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"Latin America"
Today the Economía y Negocios section of El Mercurio has a special report on China-Latin America business. It’s by the Grupo de Diarios de América, and the whole text is here, via Mexican site El Universal.
Source: El Universal http://www.eluniversal.com.mx/graficos/pdf11/china.pdf
Here is my translation of the beginning of the report (emphasis mine):
Latin America exports cheap raw materials, energy and food to China, and China exports technology products, finished goods, textiles and cooperation projects to Latin America. In the past decade, exports from the subcontinent (LatAm) to the economic giant (China) have increased 12 times, while imports have grown 8 times, according to the American Economic System (SELA).The trade exchange exceeds that with the US and neighboring countries.
Economic observers see this relationship progressing in a way that can be compared with relations with Japan between 1960 and 1990. Then, Japan’s technological development fueled economic growth and per capita income increased from 15% to 70% of the US per capita income.
“China has become a strategic partner for Latin America and the Caribbean, there are many opportunities to reach agreement on export and investment in mining, engineering, agriculture, infrastructure, science and technology,” said Alicia Barcena, Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC).
The country has already displaced the U.S. as the main trading partner for Brazil and Chile. In Venezuela, China outpaced Colombia and Brazil to become the top trading partner. Mexico’s case is special because although its products compete with Chinese exports to the United States and Canada, bilateral trade grew 2000% between 1990 and 2010. In other countries, progress is evident: Uruguay’s trade increased 40% between 2010 and so far this year, and Ecuador will sell 54% of its oil to the Asian giant.
The importance of China to the region is concentrated in high demand for primary products. To maintain its 8% annual growth rate, China’s demand for food, energy and materials will continue to rise. And Latin America provides these.
- The caption translates to: Clothing Industry. Generates 310,000 jobs in 8900 companies, although since the opening of the market to China, 400,000 jobs have been lost, and as a result of the triangulation have lost a lot of market share. Beginning on December 12, the big importers will be able to buy from China. For example, they will be able to buy sports outfits for $0.20 for 2 million units. Click here to see the rest of the graphic.
Source: El Universal http://www.eluniversal.com.mx/graficos/pdf11/china.pdf
If you’re at all interested in this topic, I highly recommend that you read the whole report!
This Wall Street Journal article, As China Goes, So Go Commodities, is the clearest explanation I’ve read about how trends in China’s economy might affect commodity prices.
You want to know where the global commodities markets are heading in the coming years? Then it’s probably best that you remember a single word: China.
Liam Pleven outlines three possible scenarios for China’s economic future and describes how these would affect the worldwide market for commodities like oil, copper, and soybeans. These three scenarios have huge implications for China-Latin America trade because Latin America is a major supplier to China, and this trade is a major component of Latin American economies. For example, Chile currently supplies 29% of China’s copper and this constitutes a very large percentage of Chile’s exports. When copper prices fluctuate, so does the dollar-peso exchange rate.
Source: The Wall Street Journal.
Here are the three forecast scenarios :
Full Speed Ahead
If China’s consumption of commodities continues to grow at the rate it has over the past 10 years, this is what the world would have to do to meet that demand in 2020, assuming that the rest of the world’s collective appetite doesn’t change at all:
[this would mean, among other things]
• Extract nearly three times as much new copper as the current annual production from Chile, which mines about four times as much as any other nation.
The Hard Landing
A growth rate of 4% to 6% would be a big leap forward for the U.S. economy and plenty of others. But not for China….
Demand for steel, copper and other industrial metals could drop significantly if China does stall, because those materials are heavily used in construction—which would be at risk from weakness in the Chinese real-estate market—and because China often accounts for some 40% of global demand for those materials. Coal demand could also tumble, she says, because the fuel is heavily used in China to generate power.
Slower but Steady
For many China watchers, including Barclays, the most probable scenario is an economy that keeps expanding strongly but at a less blistering pace, with annual GDP growth rates in the high single digits. That would mean continued upward pressure on most commodities prices, with some possibly rising substantially, but in most cases not the soaring prices that a red-hot economy would produce.
I took this photo at a wedding I attended in Beijing in 2009. I think it's an appropriate way to illustrate this rather technical post about Chinese economic trends because this is the real face of oil/gas/copper/soybean consumption. This wedding had mass amounts of meat (lamb but no pork since the bride's family is Huimin, part of a Muslim minority.) As China grows more prosperous, more people will be eating more meat and hosting ever-more-elaborate weddings.
Note: I’m curious to hear your feedback on this post because I am thinking about starting a whole new blog about China-Latin America relations, in both English and Spanish, perhaps in partnership with the small number of other people who blog about this emerging topic. Gracias!!
I visited Iquique a few weeks ago to speak at Start-Up Chile’s World Entrepreneurship Day Meetup, which simultaneously took place in 15 regions of Chile, all the way from Arica to Punta Arenas. The event was a smashing success.
Iquique is a city of about 350,000 in Chile’s far north. It’s a port city with a free trade zone (la Zofri) and a colorful history. The word Iquique means “place of rest” in Aymara.
About 70 people attended the Iquique Meetup next to the pool at the Hotel Terrado. Though I only spent about 24 hours in Iquique (busy, busy week also included trips to Concepcion and La Serena to speak at entrepreneurship events… good times!) I have a few enthusiastic recommendations for any other visitors to Iquique, especially explorers that share the entrepreneurial spirit.
1. Stay at Hostel 1920 La Casona.
This gorgeous hostel is in an old house in Iquique’s historic city center. The owner, Isabel Bussenius, is the most wonderful hostess. She has poured so much love into building and running this hostel. She seems to know absolutely everyone in Iquique, she speaks excellent English, and she will make sure to show you a good time.
After the Start-Up Chile Meetup, Isabel hosted an impromptu barbecue for about 20 people at the hostel. She served us maracuya sours (the region’s signature cocktail) and an abundance of chicken wings and choripan with all the fixins. Everyone had so much fun!
The hostel has a wide variety of gorgeous rooms, including singles, doubles, and shared 4 and 6-bed dorms.
If and when you visit Iquique, be sure to stay at Hostel 1920 La Casona. And say hi to Isabel for me!
2. Go Llama Trekking
At the Meetup, I met Matías Pinto Duk, founder of Llamatrekking. This is a unique opportunity to experience the ancient traditions of Aymara culture. Trips range in length from 1 day to 7 and full details are here on the Llamatrekking site.
Matías and his business partner, an older Aymara gentleman, explained to me that they had earned seed capital from Corfo (Chile’s economic development agency) to research all the trip routes, following traditional maps and legends.
I was really sad that I couldn’t stay in Iquique for long enough to experience one of their tours. Maybe next time.
3. Sample Gourmet Peruvian Food at Kiru
I traveled to Iquique with Francesca from the Start-Up Chile team, as well as Norwegian Start-Up Chile entrepreneurs Halvard and Sveinung, who are building Pick a Student.
The four of us enjoyed a delicious meal at Kiru, a gorgeous Peruvian restaurant located in a reed-covered courtyard, down a hidden pathway, not far from the beach. I had a pisco sour perked up with spicy green pepper, and an orange-flavored Asian-style fried fish dish with several tasty side dishes (sorry, I forgot the names of the dishes, and my camera was out of batteries. But trust me… it was good!)
Fran found this restaurant on TripAdvisor, where it’s rated #1 in Iquique.
4. Enjoy the beach and sand dune views.
Here’s my postcard shot, taken early in the morning, from the roof of the place where we stayed (edited with BeFunky, an app that I’m currently somewhat obsessed with. It’s better and easier to use than the other free photo apps I’ve downloaded.) Behind me are sand dunes as tall as hills.
And here I am with the Norwegians and two of the directors of the local Corfo. I bet you can guess who is who…
This photo is from El Boyaldia, a local news website that covered the event.
P.S. I wasn’t convinced or compensated in any way to write this post. The first three images come from the websites of the respective businesses. I hope this is useful for anyone dreaming of a trip to Iquique!
Halloween has always been my favorite holiday. This is no secret. I included this information in the first line of the bio I wrote for this site, and last year I posted so many Halloween posts that my dad made fun of me. Since it´s October, that means I can start celebrating, right??
While searching for something else, I came across an email I wrote back in 2006, when I was a bright-eyed English teacher in Jiaxing, China. It feels very appropriate in the context of my current obsession with China – Latin America relations. What follows is an edited version of that note.
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Our textbook contains a Frida Kahlo painting called El Camion, which has 6 people waiting for a bus, including Frida herself, a young boy, a mother with a baby. The relationships between the people are ambiguous, and there is a lot to discuss in the painting.
I chose 6 students to act out the painting.
I had the rest of the class interview the people in the painting. The funniest response was when one of the men (who in the picture wears a suit and holds a bag, presumably of money) explained that he was a professional murderer. Frida (who, as I explained to the students, was a very ill woman with an unhappy marriage) tried to contract his services to kill her husband. It was soooooooooooo funny! To add to the drama, Frida was on her way home from the supermarket and was carrying only eggs. So she wanted to know how many eggs it would cost for one quick murder.
And at that exact moment, “Frida”‘s cell phone rang from inside the bag that supposedly contained only eggs. It was absolutely hilarious.
Over the weekend I went to a Halloween party five hours away that the American teachers who led our orientation were hosting. I went as Frida Kahlo, inspired by my fabulous lesson!
I just read this detailed report from SINOLATIN CAPITAL - ENERGY: WHY CHINA AND LATIN AMERICA?
SinoLatin Capital is the first advisory and principal investments firm focusing exclusively on transactions between Latin America & China.
With dozens of graphs, this report outlines the market for energy and commodities that connects China and Latin America. In short, China has a great demand for energy and commodities, and depends on imports to meet these needs. China is cash-rich, and has been investing more and more in the Latin America, especially to import oil, copper, iron, soybeans, and other soybeans.
I found slides #48-50 especially interesting, since these give a brief overview of the market for wind and solar energy in China and Latin America.
Here is my summary of these slides:
The worldwide capacity of wind turbines is currently 196Gw. 38Gw of this was added last year, and 18Gw of that was in China. Only 1.2% of these new installations were in Latin America. Chinese equipment is smaller, and a lot cheaper, and it is possible to get financing from from China Development Bank (CDB) and Export-Import Bank (Exim).
China currently controls 40% of the world solar energy market (up from 0% in 2005.)
Key considerations for new wind and solar projects include:
- Do you have a Power Purchase Agreement (PPA)?
- How far away is the grid?
If you’re at all interested in China-Latin America trade, I highly recommend reading the whole report. (Thanks T for the link!)
I'm Leslie and I connect entrepreneurs in Chile, China, California, and beyond — especially through translation, training, and trade. More about me.
