China Latin America Trade Jumps in 2010

Presidents Dilma Rousseff and Hu Jintao in China last month can celebrate rising two-way trade. (Photo: Roberto Stuckert Filho/PR)

China’s trade with Latin America is growing twice as fast as U.S. trade with the region.

BY RUTH MORRIS of the The Latin American Business Chronicle

SHANGHAI — China’s dragon breathed fire into Latin America in 2010, as trade between the two sides shot up by a spectacular 51.2 percent, to $178.6 billion, and memories of the economic recession melted away.

China’s trade with Latin America is growing at nearly twice the level of US trade with the region. It also is significantly higher than the 31 percent increase in trade between the European Union and Latin America last year.

Click here to read more direct from the Latin American Business Chronicle

Brazil-China-US; a soap opera made in heaven

Brazil's President Dilma Rousseff toasts with China's President Hu Jintao after a signing ceremony at the Great Hall of the People in Beijing, April 12, 2011. Credit: Reuters/Jason Lee

Last month when US President Obama visited Brazil, a lot was expected from the visit in that he was meant to focus on ways to work with Brazil to counter China’s control of the RMB, which both seem is undervauled.  The visit fell way short of expectations, and was even lambasted by most US media as a unnecessary and untimely trip in light of the crisis in the middle-east the US actions in Libya.

Last week, Brazilian President Dilma Rousseff visited China, and it now seems Brazil interests are leaning more towards cooperation with China than the US.  Rousseff’s trip is being hailed as a major success both in China and back in Brazil.  She left with promises and new contracts for China to purchase billions of dollars of Brazilian made industrial goods–not soy beans or iron ore.

Where will Brazil’s interests eventually lean — the US or China?  Is there a way for the three to work together in a productive, positive way for the better of all?  Or will Brazil eventually have to choose? Between the US, who has long ignored it rising clout and is considered by most Brazilians to not respect the country as much as it should?  Or will it choose choose China, which for better or worse is more interested in Brazil’s raw natural resources than it is in buying its industrial goods like jets?  Furthermore, if Brazil wants to speed up development of its high tech and industrial sectors–it’s number one competitor will come from China, not the US…?

This is a foreign policy soap opera in the making people.

I suggest all those interested in the topic, go over to Reuters and read a great analysis published today about this all.

This week’s Economist “America’s Section”

1. Peru’s Presidential Election: The risk of throwing it all away

Populists like Ollanta Humala (pictured below) threaten to overcome divided moderates in one of Latin America’s fastest-growing economies

LIVING in Peru’s capital is like watching a film on fast-forward. Every few months you can spot a taller skyscraper, a swankier hotel, glossier shops and restaurants, new roads—and more traffic. House prices in the leafier neighbourhoods have almost doubled in the past two years. Rapid change is not confined to Lima. The only provincial cities of any size that do not already boast one or more new shopping malls and multiplex cinemas are about to get them. These are the tangible results of a decade in which Peru’s GDP grew by over 5% a year, the highest rate among Latin America’s bigger economies.

Since 2006 the growth has accelerated, averaging 7% despite the world recession. Some good effects have been widespread. The share of Peruvians living in poverty fell from 49% in 2004 to 35% in 2009. Much of the Pacific coast, where farmers export asparagus, grapes and a plateful of other products, enjoys full employment. Though many parts of the Andean highlands remain poor, the arrival of paved roads is cutting journey times, and some farmers there have joined the export boom with artichokes and herbs. Social indicators have improved. Between 2005 and 2010 Peru climbed 24 places in the United Nations Human Development Report, which ranks countries by income, life expectancy and educational measures. It now scores better then Hugo Chávez’s Venezuela… click link above to continue reading the full article direct from the Economist

2. Kin selection — When family replaces party

KEIKO FUJIMORI’S unique selling point in Peru’s presidential election (see article) is her surname. In 1990, when she was 15, her father, Alberto Fujimori, won the presidency and stayed for ten years. Despite his many faults, Mr Fujimori, who is now in jail for corruption and human-rights abuses, retains the support of some Peruvians, who credit him with defeating the Maoist terrorists of the Shining Path. The family political brand helped Ms Fujimori get more votes than any other candidate for Peru’s Congress in 2006. Now she hopes it will take her to the presidency.

She is part of a growing Latin American trend for politics to become a family affair. In Argentina Cristina Fernández succeeded her husband, Néstor Kirchner, as president in 2007. Until his sudden death last October he had been expected to try to take back the presidential sash at an election this year. If Ms Fernández opts to run again, her son will be among her political advisers. Her opponents will probably include Ricardo Alfonsín, whose father was president in the 1980s… click link above to continue reading the full article direct from the Economist

Bloomberg — Inter-American Bank to ‘De-Dollarize’ Region With Local Currency Funds

The Inter-American Development Bank plans to help Latin American countries “de-dollarize” their economies by providing more financing in local currencies, said bank President Luis Alberto Moreno.

“Part of our role should be to help the countries in the region de-dollarize and to have more of their stock of debt in local currency,” Moreno said in an interview during the bank’s annual meeting in Calgary.

Surging foreign investment and faster economic growth are leading to stronger currencies in countries such as Chile, Brazil and Mexico. The region accounted for twice as much of global capital inflows in 2009 as it did in 2006, Moreno said.

“That is having a huge impact on our exchange rates, on the tradable sector,” Moreno, 56, said. “All countries are worrying about the impact of overheating.”

To offset the currency gains and to develop capital markets across the region, the Washington-based lender plans to increase borrowing in local currencies, while allowing more borrowers in the region to convert their IDB loans from U.S. dollars.

Click here to read the full article from Bloomberg

MUST READ ARTICLE – Obama / US Wake up! Look South for Opportunities

Finally, FINALLY… an article which logically presents the incredible opportunities for the US in Latin America… it’s neighbors — [ http://www.latinbusinesschronicle.com/app/article.aspx?id=4809 ]

Obama it’s time as we say in Peru to “ponte las pilas” and look South to your long ignored neighbors.

” For Obama, a New World to Discover — “The Americas will remain a new world of opportunity for U.S. workers and farmers if Washington is prepared to lead. There’s no time like the present for American business to get a piece of the action — or for President Obama to help open the door.” ~~ Latin America Business Chronicle

Brazil’s highway to China

Highway to China

Indeed, the real purpose of our helicopter trip was to view Mr Batista’s latest project, a vast superport north of Rio, built with this customer in mind.

The centrepiece of the complex is a two-mile-long pier jutting straight out into the South Atlantic, which has been dubbed “the highway to China”.

[...] Click here to read the full article direct from BBC

Latin American in 2011

I came across a few interesting articles today which attempt to outline what we can expect, for the better or worse, from the greater Latin American region this year.

Latin America in 2011: the year ahead – The Global Post

FACTBOX-Key political risks to watch in Latin America – Reuters

Latin America 2011: Expert Q&A – The Latin Business Chronicle

Stable Outlook for Latin America Oil and Gas Industry in 2011 – BUSINESS WIRE / Fitch Ratings

Enjoy

Analysis: China – Taiwan – Central America

Analysis: Taiwan’s Central American allies expand China ties

By Mica Rosenberg and Alex Leff
SAN JOSE, Costa Rica | Thu Dec 30, 2010 11:16am EST

(Reuters) – Friendlier ties between Taiwan and China are allowing Central American nations to deepen economic links with the communist giant, increasing Chinese influence in a region dominated by the United States.

Central American businesses say the isthmus has been held back by its long support of Taiwan, a self-ruled island claimed by Beijing as part of China, denying the banana and textile exporting countries free access to the world’s No. 2 economy.

The region has been torn between Taiwan’s generous aid and the promise of doing business with Beijing, enviously looking on while bigger economies like Brazil, Chile and Peru steadily increase their shipments of raw materials to China.

Costa Rica made the surprise move of breaking off its decades-long relationship with Taiwan in 2007, now only recognized by a handful of small countries.

El Salvador, Honduras, Nicaragua, Panama and Guatemala say they have no immediate plans to abandon Taiwan, but are worried they will be left behind after Costa Rica agreed to a free trade deal with China in April that lawmakers aim to ratify in 2011.

[...] Click here to read the complete article direct from Reuters

China’s richest village

REUTERS – China’s Huaxi village wants to lose model village tag and be a city, makes big bets on tourism and services sector growth.

BRIC Love; Worthy reads about China-Brazil/Latam & India-Latam

1. China Investments: Brazil Top Focus

Brazil and natural resources are the main focus for China’s investments in Latin America writes Kevin P. Gallagher

China’s foreign investment into Africa has been generating a great deal of controversy. Some argue that China is becoming the new colonial power over Africa, others see China as a key source of foreign exchange that may finally help spur long-run economic growth in Africa [...click above to access the full story].

2. India Exports to Latin America

Minister of State for Commerce and Industry Jyotiraditya Scindia has emphasised the need for a shift in export from northern hemisphere to southern hemisphere in line with south-south cooperation. He said that while advanced nations would show an import growth of around 0.9-1 per cent in future, developing economies would exhibit an import growth between 4.5 and 5 per cent.

Mr. Scindia was speaking at a function organised by the Federation of Indian Export Organisations here on Tuesday to present the Niryat Shree and the Niryat Bandhu awards 2008-09. The awards honour outstanding exporters, export promotion councils, commodity boards, export development authorities, banks and other agencies.

Highlighting the potential and complementaries of economies between India and Latin America, the Minister said India needed to augment its exports to Latin American countries as these were vibrant economies. “The government will chalk out a strategy to facilitate exports and investment after an in-depth study which will be commissioned shortly,” he added [...click above to access the full story].