Belt and Road Initiative injects impetus to cooperation with Latin American and the Caribbean countries
By Yang Zhimin |
Updated: 2018-11-20 16:46
Editor's note: This article is part of the Policy Preview Report for G20 Summit in Argentina.
Yang Zhimin
Since the beginning of the 21st century, China-Latin America economic and trade relations have seen constant, stable development. Latin America has become one of the most dynamic regions for China's foreign trade cooperation. According to statistics from the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), China has become the second-largest partner in goods trade, the third-largest export market and the second-largest source of imports in Latin America since 2014.
Latin America is also the second-largest market for China’s overseas investment. By the end of 2017, the stock of China's direct investment in Latin America exceeded $200 billion. So far, more than 2,000 Chinese companies have invested in Latin America, creating more than 1.8 million jobs there.
The prosperous economic and trade cooperation between China and Latin America could not be only attributed to the complementarity in terms of resource endowment and economic structure, but also to the great importance to each other at a strategical level. A series of arrangements have established from cooperative mechanisms, platforms to specific measures that fundamentally guarantee the upgrading and stability of bilateral economic and trade cooperation.
In 2008, the Chinese government issued the first policy paper on Latin America and the Caribbean, providing a sound basis for the development of China-Latin America relations. The second policy paper released in 2016 further expounded the new ideas, proposals and measures towards Latin America and the Caribbean, in light of upgrading the relations to a comprehensive partnership of cooperation.
So far, 24 of the 33 Latin American and the Caribbean countries have established diplomatic relations with China. Among them, many are comprehensive strategic partners or strategic partners of China, as well as China’s cooperative partners in multilateral mechanisms like G20, APEC and BRICS, and also in South-South cooperation and rule-based global trade system.
Since the Belt and Road Initiative was proposed five years ago, it has been widely expanding the width and depth of China-Latin American cooperation. In May 2017 when the first Belt and Road Forum for International Cooperation, Chinese government made it explicit that Latin America and the Caribbean is the natural extension of the 21st-Century Maritime Silk Road. In February 2018 the second Ministerial Forum of "China-CELAC" released a special announcement on the Belt and Road Initiative.
So far, seven Latin American and the Caribbean countries have joined the Asian Infrastructure Investment Bank (AIIB), and 14 have signed MOU with China on Belt and Road cooperation.
Boosted by Belt and Road, the bilateral cooperation between China and Latin American countries entered a new stage of integrative, comprehensive cooperation that could be styled as “1+3+6”: one plan refers to Sino-Latin American and Caribbean Cooperation Plan (2015-2019), three driving forces that are trade, investment and financial cooperation, and six sectors including energy and resources, infrastructure building, agriculture, manufacturing, scientific and technological innovation and information technologies.
At the same time, the new mechanism on production capacity has been formed. It focuses on three sectors that are key to interconnection -- logistics, electricity and information, with integrated efforts from enterprises, society and government. And the financing channels have been expanded to development funds, credit and loan and insurance.
China also introduced substantial measures, including setting up the Fund for China-Latin American and the Caribbean Cooperation, special loan for infrastructure projects, special-purpose loans, preferential loans for agricultural cooperation, etc.
Looking into the future, China-Latin American and the Caribbean economic and trade cooperation has extensive prospects. On the one hand, China has huge market demand and outbound investment capacity. It is estimated to import as much as $2 trillion of commodities from countries and regions involved in the BRI in next five years. The first Chinese International Imports Expo, held in Shanghai in early November, is expected to serve an opportunity of negotiating the free trade zones as well as increasing imports to China.
On the other, there is a shortage of infrastructure in the Latin America and the Caribbean. According to the Latin American Development Bank, the accumulative investment in airport construction in Latin America is expected to reach $53.15 billion by 2040, to meet the surging demands of tourists that increases at an average rate of 8 percent.
Currently the economy and policies in Latin America and the Caribbean are undergoing drastic, in-depth changes and adjustments. It however will give impetus for the further innovation of the cooperation model between China and Latin America.
Yang Zhimin is a research fellow at the Institute of Latin American Studies, Chinese Academy of Social Sciences. The author contributed this article to China Watch exclusively. The views expressed do not necessarily reflect those of China Watch.
All rights reserved. Copying or sharing of any content for other than personal use is prohibited without prior written permission.
Editor's note: This article is part of the Policy Preview Report for G20 Summit in Argentina.
Yang Zhimin
Since the beginning of the 21st century, China-Latin America economic and trade relations have seen constant, stable development. Latin America has become one of the most dynamic regions for China's foreign trade cooperation. According to statistics from the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), China has become the second-largest partner in goods trade, the third-largest export market and the second-largest source of imports in Latin America since 2014.
Latin America is also the second-largest market for China’s overseas investment. By the end of 2017, the stock of China's direct investment in Latin America exceeded $200 billion. So far, more than 2,000 Chinese companies have invested in Latin America, creating more than 1.8 million jobs there.
The prosperous economic and trade cooperation between China and Latin America could not be only attributed to the complementarity in terms of resource endowment and economic structure, but also to the great importance to each other at a strategical level. A series of arrangements have established from cooperative mechanisms, platforms to specific measures that fundamentally guarantee the upgrading and stability of bilateral economic and trade cooperation.
In 2008, the Chinese government issued the first policy paper on Latin America and the Caribbean, providing a sound basis for the development of China-Latin America relations. The second policy paper released in 2016 further expounded the new ideas, proposals and measures towards Latin America and the Caribbean, in light of upgrading the relations to a comprehensive partnership of cooperation.
So far, 24 of the 33 Latin American and the Caribbean countries have established diplomatic relations with China. Among them, many are comprehensive strategic partners or strategic partners of China, as well as China’s cooperative partners in multilateral mechanisms like G20, APEC and BRICS, and also in South-South cooperation and rule-based global trade system.
Since the Belt and Road Initiative was proposed five years ago, it has been widely expanding the width and depth of China-Latin American cooperation. In May 2017 when the first Belt and Road Forum for International Cooperation, Chinese government made it explicit that Latin America and the Caribbean is the natural extension of the 21st-Century Maritime Silk Road. In February 2018 the second Ministerial Forum of "China-CELAC" released a special announcement on the Belt and Road Initiative.
So far, seven Latin American and the Caribbean countries have joined the Asian Infrastructure Investment Bank (AIIB), and 14 have signed MOU with China on Belt and Road cooperation.
Boosted by Belt and Road, the bilateral cooperation between China and Latin American countries entered a new stage of integrative, comprehensive cooperation that could be styled as “1+3+6”: one plan refers to Sino-Latin American and Caribbean Cooperation Plan (2015-2019), three driving forces that are trade, investment and financial cooperation, and six sectors including energy and resources, infrastructure building, agriculture, manufacturing, scientific and technological innovation and information technologies.
At the same time, the new mechanism on production capacity has been formed. It focuses on three sectors that are key to interconnection -- logistics, electricity and information, with integrated efforts from enterprises, society and government. And the financing channels have been expanded to development funds, credit and loan and insurance.
China also introduced substantial measures, including setting up the Fund for China-Latin American and the Caribbean Cooperation, special loan for infrastructure projects, special-purpose loans, preferential loans for agricultural cooperation, etc.
Looking into the future, China-Latin American and the Caribbean economic and trade cooperation has extensive prospects. On the one hand, China has huge market demand and outbound investment capacity. It is estimated to import as much as $2 trillion of commodities from countries and regions involved in the BRI in next five years. The first Chinese International Imports Expo, held in Shanghai in early November, is expected to serve an opportunity of negotiating the free trade zones as well as increasing imports to China.
On the other, there is a shortage of infrastructure in the Latin America and the Caribbean. According to the Latin American Development Bank, the accumulative investment in airport construction in Latin America is expected to reach $53.15 billion by 2040, to meet the surging demands of tourists that increases at an average rate of 8 percent.
Currently the economy and policies in Latin America and the Caribbean are undergoing drastic, in-depth changes and adjustments. It however will give impetus for the further innovation of the cooperation model between China and Latin America.
Yang Zhimin is a research fellow at the Institute of Latin American Studies, Chinese Academy of Social Sciences. The author contributed this article to China Watch exclusively. The views expressed do not necessarily reflect those of China Watch.
All rights reserved. Copying or sharing of any content for other than personal use is prohibited without prior written permission.
