heavily in Latin America as they look to develop natural resources needed to fuel the Asian country’s rapid growth. One of the biggest Chinese investments in the region was the $7.1 billion deal by state-owned China Petrochemical Corp., or Sinopec, to purchase a 40% stake in Repsol YPF SA’s (REP.MC, REPYY) Brazilian unit.

In Peru, one of the world’s top mineral producers, Chinese companies are developing several copper and iron-ore projects. Together, these projects will require investments of about $11.4 billion, according to figures from Peru’s Mines and Energy Ministry. Chinese-owned projects represent about 20% of the total pipeline of investment projects in Peru’s mining sector.

“The bank is very keen to expand into the region and set up a foothold,” Mr. Weinshank said in an interview during the Latin American Banking Federation’s annual conference in Lima, which ended Tuesday. “Our customers are here and are doing business, so we have to follow our customers.”

Click here to read the complete article

 

Economies of China, Latin America complementary: bank official

[Source] : Xinhua / China People’s Daily

LIMA, Nov. 20 (Xinhua) — The economies of China and Latin American countries are highly complementary, and bilateral trade has enjoyed rapid growth, a Chinese bank official told the 46th Annual Meeting of the Latin American Federation of Banks here on Tuesday.

The expansion of China’s domestic demand has been a driving force of Latin American economies, Ma Suhong, deputy division chief of Urban Finance Research Institute at the Industrial and Commercial bank of China said on the last day of the two-day event.

Ma noted that China invested a total of 12 billion U.S. dollars in Latin America in 2011. She attributed the fast development of China-Latin America cooperation partly to China’s large domestic need and economic woes suffered by the United States and European countries.

Click here to read the complete article

 

Chinese defense minister meets with Latin American guests

[Source] : Xinhua / China People’s Daily

BEIJING, Nov. 20 (Xinhua) — Defense Minister Liang Guanglie met with delegates to the 1st China-Latin America high-level defense forum on Tuesday.

Liang hailed the increasingly close relations between China and Latin American countries in recent years, noting that the two sides have enjoyed frequent high-level visits, deepening political mutual trust, strengthening communication and cooperation, as well as effective coordination on major international affairs.

He said the forum shows that China attaches great importance to developing military relations with Latin American countries.

Click here to read the complete article

Latin America – ASEAN in focus

 

President Obama, along with Secretary of State Hilary Clinton visited Thailand, Cambodia, and Myanmar (making him the 1st US President in history to visit the country) last week. In this ever more interconnected world in which we live, even Latin America is watching closely as the historic trip of US President Barack Obama has made to SE Asia unfolds.

 

Four messages Obama is sending Latin America from his trip through Asia

[Source] : The Christian Science Monitor

By James Bosworth, Guest blogger / November 19, 2012

Obama may be sending an unintentional message that the US holds Asian countries like Myanmar and China to a lower standard on democracy and human rights.

President Obama’s first post-reelection trip passes through Thailand, Myanmar (Burma), and Cambodia for the ASEAN summit. The messages that Latin America hears from this trip may or may not be the ones the United States intends to send.

Move in the right direction

Burma is a military dictatorship that is less democratic and more repressive than any country in the Western Hemisphere except Cuba. Yet, they’re doing better than they were a decade ago. They’ve released some political prisoners including Aung San Suu Kyi and have begun reforms to give democratically elected civilians increased power. The US has eased sanctions and the president is visiting. For a country like Cuba, it should be seen as a sign that real reforms can be met with better relations by the US and that gradual progress is possible.

Click here to read the complete article

 

Brazil signs TAC, offers win-win economic cooperation

[Source] :  The Jakarta Post

By Novan Iman Santosa, The Jakarta Post, Phnom Penh | World | Sun, November 18 2012, 11:08 AM

Brazil has become the 31st highest contracting party and the first in Latin America to sign the Treaty of Amity and Cooperation (TAC) in Southeast Asia and offers various forms of cooperation, ranging from food security to energy cooperation.

The instruments of Brazil’s accession to TAC and its extension were signed Saturday by foreign ministers from 10 ASEAN member countries and Brazilian Vice Foreign Minister Maria Edileuza Reis at the Peace Palace in the Cambodian capital city.

Brazilian Ambassador to Jakarta and ASEAN Paulo Alberto da Silveira Soares told The Jakarta Post that Brazil considered its accession to TAC a landmark in its relations with Southeast Asia as the country became really engaged in cooperation in a broad sense.

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U.S. to work on economic dimension of pivot to Asia: Clinton

[Source] : The Nation

By: NNI | November 17, 2012, 7:43 pm

The United States Secretary of State Hillary Clinton said Saturday that the U.S. will strengthen its economic engagement in Asia Pacific, in addition to the strategic and security dimensions of what has been known as a ” pivot” to the region.

Delivering a lecture on U.S. diplomatic strategies in the region, Clinton said President Barack Obama is visiting Asia shortly after his re-election because much of the history of the 21st century will be, and is being, written in the region.

She said it is clear that economics are increasingly shaping the strategic landscape and that for the first time in modern history, nations are becoming major global powers without also becoming global military powers.

“Emerging powers are putting their economics at the center of their foreign policies. And they’re gaining clout less because of the size of their armies than because of their GDP (gross domestic product),” she said. “So to maintain our strategic leadership in the region, the U.S. is also strengthening our economic leadership.”

Click here to read the complete article