China and Latin America

China and Latin America
[Analysis] Aggressive trade and politics
Alfredo Ascanio (askain)
Published 2008-11-15 14:46 (KST)

Edited by John Boland
Editor's Note

China has launched a trade and political offensive in Latin America. The pattern will continue in the coming years and are written in the White Paper. China is aware that the region has high potential with regard to the exploitation of natural resources.

Chinese President Hu Jintao participated in Washington, DC at the Summit on the Global Financial Crisis and then visited several countries in Latin America and Foreign Minister Yang Jiechi said that China is interested in increasing economic exchanges especially in energy resources and mining, within their programs free trade.

For example, it is known that Bolivia has the world's largest reserves of lithium - an alkaline chemical and the lightest solid element that is used especially in the heat conductive alloy in electric batteries. Its salts are used in the treatment of certain types of depression. Chile is also a major producer of lithium and copper. Venezuela is a major producer of oil, gas and gold.

The relationship between China and Venezuela has been more profound and runs deeper. Venezuela paid China US$406 million for a project of a satellite, the rocket launch, two ground stations and teleport. Everything was built with Chinese technology.

Bilateral trade between China and Latin America in 2007 totalled $103 billion. Yet China also seeks to increase security programs, defense and justice to the region and wants to detract from the commercial and political relationship that Taiwan has had with Latin America.

China also has interest in the petrochemical resources to be found in Cuba as well as the gas resources of Peru and also their mining resources of silver, zinc and lead. Costa Rica also features on the agenda as a major exporter of tropical fruit and producer of gold, limestone and clay.

The Economic Commission for Latin America (CEPAL) said that Latin America must diversify its export markets and that China is an ideal country to facilitate this policy. In 2004 Latin America to China had exported $14 billion, an increase of 34 percent compared with 2003. Continuing growth of this trade link will be important to Latin American economies.

An agreement between governments can be defined as an exchange of conditional promises, by which each party declares that it will act in a certain way on condition that the other parties act in accordance with their promises, said Fred Charles Ikle.

It is probable that these international negotiations with China will be innovative because it deals with the setting up of new relationships or obligations between the parties. It can often result in the founding of new institutions. For example, in Venezuela the setting up of a Venezuelan-Chinese bank, or with a new arrangement for controlling objects and areas, such as investing in the oil area of the Gulf of Venezuela, or the control of a mining area in a country of interest to China.

The key outcome of such negotiations will be arrangements that benefit both parties. A good negotiator should be realistic, flexible and patient and time will tell if China and Latin America have managed to reflect these qualities in their negotiations.


Alfredo Ascanio is a professor of economics at Simon Bolivar University in Caracas, Venezuela.
©2008 OhmyNews