Chinas economic links with Latin America will continue
to expand as Beijing seeks to guarantee its supplies of raw
materials, observers believe.
The China National Offshore Oil Company (CNOOC) earlier this
month announced the $3.1-billion acquisition of
Argentinas Bridas Corporation. The Marcobre copper
deposit in Peru was acquired by Chinas Sci-Tech Holdings
from Canadas Chariot for $244 million, with approximately
$800 million more expected in capital investment.
Roberto Porzecanski, a Uruguayan expert on trade, told
Emerging Markets this weekend: I would expect
the demand for commodities to continue ... there will certainly
be demand from China for raw materials for construction, as
well as soy, beef, etc., from Latin America.
Porzecanski, who is completing a book on China and future of
Latin American industrialization, said Chinas
incorporation into the IDB and the decision to sign free-trade
agreements (FTAs) with countries in the region makes
perfect sense as part of a strategy to increase Chinese
influence in Latin America.
The FTAs have an added layer that opens the way for
preferential treatment for China and does give small countries
more leverage, he added.
Peru is the latest Latin American country to reach an agreement
with China: a trade pact signed on March 1. China is now
Perus second largest trading partner and has taken the
number one spot from the US several times in the past 18
months. Perus government expects the agreement to add
around 1% to GDP growth.
Mercedes Araoz, Perus economy and finance minister, said:
The agreement with China establishes solid rules of the
game with safeguards, controls and conditions for investment
Chinese companies continued to commit big investments to Latin
America throughout the economic crisis, and are developing
major mining projects in Peru and have invested in hydrocarbons
in Colombia and Ecuador. China last year pledged oil
investments of $10 billion in Brazil and $16 billion in
China is negotiating actively with the government of
Argentinas Rio Negro province on a range of investments
that shows the breadth of its interest in the region.
Chinas Metallurgical Group Corporation acquired an iron
ore mine, Sierra Grande, in Rio Negro four years ago and is now
looking to diversify.
Rio Negro governor Miguel Saiz told Emerging Markets:
The experience with the mine has been positive and we are
looking at other opportunities with China,.
Among the possibilities are the construction and operation of
two hydroelectric plants by Chinese companies, modernization of
ports to dispatch higher volumes of grains, and the
incorporation of lands through irrigation for soy bean