19 August 2011

China SignPost™ (洞察中国) #45–“Tango for Trade, Samba for Sales: Strategic Implications of China’s Growing Investment and Commercial Ties in Latin America”

Gabe Collins and Andrew Erickson, Tango for Trade, Samba for Sales: Strategic Implications of China’s Growing Investment and Commercial Ties in Latin America,” China SignPost™ (洞察中国), No. 45 (19 August 2011).

China SignPost™ 洞察中国–“Clear, high-impact China analysis.”©

Executive Summary

–China’s annual trade with Latin American countries is now worth at least US$118 billion per year, nearly 12 times larger than what it was in 2000. This makes China’s trade with Latin America roughly the same size as its growing trade with Africa, a region whose ties with China receive much attention.

–Chinese companies made investments in a range of Latin American energy, mining, agricultural, industrial, and financial assets worth more than U.S.$25 billion in 2010, a watershed year that saw Latin America account for more than 40% of China’s large overseas investment deals, based on China Global Investment Tracker data.

–China’s natural resource-focused investment in Latin America will continue, but is also likely to diversify into local manufacturing as well as retail and other consumer-oriented businesses.

–China’s relations with Latin American countries are driven primarily by economics and a bit by politics, mainly the desire to isolate Taiwan. China sees soybeans, oil, iron ore, and burgeoning local consumer markets as the prize and will use its growing leverage to secure better economic terms, not force Latin countries to do its political bidding. Beijing does not want to overly irritate Washington, its most important foreign relationship. …