Chinese locomotives driving Latam trains

Up Front

It’s becoming a safer bet that Chinese locomotives will power rail links across Latin America.

As previously reported, China is interested in building a rail link connecting Panama's capital to the border with Costa Rica, and feasibility studies were announced last month. And the ongoing effort to build the Peru-Brazil “Biocieanic” railway has the interest of China Railway Construction Corp (CRCC) — even as they struggle to find Brazilian commitment to the project.  Locomotives for the San Martín line in Argentina left China last month, and locomotives for the Belgrano line between Rosario and Buenos Aires arrived this week.

But the biggest news this week is the announcement that China Railways Group (CREC) wants to work with local firm Sigdo Koppers to build a $1.6b high-speed rail line link connecting Santiago to Valparaiso and Viña del Mar. The project would connect the Chilean capital to it’s largest port and sunbathers to the beach in just over half an hour. It has been presented to outgoing President Michele Bachelet, and will be shown to President-elect Sebastián Piñera.

Having ridden China extensive high-speed rail network (and the more impressive Shanghai Airport Maglev), the Novam Portam team is bullish on High-Speed Rail. However, high-speed rail has struggled in Latin America, even with Chinese support. Famously, the most compelling case in the region is for a Rio-São Paulo bullet train. But despite repeated efforts by CRCC, it has never left the station and has now been on the drawing board for at least 20 years. 

More concerning is the case of the proposed high-speed train line between Querétaro and Mexico City. Not only did that project flounder, it has caused diplomatic friction between the two countries as China is now trying to claim $600m in damages from Mexico on behalf of CRCC for “not acting in a transparent manner, in good faith, nor guarantee due process of law.”

While Santiaguinos would definitely welcome easing traffic on the road to Valparaiso, whether high-speed rail gets delivered remains to be seen.

Top Stories

Rival chinês da Uber "ataca" América Latina e compra participação da 99 — SAPO Tek
Didi compra 99 taxis, luchará con Uber en América Latina — El Comercio
El Uber chino ya empezó su expansión por América Latina — El Observador
A chinesa Didi Chuxing assume controle da 99 Taxi — Journal Oleme
Didi e Uber vão travar guerra pelo Brasil — Estadão
Didi’s ‘War Of The Century’ — Supchina
China Didi Chuxing empieza a reclutar personal de cara a su lanzamiento en México — Reuters
With the official confirmation of Didi’s purchase of 99, a series of articles have come out
looking at it’s expected competition with Uber in Latin America. But, Didi’s focus may be more on Chinese domestic rivals like Meituan Dianping. Didi senior vice president Chen Ting recently said they were in a “war of the century” in China. However, Didi is ramping up operations in Mexico, looking to hire people for various positions in the country.

Empresas Públicas de Medellín Secures $1 Billion IDB Loan for Hydropower Plant — Finance Colombia
The Inter-American Bank and the China-LAC Co-Financing Fund team up with the private sector to finance a $1b, 2400WM hydro project for EPM’s energy branch. BBVA, Banco Santander, BNP Paribas, KFW IPEX, Sumitomo Mitsui Banking Corporation, CDPQ, and ICBC all took part in the $650m syndicate, with the IDB financing $300m, and the China Co-Financing Fund supplying the remaining $50m.

JD.com abrió su primer supermercado físico ‘7Fresh’ en China — Perú Retail
E-commerce platform JD.com is following the moves of it’s competitor Alibaba, and opened it’s first physical supermarket in Beijing, under the 7Fresh brand. Alibaba has opened 30 supermarkets this year, and JD says it wants to open 1,000 in the next 3-5 years.

Nextel Brasil recebe aval de chineses para alongamento de dívida — Valor
Nextel conclui negociação de financiamento com BB, Caixa e China Development Bank — Istoé Independente
Next Brasil gets refinancing relief for a R$1.28b ($386m) line from Sinosure, the  China Development Bank, Banco do Brasil, and Caixa Econômica Federal.

China aventaja a EEUU en relación económica con Latinoamérica — Hispantv
Se ampliaría ‘Puerta’ hacia China — Vanguardia
O governo Donald Trump e a América Latina — Ceiri Newspaper
China Promoting Globalism in South America — Trunews
Trump le 'pone el pie' a China en el comercio con Latinoamérica — El Financiero
América Latina y su brújula — Clarín
Entries in the ongoing series of think pieces about the impact of the radically changed US administration’s foreign policy — and whether it is giving China running room in Latin America — including from Former Chilean President Ricardo Lagos.

China-LAC

Por qué se dispara precio del cobre en el mundo y qué significa para Perú — El Comercio
Lack of expected supply in the medium turn in the face of continued demand from China drove copper prices up 30% over 2017, a move that makes Peru and Chile smile.

Minxin Pei: Could China spring a nice surprise in 2018? — Nikkei Asian Review
Did Latin America get in the door right as the party is ending? In an op-ed piece laying out potential steps China could take to put it’s economy on a more sustainable basis, professor Minxin Pei says that one alternative would be to curtail of President Xi Jingping's Belt and Road Initiative.

Indústria vinícola do Chile ignora críticas de Trump à China — Jornal Floripa
Jiangsu Yanghe Distillery bought a 12.5% stake in Viña San Pedro Tarapacá, Chile’s second-largest wine exporter, for $66m. Following the 2010 $18m acquisition of Viña Bisquertt by COFCO, we expect you’ll be hearing “ganbei” along with glasses of Carménère soon.

Lazard apuesta por próximas compras de chinos en Chile, minería, agroindustria, infraestructura y energía — Portal Minero
Storied M&A bank Lazard is positioning itself for more purchases of Chilean assets by Chinese companies. Per country head José Luis Jeria, they expect further interest in mining, agriculture, infrastructure, and energy.

Acero chino aumentó un 5% sus importaciones a Chile entre enero y noviembre de 2017 — Pulso
Compra de acero en CA cayó un 26% — Diario La Prensa
Data from the Latin America Steel Association (Alacero) on production in the region over the 11 months ending in November shows that Chinese steel exports to the region fell 5% over the previous year. Imports by Venezuela (-55%), Cuba (-51%) and Central America (-26%) led the decline, while they were up 5% to Chile.

Cómo la miel argentina intenta ganarle a China un mercado que mueve US$ 2200 millones — Apertura
The $2.2b honey market is setting Argentine apiaries against Chinese producers.

Rallys Pliauzer: "Si la Argentina es inteligente, su principal socio comercial será la región Asia-Pacífico” — La Nación
An interview with Rallys Pliauzer, the president of Argentina’s Asia-Pacific Chamber of Commerce. He says that “if Argentina is intelligent, it’s principal commercial partner will be the Asia-Pacific region." 

Santander Brasil anuncia parceria com NDB, o "banco dos Brics” — Valor
Santander Brasil e NDB realizam parceria para projetos ‘verdes’ — Cruzeiro do Sul
Santander Brasil has inked a deal with the New Development Bank (better known as "the BRICs Bank") to fund green projects. NDB will co invest in Santander Brasil on projects like hydropower, clean energy, mobility and urban transit. Says Sergio Suchodolski, NDB Director General for Strategy and Partnerships: 

“There is already a project under discussion. A team should be going to Brazil at the end of the month. We have a $300m portfolio of projects aproved in renewable energy in Brazil." 

China's debt-ridden Guangdong Zhenrong taps private refiner for Caribbean project — Reuters
China’s debt-ridden Guangdong Zhenrong Energy (GZE) has asked Baota Petrochemical — a private refining group in China — to join a $3.4b investment in the century-old Isla refinery to shore up financing on the deal. The 335,000bpd refinery, was operated for decades by Venezuela’s cash-strapped state oil firm PDVSA, until it’s contract with Curacao expired last year.

Diversificación comercial acaparará primer semestre — El Economista
An interview with Mexican Economic Secretary Ildefonso Guajardo in which he highlights the Trans-Pacific Partnership and Pacific Alliance, as well as a Free Trade Agreement with the EU and bilateral relationships with Brazil and Argentina as the tools he plans to use in the event of an implosion of NAFTA.

Moody's anticipa una aceleración del crecimiento en América Latina en 2018 — Reuters
América Latina duplicará el ritmo de crecimiento este año — El País
Banco Mundial rebaja a 2,0 % pronóstico de crecimiento de América Latina en 2018 — Crónica Viva
Both Moody’s and the World Bank see exports to China as supportive of slightly accelerated growth for Latin America in 2018, with the bank seeing the region growing 2% next year, and Moody’s 2.7%.

A paso lento: La ganadería bovina nacional empieza a recuperar mercados externos — Infocielo
Thanks to the export controls imposed by the government of Cristina Fernández de Kirchner, Argentine beef exports fell from 800k tons to 300k last year. Thanks in large part to demand from China, local agricultural organizations expect exports to increase 16% to 350k tons in 2018.

Ministro Manuel Quevedo se reunió con representantes de petrolera china — Panorama
Quevedo y petrolera China revisaron proyectos para "acelerar” producción — El Universal
In his country’s continuing efforts to shore up it’s Chinese flank, Venezuelan oil minister and PDVSA president Manuel Quevedo met with Jia Yong, the Latin America President of China National Petroleum Corporation (CNPC). They discussed production by Petrosinovensa and other mixed projects, and expect to announce new (higher) production benchmarks next week. Unclear how the cash-strapped Venezuelans will meet those benchmarks.

China busca llegar a US$10.000 millones de importaciones en cinco años y convoca a empresas argentinas — La Nación
China has unveiled the first China International Import Exposition, to be held in November in Shanghai. The goal of the Expo is to increase the familiarity of Chinese consumers with companies from around the world. This is part of an initiative by China to import $10b in good and services over the next five years.

Se aproxima una tormenta perfecta a México — NYT
A Perfect Storm Is Coming to Mexico — NYT
Former Mexican Foreign Minister Jorge Castañeda outlines what he sees as the “three dark clouds” that threaten Mexico in 2018: "Donald Trump’s tax overhaul, the possible end of Nafta and a presidential election that may introduce an era of turmoil and uncertainty for the economy and Mexican society at large.” To address these, he says that solutions like "China will come to Mexico’s rescue” is an unlikely miracle.

Avocado sales could more than double this year, boosted by demand from China's middle class — CNBC
That’s a lot of guac, and only has room to go up.Latin American countries as a group shipped about 76 million pounds of avocados last season to China. By comparison, Mexico plans to ship 1.8b pounds of avocados to the U.S. in the current 2017-18 season.

China is expected to replace the US as the main destination of Chilean nectarines — Fresh Plaza
A year on from gaining access to the Chinese market, Chilean nectarines are expected to become the biggest player. Says Chilean Minister of Agriculture, Carlos Furche: "This season, China is going to become the main destination market for this fruit.”

Korea-LAC

Rayence to set up production base in Brazil — Korea Biomed
Rayence, a Korean company specializing in digital X-ray imaging solution, has signed an agreement with Teikon to launch joint venture RT Tecnologia Medica in Brazil to be a specialized producer of X-ray detectors.

Japan-LAC

Argentina confirma próxima negociación tributaria con Japón — Marco Trade News
Argentina y Japón negociarán acuerdo para prevenir evasión fiscal — Pulso
La Argentina negocia un acuerdo tributario para atraer inversión japonesa — La Nación
Japan and Argentina launched negotiations of a double-taxation treaty in Tokyo this week. Last year Japan negotiated a double-taxation treaty with Colombia, so expect news soon?

El hombre clave de Japón en el TPP-11 visita México — Opportimes
Toshimitsu Motegi, Japan’s point man on the Trans-Pacific Partnership, visited Mexico this week to help push forward the finalization of the revitalized trade pact.

Colombia y Japón promueven intercambio de tecnologías — Opanoticias
Juan Sebastián Rozo, Colombia’s Ministre of Communications (MinTIC) sat down with Japanese Ambassador Keiichiro Morishita to push for more technology interchange between the two countries.

India-LAC

Peru records highest export sales to India among Asian markets — The Times of India
Peruvian exports to India in the first 10 months of last year were up 127% over the previous year, to $1.57 b. Avocados and grapes led the way.

ASEAN & Oceania-LAC

Diseño de modas, el eslabón perdido que necesita la industria textil para despegar en el Perú — Gestión
An article about how the Peruvian  garnet industry would be foolhardy to go up against Bangladesh or China on volume, and needs to look for niches in order to be successful.

GCC-LAC

Dubai Chamber to organize 2nd Global Business Forum on Latin America in February — Zawya
Dubai Chamber has anounced it is going to host it’s second Global Business Forum (GBF) on Latin America in Dubai on February 27-28.

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