Latin Love in Beijing

Two recent items highlight China's increasing influence in Latin America:

1) Last Friday, a Mexican-Chinese joint venture broke ground on an automobile plant in the Mexican state of Michoacan. The partnership between FAW, one of China's state-owned automotive giants, and Mexico's Grupo Elektra, will produce FAW-branded cars for sale in Mexico and beyond.

2) Yesterday the China-Latin America Business Summit opened in Santiago, Chile, bringing Chinese officials together with representatives and businesspeople from 16 Latin American nations.

In a speech opening the Santiago summit, Chilean president Michelle Bachelet said that "China has replaced the United States as Chile's biggest trading partner," adding that Chile's exports to China have jumped 140% since the enactment of a free-trade agreement between the two countries last year. Total Sino-Latin American trade has jumped 44% through September of this year.

While U.S. trade with Latin America is still much bigger than Sino-Latin American trade, the lion's share of U.S.-Latin trade is between the U.S. and Mexico. In South America, China has aggressively pursued commodities deals, often tying them in with Chinese investment in infrastructure. Meanwhile, U.S. relations with Latin America have chilled, typified by Hugo Chavez's many public spats with George Bush and a region-wide disgust with U.S. unilateralism in Iraq stirring memories of a history of U.S. colonial incursions in Latin America.

The $150-million FAW auto plant under construction in Mexico is a concrete example of Sino-U.S. economic competition in Uncle Sam's backyard. The plant will eventually churn out 100,000 cars a year, and the entry level FAW vehicle will sell for almost $1000 less than General Motor's cheapest Chevrolet model available in Mexico, according to the Associated Press.

China's growing influence has also spooked the U.S. defense establishment. In May, Assistant Secretary of Defense Stephen Johnson, in charge of the Western Hemisphere, warned that the U.S. must maintain its military spending in Latin America or risk leaving a "vacuum for powers like China and Russia to fill."

And while Latin American governments seem to be welcoming "South-South" trade deals with China for the moment, it remains to be seen whether they will come to view China as an exploitative power, simply after sweet commodities deals and a place to sell Chinese-produced manufactured goods.

For the moment though, the fact that China is not the U.S. seems to be helping to grease the skids for a continued expansion in trade.

From a more selfish standpoint, here's hoping that the growth in Sino-Latin trade brings a decent Mexican restaurant to my neighborhood in Beijing.

Luke @ 17:25 | .(144) |

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