Do China and LAC have Divergent Priorities on Infrastructure?

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The Brazil-China Cooperation Fund (o "Fundo Brasil-China de Cooperação para Expansão da Capacidade Produtiva”) announced this week that it has agreed to provide $2.4 billion in financing to five projects in Brazil. Oddly, the five projects to be financed were not announced, but the East-West Integration Train (Ferrovia de Integração Oeste-Leste aka FIOL), the São Luís multimodal port in Maranhão, Porto Sul in Ilhéus, and the Ferrogrão train line are all rumored to be on the list. MOUs on many of these projects were signed at last year’s BRICS Summit in China.

Given the perpetual demand for improved infrastructure in the region — as former Chilean President Eduardo Frei put it: “in Latin America we have 19th century infrastructure” — all this investment should be for the good. 

But when evaluating infrastructure projects, a distinction has to be made between projects that are China priority and projects that are a priority for Latin America. While Chinese institutions have pushed for infrastructure spending in the region, sometimes they push projects that might not make sense for local partners. One recent example that has left us scratching our heads is the proposed railway in Panama to Chiriquí on the Costa Rica border. The railway is supposed to make Panama an agro-logistics hub for Central America, but it is unclear exactly how it will do so.

The Bioceanic rail line to connect Brazil and Peru (and possibly Bolivia) is a similar divergence between Latin American and Chinese priorities. Despite second thoughts from Brazil and Bolivia about the cost-benefit of the project, Chinese embassies continue to insist that the train will role forward.

Latin America needs infrastructure, and China needs to export excess capacity, so the two regions will continue to collaborate on building infrastructure. But the tension between projects that the two sides prioritize will also continue, and could lead to difficulties down the road.

Top Stories

叶檀:果然对大豆动手了! — JRJ
Exportaciones de soja brasileña alcanzan récord en abril por sequía en Argentina y tensiones de EE.UU. con China — América Economía
Exportação de soja do Brasil tem recordes com tensão EUA-China e seca na Argentina — Notícias Agrícolas
Brazilian Soybean Exports Seizing a Chinese Opportunity — Farm Bureau
Argentina’s drought and the US’ trade war with China has boosted Brazil’s soy exports to a record volume of 11.6m tonnes, a million more than last year.  Chinese economic commentator Ye Tan (叶檀) notes that this is a godsend for China when trade with the US is getting tough

China "sospecha" que otros países están tras bloqueo de compra de parte de SQM — America Economía
RPT-China suspects others lobbied to block it from Chilean lithium -official — Reuters
The Tianqi/SQM plot thickens. Liu Rutao, China’s trade and economic representative in Chile, says China suspects foreign countries may worked to block Tianqi’s acquisition of a third of Chilean lithium giant SQM: "We have our suspicions. But we don’t know why they did it."

Risk and reward in China’s overseas development plan — Financial Times
In response to the FT's “China needs to act as a responsible creditor” editorial, Kevin Gallagher at Boston University points out China should not be assailed for its Belt and Road when its financing promises “to be more productive than the short-term capital flows that surged into the EM and developing countries” from the United States: “China would do well to take risk more seriously, but there are few who lead by example in this regard.”

一带一路为什么要挺近拉美? — Sina
On blogging website Sina, Lu Xiaofu 鲁晓芙 asks: "Why is the Belt and Road Initiative going into Latin America?” She says it’s because China acts as “patient capital” when it invests in the region. She notes that while China has a comparative advantage in providing capital over a longer time horizon, that does not guarantee success. Country risk remains a real concern that needs to be priced into decisions.

China descarta que tenga agendas ocultas en América Latina — Hoy
China nega agendas ocultas na América Latina — Exame
Senado aprueba crear grupos de amistad Domínico-China — Hoy
Establecimiento de relaciones entre R. Dominicana y China  “es un hecho de justicia histórica,” afirma experto — El Universal
Chinese ambassador to Panama, Wei Qiang, says: “Chinese presence in Latin America does not have, as some think, hidden agendas.” Qiang spoke following the establishment of diplomatic relations with the DR about China’s intentions, which he says is to “reach the common goal of mutual development.” The DR’s senate established a Dominican-China Association of Parliamentary Friendship, and Venezuela expert Chevige González Marcó says it’s an “act of historical and geopolitical justice.”

At World Bank, China Moves to the Grown-Up Table — Bloomberg
AIIB set to extend reach to Latin America and Africa — Financial Times
More articles about the Asian Infrastructure Investment Bank (AIIB) expanding beyond Asia. No deals have been signed yet, but AIIB has just signed an MOU with the African Development Bank (AfDB), mirroring it’s agreement with the Inter-American Development Bank (IDB). But when will they put that capital to work?

Rowley, delegation to visit China and Australia — Newsday TT
Prime Minister Keith Rowley of Trinidad and Tobago to visit China next week — Xinhua
Six months after a state visit was announced and then scrubbed, Trinidad and Tobago Prime Minister Keith Rowley will visit China and Australia next week.

Vice President of India on a 6-day visit to Panama, Guatemala, and Peru — Devdiscourse
India’s Vice President, Shri. M Venkaiah Naidu, has left on an official state trip of Latin America, where he will be visiting Guatemala, Panama, and Peru in order to strengthen relations.

O Brasil em direção à Ásia — O Globo
Brazilian Foreign Minister Aloysio Nuner Ferreira has begun an Asia-wide trip, with stops in China, South Korea, Japan, Singapore, and others. Ferreira seeks to espouse Brazil’s adversity to protectionism and cooperative interests.

第十二届中国-拉美企业家高峰会将于11月在广东珠海举行 — Xinhua
Ciudad meridional china de Zhuhai celebrará en noviembre XII Cumbre Empresarial China-Latinomérica y Caribe — Xinhua
In the lead up to the 12th China-LAC Business Summit in Zhuhai in November, Vice Mayor Lu Xiaofeng introduced Zhuhai’s economic and trade situation in Latin America and preparations for the summit.

China—LAC

中企,在南美“黄金国”获得好口碑 — People Online
A profile of Creat Group, a diversified company that is engaging in manufacturing and industry, including nitrogen membrane production, in Colombia. This is indicative of greater Chinese interest in the country. “In the next few years, China enterprises will become into an important driving force for the successful transformation of Colombia and even Latin America as a whole,” says the president of China-Colombia Investment and Trade Chamber of Commerce, Carlos Lundro.

提到拉美的这个文化符号只知古巴?快进来补补课  — Xinhua
Spotlight: Diplomatic ties with China open up markets for Dominican tobacco — Xinhua
When it comes to cigars, China is now going to learn what many of us have known — there’s more to it than just Cuba. Joaquín Cambeiro Oreiro of the Caoba cigar factory says: “I know the relations between us and China, I don’t think my factory will have any open seats in the future. I want to hire more people, to produce more cigars, and do business with the Chinese.”

Operadora móvil China Telecom prepara su arribo a Chile — FayerWayer
Gigante china de telecomunicaciones expresa interés al gobierno para ingresar a Chile — La Tercera
China Telecom the world’s largest cell phone company met with Chile’s Undersecretary of Telecommunications Pamela Gidi in anticipation of launching in the country.

Panamá tiene que mirar a EE.UU., China, Colombia y Costa Rica en 2019 — El País
Former Panamanian Foreign Minister José Raúl Mulino advises the country’s government to have a more active foreign policy with the US, China, Colombia, Costa Rica, and the national clients of the Panama Canal. Concerning China, he says out diplomatic recognition was achieved “without knowing what [Panama] would do with them,” while the Chinese knew exactly their intentions with Panama.

Cítricos dulces, carne y cerezas, la agenda de Etchevehere en EE.UU., Japón y China — La Nación
Argentinian Minister of Agroindustry Luis Miguel Etchevehere has begun a trip to the US, China, and Japan, to increase agro exports.

Perú espera duplicar las exportaciones y alcanzar los US$88.000M en tres años — América Economia
The Peruvian Association of Exporters (ADEX) says exports will double in the next couple of years to reach $88b, based on this quarter’s 15.5% growth rate. China is Peru’s biggest export market.

Embajador de China en Colombia, está en tierras huilenses — La Nación
In a tour of the department of Huila, China’s ambassador to Colombia, Li Nianping, highlights bilateral relations and further cultural, economic, and education exchanges that could be beneficial to the two countries.

Relación China-América Latina "se ha modificado cualitativamente", apunta experto — People Online
Economist Gustavo Girado says relations between China and Latin America “have changed qualitatively." He says China does not seem to want to take a hegemonic position, shown in a lack of financing conditionality, which encourages competitors to offer their best prices as well and not take advantage of the region.

El déficit comercial con China sigue batiendo récords — La Política Online
Argentina’s deficit with China keeps breaking records. Experts worry that the this may be due to competition with countries like Chile, which has a free trade agreement with China, and that Argentina has a many sectors which consume more capital than they produce, especially in agriculture. The solution is to better promote and position regional commodities, such as beef, rice, and fruits.

US agricultural rival Brazil opposes China trade war — Nikkei Asian Review
BCB (Central Bank of Brazil) head Ilan Goldfajn, advises emerging markets to invest their resources in economic structural reform as they experience renewed global growth. He also criticizes the US-China trade dispute, but we saw that one coming.

Cabo Frio recebe comitiva chinesa que pensa em investir na cidade — Clique Diário
A Chinese delegation made its way to Cabo Frio, a city on the coast of the state of Rio de Janeiro, in order to establish amicable relations with the city of Huzhou, China. Unclear if they hit Chez Michou in Búzios while out there.

Tres SUV y dos pick ups, los lanzamientos de las chinas Haval y Great Wall en la Argentina — iProfesional
Marca china ya vende en Argentina sus primeras pick-ups — Punto Biz
Argentine dealership Car One has begun selling models from Great Wall and Haval, subsidiaries of China’s Great Wall Motors Company.

Feature: Chinese-built trains improve rides for Argentine commuters, conductors — Xinhua
Argentines are reportedly very happy with their new Chinese-made electric trains.

Desarrollo de energías renovables en Chile abre oportunidades para inversión china — Xinhua
The recently held ‘Chile-China: Renewable Energy and Society, Projections for the future’ celebrated bilateral relations and reinforced interest in green energy investments, in both countries. Chile seeks to provide 70% of its energy through renewables by 2050.

Apertura del mercado chino presenta mejores oportunidades para empresas de Uruguay — Xinhua
Fernando Lugris, Uruguayan ambassador in China, sees the Belt and Road as an opportunity to strengthen bilateral relations with China, being able to trade far more than the traditional foodstuff and move into exchanges of information technology and telecommunications.

Metas China y ALC van más rápido en comercio que en inversiones — El Caribe
Findings from the Community of Latin American and Caribbean States (CELAC) show that as of 2017, China is 46% closer to its goal of investing $250b in LAC though foreign direct investment by 2025.

China superará por primera vez a México en PIB per cápita — El Financiero
2018 marks the first year in which China’s GDP per capita overcomes that of Mexico. In 1980, China’s GDP per capita was 9% of Mexico’s.

Pesca ilegal: por primera vez, el Estado argentino cobró los gastos de la persecución a un buque chino — Clarín
A Chinese fishing vessel illegally in Argentine waters was fined an additional $500,000 for legal costs, a first.

Proponen centro comercial chino en Bogotá; dicen que beneficiará a colombianos — Pulzo
A commercial center to serve the community of 4,000 Chinese people in Bogota, Colombia has been proposed.

10 new buses arrive, five more to come — TT Newsday
Ten Chinese buses arrived in Trinidad and Tobago this week, and 5 more are expected later this month.

Syngenta quer servir de ‘ponte’ entre o Brasil e China — Valor
One year after being bought by ChemChina, Syngenta expects to increase Brazilian exports to China and help foment bilateral relations: “We will invest to keep us in the lead,” said president Erik Fyrwald.

Más de mil empresas chinas vendrán a México por negocios — AM de Queretaro
1200 Chinese firms will be going to Mexico in June to take part in the second China HomeLife-Mexico fair.

Comercio entre México y China alcanzaría cifra récord de 85 mil mdd — Excelsior
Trade between China and Mexico may reach record levels this year of $85b, according to Karla Loyo, director general of the Mexico-China Chamber of Commerce.

Japan—LAC

Grupo sanitario de japonesa Marubeni apuesta a crecer en Chile con nuevas adquisiciones — Economía y Negocios
Marubeni enters into Chile's natural gas distribution business — Your Oil and Gas News
Waterworks Aguas Nuevas in Chile, owned by Japanese Marubeni and Network Corporation of Japan (INCJ), has recently purchased Aguas Chañar, another sanitary firm serving the Atacama region. “it was easy to incorporate a fourth operational firm and it puts us in a good position to incorporate a firth and why not a sixth,” commented general manager of Aguas Nuevas Salvador Villarino. Marubeni Corporation has also recently acquired an 100% stake is GasValpo SpA, the second largest natural gas distribution company in Chile.

NSK inaugura su segunda planta en Guanajuato Puerto Interior — Mexico Industry
Japanese firm NSK Warner México has begun operations in its new plant in Guanajuato, Mexico. Sakae Kuwashiro, president of NSK-Warner KK, expects the plant will contribute to regional economic development in two years.

Brasil e Japão fortalecem cooperação na área de defesa — Defesa Net
Brazil’s interim Defense Minister, Joaquim Silva, and Japan’s Vice Minister of Defense, met in Brasilia to discuss opportunities to increase bilateral security cooperation, such as in response to natural disasters.

Automotrices japonesas desean más proveedores mexicanos — El Financiero
The Japan External Trade Organization (JETRO) in Mexico, says Japanese auto manufacturers wish they had more local vendors to sell their products.

Argentina y Japón repasan agenda común para fortalecer relación estratégica bilateral. — Xinhua
Japan and Argentina’s Vice ministers of Foreign Affairs, Kazuyuki Yamazaki and Daniel Raimondi, met at the 24th Policy Consultation Mechanism meeting and restated mutual interest to maintain and enforce bilateral relations.

JCB starts issuing credit cards in Brazil — The Japan News
JCB Co. has started issuing credit cards in Brazil in cooperation with state-run Brazilian bank Caixa Econômica Federal.

Korea—LAC

Corea y Ciudad de México explorarán modelos de prevención en seguridad — 20 Minutos
Hiram Almeida, Public Security Officer for Mexico City, and Sang-Il Kim, South Korean ambassador in Mexico, met to discuss opportunities to share information in regards to security measures, such as cyberattacks, and the use of preventive measures in the capital.

Korean cosmetics take Latin America by storm — Korea JoongAng Daily
Korean cosmetics, which has been exponentially growing, see opportunity in the Latin American market for its value of $59.7b and the regional appeal for the quality and price of products.

Chile and South Korea want to lift tariffs on 458 products — Fresh Plaza
Chile and South Korea want to revisit their FTA and lift tariffs on 458 products.

GCC—LAC

Argentinian football giants Boca Juniors partner with award winning airline — IOL
Coming soon to the Bombonera: Qatar Airways has teamed up to be Boca Junior’s jersey sponsor this season through 2023.

India—LAC

Indian pharma, auto firms are doing well in Colombia, says Ravi Bangar — Financial Express
India’s ambassador to Colombia, Huma Siddiqui, expects bilateral relations to grow with India becoming its second most important Asian trading partner, overtaking Japan. India’s exports to the South American country increased almost by 20% in 2017, and its Pharma  and auto firms seem to be doing particularly well in the Colombian market.

India's ONGC floats first tender to sell Brazil's ostra crude — Reuters
India’s Oil and Natural Gas Corp is ready to sell its portion of Brazil’s Ostra heavy oil in June-November, previously marketed by Shell. Buyers will have to move fast as the tender closes May 15.

Asean—LAC

Singapore and Brazil sign pact to avoid double taxation — Channel News Asia
Singapore and Brazil signed an accord to avoid double taxation and initiated discussion on an FTA between Singapore and Mercosur.

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