Arguably the biggest mover & shaker at last week’s BRICS Summit in Johannesburg was not a “BRIC”, but Argentine President Mauricio Macri. Officially, Macri participated as the President of the G20. However, given Argentina's current economic troubles, the gathering presented a timely opportunity to garner support from Chinese President Xi Jinping (and to a lesser extent Indian Prime Minister Narendra Modi and Russian President Valdimir Putin). Macri and Xi were all chummy (习近平会见阿根廷总统马克里), and Argentine Foreign Minister Jorge Faurie wanted to make sure you saw.
Rewind 12 months and Argentina was belle of the ball for international investors, not heads of state. After almost two decades in the preverbal wilderness, President Macri spent the first year of his administration focused on reintegrating Argentina into the global financial system. While never turning his back to China, one could argue his priorities were with Washington D.C. (and New York). This was in stark contrast to his predecessor, who made Argentina the third largest beneficiary of China policy bank lending to Latin America.
To the casual observer, Macri's charm offensive in Johannesburg last week could be interpreted as a pivot back to China. But Macri has continued to work with China even as he brought Argentina out of the international economic doghouse.
Macri steadily courted China (along with traditional decision-makers like the US) to support the International Monetary Fund's $50b, three-year Stand-By Arrangement (SBA) for Argentina that he secured in June to stave off a full-blown economic crisis. On Friday in Johannesburg Macri went out of his way to thank Xi for supporting the deal.
Beyond support for the IMF agreement, Argentine Central Bank BCRA also asked the People’s Bank of China to discuss increasing their bilateral $11b swap facility by another $5b. The ongoing swap facility discussions are likely to be unveiled later this year. Along with agreement to buy more soy, begin importing beef, and spending on infrastructure projects in Argentina, China’s foreign ministry has said the country wants to “help in any way [it] can.”
Not all Chinese support has flown under the radar. The New York Times’ eyebrow-raising article this weekend about potential dual-use telecommunications equipment at a satellite tracking station in Neuquén has observers worried about Chinese military infiltration in the Pampas. And that follows concerns about the $9b Atucha III nuclear plant deal inked in June contingent on using Chinese technology. This has critics calling Chinese support "charity with nails."
But the biggest announcement may yet still be to come. On the sidelines of the BRICS Summit, Macri and Xi were rumored to be discussing Argentina’s joining the Belt and Road Initiative (BRI). Macri has already agreed to help pursue BRI infrastructure projects. Knowing that diplomats — and Chinese diplomats in particular — like flashy signing ceremonies at international conferences, we wouldn’t be surprised that leading up to the G20 Leaders Summit in late November in Buenos Aires, China and Argentina will probably sign a Belt and Road Cooperation Agreement. That would make Argentina the largest country and economy in Latin America to join the BRI.
The G20 Leaders Summit is an opportunity to invite the world to Buenos Aires. But no matter who lives there, China appears to have a standing invitation to do business with the Casa Rosada.
智利政府推动亚太与美洲跨洋光缆连接项目— SAO News
Chilean President Sebastián Piñera has made a fiber-optic connection to Asia a priority. The connection will either be through a $600m, 24,000km connection to Tokyo, or a $500m, 22,800km connection to Shanghai. Chile is consulting with Brazil and Argentina, as well as Latin America Development Bank CAF and the Inter-American Development Bank (IDB).
China y Europa avanzan en fusiones en AL— El Financiero
According to Mergermarket, Chinese mergers and acquisitions in Latin America in the first half of this year was $5.1b, up 90% over the $2.7b from the same time last year. Brazil, Chile, and Mexico were the top three markets. Overall inward M&A was up 38.4%, even though M&A from US firms was down 39% to $1.5b.
China Communications wins legal fight to build Panama’s fourth bridge - News— Global Construction Review
China Communications Construction Co Ltd (CCCC) and China Harbour Engineering Company Ltd (CHEC) won a $1.42 billion contract build the fourth bridge over the Panama Canal. The 6.5-km (4-mile) bridge will have six car lanes and a two-way metro line. Construction is expected to begin later this year and will take three years.
Mitsubishi to invest in Peru copper mine— The Japan News
Mitsubishi plans to spend between ¥220 billion and ¥230 billion to develop the Quellaveco copper mine in southern Peru. The sum is 40 percent of the project’s development costs totaling 5 billion to $5.3 billion.
Guyana signs onto China’s ‘Road and Belt’ initiative— Antigua Observer
Guyana signs onto China’s ‘Road and Belt’ initiative— Guyana Department of Public Information
Argentina’s not the only one looking at the BRI. Guyanese Foreign Minister Carl Greenidge and Ambassador Cui Jianchun have signed a Memorandum of Understanding (MOU) bringing the country into the BRI.
The Pacific Alliance Puzzle— Global Americans
Latin America's Future Begins with the Pacific Alliance— Atlantic Council
In the wake of last week’s Pacific Alliance meeting, our friends Dan Erikson, Jason Marczak, and Benjamin Creutzfeldt all assess how the group is evolving.
The trade war continues. Soy exporters in Brazil and Argentina are looking to leverage the situation to get permission to export processed products (meal and oil) to China. Mexico, Korea, Japan, and others band together to fight US auto tariffs, while O Globowonders if Brazil will join up with China and India to fight US isolationism.
The Pacific Alliance fund of Mexico’s Angel Ventures has invested $1.3m in Chile’s Citysense and $1.2m in Mexico’s Energryn. More broadly tech venture capital is taking a bigger role in Latin America. Rethink Education, SoftBank, Telstra Ventures and TPG's the Rise Fund were among the 25 VC firms that debuted in Latin America last year, among the $1b equity invested regionally in tech.
SAG y Asoex buscan diversificar mercados para la fruta chilena en Asia— Portal Portuario
Chile’s at it again. The Livestock and Agriculture Service (SAG) and the fruit exporters association ASOEX hosted inspectors from Indonesia’s Agriculture Quarantine Agency (IAQA) to approve fruit exports beyond those currently allowed through the isolated Surabaya port. The Chileans are also working on getting access for their avocados to South Korea, apples to Vietnam, and a waiver on fumigation for berries and avocados to India.
China — LAC
习近平会见巴西总统特梅尔— People’s Daily
Brasil e China discutem maior aproximação comercial no setor de agro— Último Instante
Temer pede à China fim de sobretaxas a frango e açúcar— Jornal do Brasil
During the BRICs Summit last week President Xi told his Brazilian counterpart Michel Temer that the country will evaluate the anti-dumping barriers China has imposed on Brazilian raw sugar and poultry. Brazil also hopes to be able to export processed soya products to China.
O que os candidatos querem da China? E para o Brasil— O Antagonista
Marcos Troyjo, head of Columbia University’s BRICS Lab, argues that Brazil’s presidential candidates need to know what they want from China.
Shougang Hierro Perú began its $1.1b expansion of the Marcona mine operations this week.
The Lázaro Cárdenas-La Unión Special Economic Zone (ZEE) head Gerardo Gutiérrez Candiani says that China is playing a key role in the development of the zone.
China has a vastly ambitious plan to connect the world— The Economist
The Economist gives the BRI the cover package treatment, while the FT worries that it is not living up to expectations.
Petrobras targets larger China market share with new crude oil— Hellenic Shipping News Worldwide
Petrobras plans to push more crude oil to top importer China by marketing a new medium-sweet grade that could be shipped from October. China’s demand for low-sulphur crude, such as oil from Angola and Brazil, jumped over the past two years after its independent refiners, also known as teapots, were allowed to import crude.
Especial de TTC: El Caribe da la bienvenida a China— Travel Trade Caribbean
China’s new diplomatic relations with the Dominican Republic have heightened Caribbean interest in Chinese tourists.
Peruvian blueberry season kicked off this week, and ProArándanos Perú head Sergio del Castillo expects exports to reach 76,000 tons, up 60% from last year. Forty-six percent of Peru’s blueberry exports go to North America, and 15% go to China.
Mexican President elect Andrés Manuel López Obrador is inviting President Xi Jinping to his December swearing in. Maybe he’ll skip out early from the G20 in Buenos Aires?
10th BRICS Summit Johannesburg Declaration: An analysis— Post Western World
Our friend Oliver Stuenkel looks at the BRICS Summit declaration. Among other things, the leaders recommitted to opening a New Development Bank (NDB - aka BRICS Bank) office in São Paulo.
China’s Ambassador to Brazil, Li Jinzhang recently expressed the Chinese government is interested in investing in railways and urban transport. Ambassador Li noted that a Chinese SOE had lready submitted a proposal for the construction of a surface light railway to the Federal District/Brasilia.
Uruguay’s capital Montevideo has incorporated the very first hybrid vehicle into its bus fleet. The vehicle was manufactured by Yutong, one of China’s leading bus manufacturers.
Bogotá-based architecture firm Taller will design the Guan Ming Town forest and sports park in Shenzhen.
The Hondu-Central American China Chamber of Industry and Commerce is holding events in Tegucigalpa (Aug 15) and San Pedro Sul (Aug 16) on doing business in China and the Canton Fair.
Futuro prometedor de la cooperación China-México— El Economista
Chinese Ambassador to Mexico Qiu Xiaoqi talks about the strategic relationship between the two countries.
México impulsa la exportación de gasolina… de China— Forbes México
Mexico’s demand for gasoline now has it importing from China. In June 900,000 barrels of gasoline were imported from China, up from none in June 2017. We’ll see if AMLO’s energy program is able to address that demand.
Broken China should scare LatAm— Euromoney
Rob Dwyer writes about how Latin America’s increasing dependence on China as an export market could be a problem if China slows down.
Three international teams line up for Jamaican airport PPP - News— Global Construction Review
China Harbor Engineering is part of the Corporacion del Este consortium (Grupo Puntacana - DR, Corporación del Kingston, GBG Energy and Jamaica Producers Group) bidding on the PPP to operate and expand Norman Manley International Airport near Kingston. The winner will finance, develop and maintain the airport, the second largest in Jamaica after Sangster International.
Korea — LAC
En Santiago: Chile y Corea del Sur acuerdan términos para profundización del TLC— Dirección General de Relaciones Económicas Internacionales
Chile and South Korea have agreed to terms of reference for negotiating an expansion of their Free Trade Agreement. Chile hopes to have 370 mostly agroindustrial products identified in the Doha Development Agenda (DDA) added to the agreement.
Philipino banana exporters are sensing increasing competition from Latin American countries. Especially Central America which recently singed and FTA with South Korea.
Corea del Sur: el TLC pendiente— El Heraldo de México
An argument that Mexico needs to sign an FTA with South Korea.
During 2017 bilateral trade topped $1.25 billion according to Colombian Ambassador to Korea Juan Pablo Rodriguez Barragan. Colombian exports to Korea -- mainly coffee, flowers, other agricultural products and coal-- reached $457 million, while Korean exports to Colombia -- such as electronics, cars, and heavy construction equipment and materials -- reached $791 million.
Korean International Cooperation Agency (KOICA) head Lee Mikyung is interviewed on her visit to Lima.
Japan — LAC
Embajador de Japón en México visita Cancún— Azteca Noticias
Ambassador Yasushi Takase led a delegation of members of the Japanese Diet to visit and learn about the “Cancún Model."
Japan and Mexico are going to cooperate more on combating customs infractions
Now that the first Patagonian beef has gone to Japan, Argentina is working to get approval to export beef from the rest of the country. Japan is also now exporting Wagyu beef to Argentina.
How sweet it is - Argentina is also sending its first dulce de lecheto Japan.
An interview with Toyota President Edge Egashira, in which he talks about lowering import tariffs into Colombia and hoping to end the year with 6% market share.
Colombia and Japan have signed a double-taxation agreement.
Acordo Mercosul-Japão - Opinião— Estadão
Estadãoargues for a trade deal between Mercosur and Japan.
ASEAN & Oceania — LAC
Argentina signs ag co-operation agreement with Australia— Queensland Country Life
Australia and Argentina have committed to stronger agricultural engagement and co-operation, including stronger trade ties following the inaugural Australia-Argentina high level agriculture dialogue meeting in Buenos Aires.
GCC — LAC
Brazil to promote tourism in UAE— Trade Arabia
Brazil’s Ministry of Tourism will send a mission to the UAE to promote the country as an tourist destination for Arab travelers. Brazil and the UAE recently agreed to a visa waiver agreement for leisure, business, and transit travelers.
¿Qué tienen en común Colombia, Qatar y México?— Bolsamania
What do Colombia, Qatar, and Mexico have in common? According to JPM Cazenove, they’re the only Emerging Markets to have their stock markets in positive territory all year long.