China brought money pouring into America's backyard
While burning surface by the issue of sovereignty in the east, Beijing apparently is quietly reaping the advantages of American backyard with huge contracts of hundreds of billions of new dollars signed with Latin American countries.
Chinese Premier Li Keqiang (black shirt, holding flowers) on 19/5 to Brasilia, capital of Brazil, in the 8-day trip to four countries in South America. Photo: Xinhua
Chinese Premier Li Keqiang yesterday 18/5 to Brazil, starting 8 day trip to four South American countries. During this mission, Mr. Li has signed several trade agreements and ambitious investment with Brazil, Peru, Chile and Colombia.
Rotate the shaft to South America
One of the plans was the most discussed last week the project is the construction of the transcontinental railway, 5,300 km long, linking the Pacific coast of Peru with the Atlantic coast of Brazil. If completed, the route will help the transportation of raw materials from South America to China to become easier. But environmental activists fear super project will destroy the pristine rainforest of the world's largest Amazon, as well as the habitat of the oldest Aboriginal communities here.
According to the Economist, places that Prime Minister Lee visited and the plan he proposed represents a positive step change in the relationship between China and Latin American region. However, commentators Tom Phillips from Telegraph argued that the move shows that China apparently wants to apply strategic "charm offensive" in order to increase the influence to attract supporters on the backyard US.
Currently, the economy on both sides of the Pacific are halted. The recession in China caused prices of many commodities declined, led to the decline in value of exports of Latin America. Exports from Brazil to China fell by a third this year compared with the same period last year. But the value of investments and loans that China poured into South America continues to increase.
Back in January, President Xi Jinping declared the Chinese company aims to invest $ 250 billion in Latin America in the next 10 years. These key sectors also expanded, from the exploitation of oil, gas and minerals, to food processing, agriculture, and especially in infrastructure construction.
Some analysts said the moves are part of a strategy to "turn to Latin American axis" of China with the aim of competing with the "pivot to Asia" of America. Many South American countries currently accept Beijing as partners alternative to Washington. With a limited area of infrastructure, investment from China is indeed brought many benefits but also hides many risks, according to the Global Post.
Project transcontinental railway 5300 km long, connecting the Pacific coast of Peru with the Atlantic coast of Brazil, is Mr. Li proposed in this mission. Photo: Alert-conservation
Goals change
Mr. Li to bring a host country agreement with the prospect values help China make more intimate relationship with the Latin American region. Biggest highlights of this trip belongs to Brazil when Chinese Prime Minister, just a few days in this country, has signed up with investments worth more than $ 53 billion, focused primarily on the project to upgrade the infrastructure.
"China clearly will contribute more to the region, despite sluggish growth on both sides", AFP quoted Margaret Myers, China program director - Latin America Organizational For Inter-American dialogue, evaluation.
China from 2005 to 2014 for the Latin American region over 119 billion loan. Venezuela's national oil party most at 56.3 billion, followed by Brazil with 22 billion dollars, according to a report from the University of Boston. China on the other hand are also gradually dominate the raw materials and natural resources of the region.
Experts predict that Beijing will replace the European Union (EU) to become the second largest trade partner of Latin America next year. America, currently holds first place, starting to feel the pressure.
Slow growth rate in China is creating opportunities for both partners "deepen and expand relationships," Joao Augusto de Castro Neves, head of Latin American consulting firm Eurasia Group, comment. "The top priority of China in South America now is to move from imported goods to the export industry".
"This explains why China focused projects of infrastructure development in Latin America," said Castro Neves said. Plans to build the transcontinental railway that Beijing wholeheartedly support the clearest evidence for this statement.
"China's current strategy needs to attract investment growing countries in South America," Mr. Castro Neves said. But the future is sure to appear more "barriers".
Risks
According to Ms. Myers, the current relationship between China and Latin America is in a state of "imbalance". A large quantity of goods, value-added agricultural products had been exported to China, but such is not sufficient to overcome these problems, Ms. Alicia Barcena, president of the Economic Commission for Latin America and Caribbean (ECLAC), said.
"Only 5 products, all of which are consumer goods, accounting for 75% of total regional exports to China in 2013," Barcena wrote in El Pais of Spain. Meanwhile, about 90% of Chinese money flowing into Latin America are running on resource extraction industries. The decline in commodity prices in recent years make this asymmetric world becomes ever more apparent.
According to Bloomberg, the South American country will probably regret when too confident in loans, investments that seemed lucrative Chinese hospitality. Venezuela is a typical example. The country now depends excessively on loans from China. The debt partly caused economic instability in Venezuela politics when the country must constantly adjust oil policy to conform to the strict conditions from China.
Ecuador also fall into a similar situation when Chinese companies control about 90% of the oil production of the country's annual output. Argentina is isolated from the international capital market, to "return the favor" of loans from Beijing in the construction project without a tender or easing visa requirements for investors, the Chinese workers.
If the agreement set forth in this mission are implemented, China will certainly risen to become a leading and reliable partner in the region. However, the reality is all still just on paper. The promises of China are seldom 100% complete, according to the Palm Beach Post.
The implementation of the promises made will bring major benefits to both parties but Latin America should "lowered expectations before the huge number of Beijing," Ms Myers said.
