5 February 2011

China Displaces USA In Trade Ties

Economic collaboration with China over the past years has brought fresh capital into Latin America and reduced the continent’s decades-long dependence on the United States. Chinese capital began to flow into Latin America from the end of the Nineties with the arrival of Hugo Chavez in Venezuela and Lula da Silva in Brazil.

In 2000, trade that Latin America and the Caribbean had with China reached $10 billion and in 2008 it was $140 billion. Despite the economic crisis in the USA, the region’s commercial exchange with it did not suffer much and closed 2009 at $143 billion. In 2010, trade with China grew to around $240 billion.

In these 10 years, China has multiplied its investments in the region, principally in mining, hydrocarbons, energy, iron and steel, communications and railways. It is present in the vast majority of countries, very different from 1959 when only Cuba recognised it. With the Caribbean, Chinese trade is close to $2 billion and it has come to be one of the principal trading partners of the region.

Brazil has attracted 50% of all Chinese investment in the region. China is financing Petrobras, the Brazilian state petroleum company, with $10 billion. China is participating in petrol fields in the north of Brazil and offshore ones in the states of Para and Maranhao. It has given the Vale company, principal iron producer, $1.2 billion to build 12 giant ships to carry iron to China.

China’s Wuhan Iron and Steel and the Brazilian company EBX have invested $5 billion to build an iron and steel factory together. There are plans for a high-speed rail network between Rio de Janeiro and Sao Paulo. A deal has been signed with Argentina to build a high-speed train between Buenos Aires and Cordoba at a cost of $10 billion. Another $1 billion has gone into a host of projects such as agro-chemicals, thermal power and a commercial port in Tierra del Fuego. Soya has become a fundamental Argentinean export to China.

Beijing handed Venezuela in 2010 a credit of $20 billion for 19 projects. The two countries have signed hundreds of contracts. In 2011, Venezuela will sell 600,000 barrels of petrol daily to China, a figure that will cross 1 million in the next few years. China is collaborating with Venezuela in petroleum extraction in the Orinoco belt.

Half of Chile’s total exports to Asia go to China, about $10 billion, three times what it exports to the USA ($3.6 billion). Its exports mostly are copper and other minerals. Chile will close trade offices in Atlanta to open branches in Beijing and Canton.

Peru sells China everything from mineral to fish, textiles and fruit and is also a huge recipient of Chinese capital with more than $1.5 billion invested, mainly in mining. President Juan Manuel Santos of Colombia has increased trade ties with China and sells both traditional and non-traditional items to Beijing, whose trade with Ecuador and Bolivia are growing in mining and hydrocarbons.

Trade with China allowed the region to escape some of the worst effects of the global downturn last year.

Source: Rebelion

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