The AIIB shows up in Latin America

Up Front

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At last week’s Inter-American Development Bank (IDB) Annual Meeting in Mendoza, Asian Infrastructure Investment Bank (AIIB) President Jin Liqun sat down to discuss his vision for his banks’ role in Latin America. Certainly there has been lots of interest - Argentina, Brazil, Chile, Bolivia, Peru, Ecuador, and Venezuela all have the green light to become members of AIIB, with Argentina expected to ratify by the end of the year.

Jin explained that the AIIB is designed with broad mandate. This is in response to the experience of the European Bank Reconstruction and Development (EBRD), which worked itself out of a job in the wake of the post-Communist growth in Eastern Europe and needed to amend its charter to remain relevant. The goal of the AIIB is to promote economic development through investment in infrastructure and other productive sectors in all countries with which Asia does business. In practice this means that it’s open to all countries in the world, because - as Jin said - Asia cannot sustain economy in isolation.

To the satisfaction of representatives of other AIIB members in the room, Jin did highlight that China is "not supposed to dominate” the AIIB, and that it is run by its member countries.

Jin noted that AIIB’s interest in Latin America stems from the fact that Asia-Latin American trade and investment is continuing to grow. He diplomatically pointed out that China is a big factor — but not the only factor — in that growth.

Characterizing its role outside its home region, Jin said that in Latin America, AIIB wants the IDB "to be the conductor, and we have a seat in the orchestra.” The AIIB is looking at projects to co-finance with IDB, but hasn’t put capital to work yet.  Jin says they are focusing on connectivity — in practice that means infrastructure, but we’d expect communications and other related fields to be looked at.

Asked about the trade balance between China and Latin America in raw materials versus value-added products, Jin offered a fairly blunt response. Jin doesn’t think manufactured goods from Latin America are competitive in the Chinese market right now; but if Latin America integrated its market, they could become competitive.

Finally, addressing the 900-pound gorilla in the room, Jin explained that while AIIB is not formally involved with the Belt & Road Initiative, he feels it is a platform for broad consultation, joint construction, shared benefits.

The current geopolitical climate, combined with the fact that China will host the IDB Annual Meetings for the first time next year in Chengdu (西媒:中国明年将首次承办美洲开发银行年会 巩固中拉关系), may just set the stage for a watershed year in China-Latin America relations. What remains to be seen is the role that AIIB will play — when exactly it will take its seat in the orchestra.

Top Stories

Latin America in the new Asia-Pacific trade order — Brookings
As part of a larger report on Latin America, the Brookings Institute looks at Latin America’s connections across the Pacific:

In order of increasing scope (and decreasing progress to date), the four main Asia-LAC integration processes are: (i) the TPP-11 (without the U.S); (ii) the Pacific Alliance plus Asian partners; iii) the expansion of the Regional Comprehensive Economic Partnership (RCEP) to LAC; and iv) a Free Trade Area of the Asia-Pacific (FTAAP).

These days, one out of four ain’t bad.

黑帮、枪支和辣子鸡:中国吃货们在南美引发一场“牛油果战争”  — Souhu
How the Avocado Became the Fruit of Global Trade — The New York Times Magazine
Stories from the “avocado war” over “green gold.” Chinese food eateries have sparked an “avocado war” in Latin America — from an obscure food, avocado has leapt into the top ten hot fruit on the Tmall Platform. The Chinese see avocado supply as 黑帮、枪支和辣子鸡 (“gangsters, guns, and 'spicy chicken’”), as Mexican cartels are influencing exports of the must-eat food of the moment. Exporters in Chile and Mexico are scrambling to respond (and Colombia looking to get into the game soon); with US saber-rattling over NAFTA, Michoacán growers are finding the demand couldn’t come at a better time.

还在挖掘西方市场?这10个新兴电商市场才是最值得关注的! — CIF News
Mexico, Colombia, and Argentina all make the list of the Top 10 New E-commerce markets for Chinese companies to look at. Colombia's e-commerce market is growing at 45% a year; Mexico’s 59% growth is seen as driven by the improvement in electricity supply under reforms. The top ten is Indonesia, the Philippines, China, the UAE, Saudi Arabia, Israel, and India round out the list. The article states that Chinese companies need to consider these markets, and get in the game.

Latin American and Caribbean Macroeconomic Report 2018 — IADB
Also at last week’s summit in Mendoza, the IDB released their annual report on Latin America and the Caribbean: “A Mandate to Grow” where it notes what might be a concern for primary material exporters in Latin America:

While still a major importer, particularly of metals and grains, China now has substantial domestic production. Changes in Chinese domestic production, as well as stock holding decisions, have the potential to affect global markets.

China — LAC

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Alipay Partners With Openpay In Mexico — PYMNTS
Alipay has been reading our top stories. China’s most popular mobile and online payment software will expand in Mexico via partnership with Openpay. “Our partnership with Openpay not only connects Mexican merchants with Chinese consumers seeking their products and services, but also opens new revenue channels for merchants in Mexico,” said Souheil Badran, President of Alipay Americas.

拉美成“说走就走”旅游目的地 —
Air China Adding Panama City To Network In April — Aviation Week
Air China to Launch New Beijing-Houston-Panama City Route — Travel Pulse
Air China will inaugurate its first Panama City flight on April 5. The route will connect Beijing and Panama’s capital through Houston. Relatedly, Chinese consumers are crowing about “说走就走” (“say ‘away’ and go”) increased easy travel to Latin America this will give them.

Huawei plants more local ‘seeds’ — Newsday TT
Huawei has signed a memorandum of understanding (MOU) with the University of Trinidad and Tobago (UTT) for a third call for students to participate in Huawei’s Seeds of the Future program that gives them a fortnight immersion in Huawei’s tech campus in Shenzhen. UTT Chairman Ken Julien hopes this might spark Huawei interest in the nearby Tamana technology park - as Newsday notes, this "drifted a bit from the stated purpose of the morning’s event."

共叙友情,共话合作 — Ministry of Foreign Affairs of China
Chinese Ambassador to Panama Wei Qiang visited the Goldwind wind farm at Azuero. This is the first and largest wind power project for the company, and an indicator of where things are going in China-Panama relations.

US grants last-minute exemptions to looming steel tariffs — Financial Times
Trump temporarily excludes EU, six other allies from steel tariffs — Reuters
U.S. May Delay Steel Tariffs for Some Nations Wanting Relief — Bloomberg
Trump impone aranceles de 60.000 millones de dólares a China — Expansion
Trump desencadena una guerra comercial con China al imponer aranceles por 60.000 millones — El País
Qué chances hay de que China ponga aranceles a la soja de EE.UU. — La Nación
Preços da soja do Brasil sobem com guerra comercial entre China e EUA — Globo
Brazil-China pork trade may jump if levies on U.S. pork rise: ABPA — Reuters
Continuing the trade policy confusion coming from the US these days, just hours before President Donald Trump's steel and aluminum tariffs would go into effect, Mexico, Australia, Argentina, Brazil, South Korea EU, and Canada were temporarily exempted from the tariffs. China has also been slapped with $60b in intellectual property-related tariffs, and Brazil and Argentina are watching to see if they can benefit from China slapping retaliatory tariffs on US pork and soy. This story is far from over.

Santiago de Cuba undergoing transformation into modernized port with Chinese assistance — Xinhua
China Communications Construction Company (CCCC) continues in its $120m project to revitalize Santiago de Cuba's port, paid for by the Chinese government. When completed, the terminal will have a 232-meter-long pier, two warehouses, three multipurpose cranes and a waste treatment plant, which can load and unload some 565,000 tons of merchandise a year.

China quiere aumentar la cooperación con Perú tras relevo en la presidencia — La Vanguardia
China brindará más cooperación al Perú tras ingreso de Vizcarra por PPK — Gestión
The shake up in Lima doesn’t faze China. Beijing has stated its intentions to maintain and successful and cooperative relationship with Peru, following the resignation of Pedro Pablo Kuczynski. “We congratulate President Vizcarra and hope Peru will maintain its stability and social and economic development,” says Chinese spokesperson for the Ministry of Foreign Affairs Hua Chunying.

江苏张家港口岸首次进口墨西哥猪肉 — Techfood
A container of Mexican pork has arrived at Zhangjiagang Port in Jiangsu Province. The 22 tons of pork knuckles, trotters, and neck bones is worth only $45,000, but is noteworthy as the first shipment to Zhangjiagang since China allowed Mexican pork imports.

Rowley holds finance and trade talks with Chinese delegation — Daily Express
T&T, China talk finance and trade — Loop TT
Outgoing PBOC (People’s Bank of China) Chief Zhou Xiaochuan met with Trinidad and Tobago’s Prime Minister, Dr Keith Rowley.

Brazilian-Chinese joint venture unveils first co-built vehicle — Xinhua
Caoa Chery, the joint venture comprising Brazilian automaker Grupo Caoa and its Chinese counterpart Chery, unveiled the Tiggo 2, a new Sports Utility Vehicle "planned and designed for Brazil," said Henrique Sampaio, the company's marketing manager.

CNPC, PDVSA revive 400,000 b/d greenfield refinery, petchem project in South China — Platts
China National Petroleum Corp and  Venezuela’s PDSVA shelved Guangdong refinery plan has supposedly been brought back to life. We’ll see.

Eduardo Chadwick: “En el mundo del vino premium, China será el único lugar para los próximos 10 años” — Pulso
Eduardo Chadwick, president of the Chilean wine group Viña Errázuriz, believes China is the “market of the future for the high end market” for wine. China is Chile’s number one wine importer, and despite a low per capita consumption, Chadwick sees a lot of room for growth and increased profit as branding continues to develop.

Argentina se promueve como destino MICE en China — Travel 2 Latam
Argentina’s National Institute for Tourism Promotion (INPROTUR) pushed the nation as the optimal site for MICE (meetings, incentives, conferencing, exhibitions) events at the international Incentive Travel & Conventions fair in Shanghai.

China Wants in on the Clean, Copious, and Chilean Energy Boom — PR Newswire
Chile is primed to become a battleground for lithium mining as its mostly untapped production and low production costs push other resource rich countries away. A main player in this race is China, currently producing half of the world’s electric vehicles; as demand rises, so will their interest. Competing with China is Canada’s Wealth Minerals Ltd., who has recently partnered with Chile’s Enami in the Atacama desert. 

First Specific Promotional Campaign for Chilean Nectarines Worldwide Launched in China — Produce Report
Move over cherries - here come nectarines. Chile’s Fruit Exporters Association (ASOEX) has introduced its first fruit promotional campaign ever, focused on the sale of nectarines in China. Chinese demand for the fruit has increased 2.5x over the past three years.

Por qué China realiza enormes inversiones en el sector eléctrico de Sudamérica y cuáles son los beneficios (y el riesgo) para la región — BBC Mundo
China’s energy investments in Latin America are nothing new but Kevin Gallagher, director of the Global Development Policy Center at Boston University, cautions Latin American nations as they welcome high-profile investments and turn a blind eye to possible social and environmental risks.

Trina anuncia nuevo enfoque en el mercado argentino — PV Magazine
Argentina’s renewable energy market has encouraged China’s Trina Solar Limited, the world’s second largest manufacturer of solar panels, to reiterate its interests.

Japan — LAC

Japan pledges $5 million to support public-private partnerships in Latin America and the Caribbean — IADB
At the IDB Annual Meeting in Mendoza, the Japan government and the IDB signed an agreement expanding their partnership in support of public-private partnerships (PPPs) in Latin America and the Caribbean, with Japan committing $5m to the program.

Korea — LAC

KORES to start copper trial mining in Panama with $178mn financing — Pulse News
Korea’s state-run mineral developer Korea Resources Corp. (KORES) expects trial production in its Cobre Panama project to begin in the second half of this year. KORES has been able to secure $178m in financing for the project — in which it owns a 10% stake — despite past troubled investments. The Cobre Panama project sits atop the world’s tenth largest copper deposits.

India — LAC

Indian Government eases apple import rules — Fresh Fruit Portal
Will we see a Chile Week Mumbai soon? India has expanded ports of entry for apple imports to any port in the country (from a previous five). Chile is a top five exporter of apples to India.

ASEAN & Oceania — LAC

Indonesia considering beef imports from Brazil — Beef Central
A delegation from Indonesia’s Ministry of Agriculture is heading to Brazil to inspect the beef industry there, with the goal of allowing the importation of Brazilian boxed beef and offal in time for Ramadan in May and June of this year. 


Qatar Petroleum wins exploration bids in 4 blocks offshore Brazil — Reuters
Qatar Petroleum and its partners won bids for four exploration blocks in the Campos basin off Brazil’s Rio de Janeiro state. It will hold a 30% stake in two of the blocks to be explored along with Exxon Mobil and Petrobras; and 36% in another two to be explored with Exxon.

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