Global gloom places Latin America on alert – Financial Times

Interesting article written by John Paul Rathbone, Latin America editor of the Financial Times.

Every day Luis Castilla, Peru’s finance minister, says he lights a candle and “prays that China won’t crash”.

His prayers are echoed by many in a region that remains one of the world economy’s few bright spots. South America’s commodity-rich economies grew 5 per cent in the first half of this year. Last year, these new motors of the world economy added half a percentage point to global output.

But slowing Asian demand and plunging commodity prices have raised the spectre that South America, having largely escaped the 2008-09 Great Recession, may not be so lucky this time around.

Main point = Potential new financial crisis in the “Developed World” + slow down in China = Scared Latinos

Click here to read the full article direct from the Financial Times

India Eyes Latin America – Latin Business Chronicle

Why India can and should become a counterbalance to China in Latin America.

Indian Prime Minister Manmohan Singh and Brazilian President Dilma Rousseff in a bilateral meeting, on the sidelines of BRICS Summit, at Sanya, Hainan, China on April 14, 2011. (photo: Indian PM's Office)

BY JAIME DAREMBLUM of the Latin Business Chronicle

The competition between China and India — the world’s largest dictatorship and the world’s largest democracy — will be a defining feature of 21st-century geopolitics. Because China opened its economy more than a decade before India did, the Middle Kingdom has a clear head start in the global battle for economic influence. Yet the South Asian giant is rapidly gaining ground on its northern neighbor, and over the long term its democratic system seems far more stable than the autocratic Chinese model. When assessing U.S. grand strategy in Asia, American policymakers view India as an important counterweight to China. Closer to home, India may also serve to balance Chinese economic clout in Latin America.

Click here to read the full article direct from Latin Business Chronicle

Real picture of Sino-Latin America ties [China Daily US Edition]

The author is deputy editor of China Daily US edition. He can be reached at chenweihua@chinadaily.com.cn

The Western media continually criticizes China’s role in Latin America as being “neocolonial” and claims it has an “insatiable demand for commodities”, so I was keen to observe the people’s attitude toward China during my trip to the region recently.

Judging from the enthusiasm for China displayed by government officials, businessmen, academics and ordinary people in Chile, the picture presented by the Western media has been seriously distorted.

At the UN Economic Commission for Latin America and the Caribbean, chiefs and experts attributed the fast trade and investment growth from China as a key factor for Latin America not only surviving, but thriving during the global financial crisis.

The same message was heard from top Chilean officials at the 5th annual meeting of the Chile China Business Council, which drew some 500 government officials and business people.

It is true that commodities are an important part of the trade between China and Latin America. However, that trade benefits not only China, but also Latin America and the rest of the world.

By being the world’s manufacturing workshop, China has paid a high environmental cost. Just half a century ago, that job was done in most of today’s developed countries when they were the global manufacturing center.

Many developed countries have an insatiable demand for China’s rare earth and, of course, the country’s cheap labor. But this never seems to bother the Western media.

In fact, China and Latin America are quickly diversifying and elevating their trade and investment as witnessed by the host of agreements signed by China and Cuba, Uruguay and Chile in the past few days.

China has already become Chile’s largest trade partner. Chinese businesses are increasing their presence in the South America country. The billboards on Santiago streets by automaker BYD and appliance firm Haier, and the Chinese businessmen who do trade, operate malls and run convenience stores are proof of China’s presence.

Both countries share a priority in development. Chile aspires to become a developed country and China wants to become a xiaokang (well-off ) society.

Chilean President Sabastian Pinera made constant reminders that the two countries are very close despite the geographical distance between them.

The mood among the ordinary people I met in Chile was also favorable to China. I have never heard the word “Welcome” as often as I did in Chile. Ordinary Chileans I met in cafes, museums, parks in Santiago and Pablo Neruda’s colorful and hilly neighborhood in historic Valparaiso greeted me with “Welcome to Chile”.

What Pinera said was true. China and Chile are very close. In South America, Chile was the first country to recognize China’s market economy status, the first to sign a free trade agreement with China, the first to establish diplomatic ties with China and the first to support China’s WTO accession.

Of course, China and Latin American countries, all belong to the developing world and are going to compete with each other. But we all know that competition is a good thing and there is no need to distort the picture simply because of competition.

Latin American nations are independent countries and they are no one’s backyard. For China and Chile, they are really neighbor countries separated only by the Pacific. You can literally fly from Beijing to Santiago without passing over any other country.

China-Brazil; a clash of cultures

Celio Lin, 29, sat by the cash register of his family’s busy Chinese restaurant complaining about the Brazilian staff, while his mother checked on the line cooks by tugging on their coats and attentively peeking into pots of soup and noodles.

Img: Courtesy of Wikicommons

“Brazilians want vacations for I-don’t-know-what, they want a day off for I-don’t-know-what, they want to go to the beach, to relax,” Lin said. “The beach is obviously pleasant, but if you send a Chinese man to the beach, he’ll go there to sell something!”

A tip of my hat to AP’s Sao Paulo office for writing a very interesting piece on the on-going process of Chinese and Brazilians learning how to do business with one another.

The article does a great job of highlighting the major differences in the expectations of workers, managers, and executives from both Chinese and Brazilian companies operating in one another economy.

More than 2 years after your author personally embarked on his journey to learn Chinese, build bridges between China and South America, I can personally attest that many of the observations in this article are true… but I stop short of painting such a negative picture as the article does — almost suggesting it is impossible for the two cultures to begin to learn how to work together more efficiently and understand one another.

Here’s an excerpt from AP’s article. You can click here, or the link at the end of the excerpt to read the article in its entirety direct from AP News.

Culture clash complicates China’s Brazil push
(AP) – 13 hours ago

SAO PAULO (AP) — Stocking shelves in a Chinese grocery store, Thiago warned that he didn’t want to be caught chatting during working hours. Within seconds, however, the Brazilian unleashed a pent-up flood of complaints about the owners, who lingered just beyond hearing distance.

“My bosses have never heard of a day off,” said the 20-year-old, who would only allow his first name to be used, for fear of losing his job. “Vacations? Forget it. They pay well and they pay for extra hours, but they don’t understand that some things are more important to Brazilians than money.

“I’ve seen many workers walk in, see the Chinese way of doing things, and quit the very same day.”

Such cross-cultural tensions have become a stumbling block in an otherwise meteoric rise in business ties between China and Brazil, two of the world’s fastest-growing economies.

Chinese companies’ direct investment in Brazil jumped to $17 billion last year, nearly 60 times the investment the previous year, according to SOBEET, a Brazilian economic think tank. At the same time, more Chinese companies are hiring local workers rather than following their old practices of bringing in Chinese laborers.

Click here to read the full article, direct from AP

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

Booming Brazil – Bloomberg Video

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