China and Latin America poised to strengthen economic ties

Updated: 2011-09-13 08:31

(China Daily)

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 China and Latin America poised to strengthen economic ties

Enrique Garcia, president of CAF, giving the keynote address at the 2nd Latin America China Investors Forum, last year.

 China and Latin America poised to strengthen economic ties

Questions from the audience at last year's Latin America China Investors Forum.

 China and Latin America poised to strengthen economic ties

Business talks during the Latin America China Investors Forum. Photos Provided to China Daily

In the last decade, China-Latin America trade has grown tremendously, thanks to China's rapid industrialization and economic growth. But another area that has grown is China's investment in the region, which has crawled out of the margins to become a primary source of capital for Latin America.

The changing relationship has seen a new type of investment, in a much broader range of industries.

Some major investments that have provided a stable foundation have been in natural resources, such as Sinopec's US$7.1 billion-deal for YPF's Brazilian unit; or Chinalco's $2.16-billion deal with the Toromocho Copper Mine, in Peru; CNOOC's $3.1-billion deal for a 50-percent stake in Argentina's Bridas Corp; and Wuhan Iron & Steel's $400mn investment in MMX.

Government support for these deals has come from the National Development & Reform Commission (NDRC), China Development Bank (CDB), and The Export-Import Bank of China (CEXIM), with Chinese investors gradually diversifying more.

Since 2008, the CDB has approved about $30 billion worth of loans for Chinese companies such as the following: ZTE and Huawei, to develop telecom networks from Brazil to Mexico; Chery Auto, which is building plants in Brazil, Mexico, Uruguay, and Venezuela; Cha Dong Hong Foods, which has a joint venture agreement with BR Foods to supply the Chinese market with poultry; and the State Grid, which has set up a unit focused on Brazil.

Challenges and opportunities

Yet, in spite of all the noteworthy growth in Sino-Latin-American relations, there are some significant communication gaps between the two.

To deal with this and to respond to the global financing shift that took place after the 2008 global financial crisis, LatinFinance (see below) began a Latin America China Investors Forum, in 2009, to educate Chinese investors about the opportunities in Latin America.

The forum is now in its third year, and has become a prominent place, where Chinese banks, funds, corporations, their intermediaries, and government officials can connect with their Latin American counterparts in a private, professional setting.

More than 500 very important executives and officials from the two regions who are driving forces behind China's expansion will meet at Beijing's Westin Chaoyang today and tomorrow for a series of panel discussions, presentations, one-on-one meetings, and networking events.

These two days have been designed with a specific purpose: to create a private, professional place, where investors can find new investment opportunities in Latin America, whether they are already familiar with the region or are thinking of it for the first time.

The 2011 version of the forum has got a great deal of attention from leading Chinese portfolio managers, companies investing directly overseas, bankers, and government officials, and, from Latin America, some of the most prominent CFOs, fund managers and officials.

Discussions will cover investing in Latin American metals and mining, construction and infrastructure industries, as well as oil, energy, agribusiness, and logistics.

Recent major examples of China's growing role in Latin America include Foxcon's $10 billion investment in Brazil to manufacture the next generation of iPads, and China New Machine Energy's Jaguar Energy Guatemala plant.

With a better understanding of each other's markets and opportunities, China and Latin America are on the verge of increasing economic and commercial ties over the long run.

For more information on the 3rd Latin America China Investors Forum, go to:

(China Daily 09/13/2011 page12)