[Img] : Courtesy of WikiCommons
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.
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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.
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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.”
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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.”
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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.
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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.
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