China Seeks Political Dialogue with Latin America and the Caribbean

China Seeks Political Dialogue with Latin America and the Caribbean

LA JOLLA – What does China want from Latin America?  Oil. Minerals. Agricultural products.

But China also wants a broader, more diversified relationship with Latin America and the Caribbean, said Brazilian Ambassador to China Clodoaldo Hugueney during a Nov. 28 presentation to an audience of business leaders and scholars at the Institute of the Americas.  “China has also started thinking about the relationship in more comprehensive terms — not just in terms of natural resources and trade, but a more political relationship.”

Hugueney, who has served as Brazil’s ambassador to China for the past four years, said Chinese Prime Minister Wen Jiabao “took the region by surprise” during a June 2012 speech to the U.N. Economic Commission on Latin America and the Caribbean when he “proposed a model for a relationship that involved the whole Latin America region and established a political dialogue.”

“Up to this point, the relationship had been a bilateral relationship between China and different countries. Brazil was a priority. Venezuela was a priority. Cuba was a priority,” Hugueney said. During the June speech, Wen “proposed several initiatives, for example, meetings of agricultural ministers.  They are now pursuing these initiatives, which indicates that the relationship with China and the whole region has become much more important.”

Brazil’s relationship with China has changed “dramatically” over the past five years.

“The relationship has moved from the economic front to the political, scientific and cultural fronts. The relationship became much more comprehensive and diversified,” Hugueney said. “Every year, either the Brazilian president visits China or the Chinese prime minister visits Brazil, something that has never happened before.  Not only are there visits, but the presidents talk on the phone and they meet on the margins of all the international meetings.”

China is now Brazil’s largest trading partner.

“What we have been trying to do is shift the trade structure so that we are exporting more manufactured goods to China,” he said.  The main manufactured good that Brazil exports to China is aircraft. For example, Brazil’s aircraft manufacturer Embraer has about 70 percent of the Chinese market.

“We have finally convinced the Chinese that it is in their own interest to do this,” said Hugueney. “The Chinese are sending missions to Brazil to increase imports of Brazilian products. The Chinese are also dramatically increasing investment in Brazil.  They are moving into the industrial sector – the automobile sector, the construction sector. They have been in the telecommunication sector for several years now.”

The Brazilian government took the unusual step of establishing a structure to oversee the relationship with China, building a blueprint for the objectives of a comprehensive relationship.

“We adopted a five-year plan of action,” said Hugueney.  “We established 11 key issues, including trade, investment, agriculture, science and technology, culture, education.

“We now have a document that is not a classic diplomatic document, but a 30-page document indicating priorities, so that the relationship evolves in a way that is positive for both countries.  The idea is to ensure that the relationship is, as the Chinese like to say, a ’win-win’ relationship for both. If left uncontrolled, we can be sure that there will only be one winner in the relationship because the Chinese think ahead and plan ahead.”

As China’s relationship with Latin America deepens, the country’s leaders have been careful to stress that it poses no challenge to the historic relationship between the United States and Latin America.

“For all of the Latin American countries, the relationship with the United States will always be fundamental,” said Hugueney. “It would be a mistake, both for China and for Latin America, to perceive the growing relationship with China as a sort of a counterbalance to the relationship with the United States. The Chinese are 20,000 km away. The United States is part of the region. The U.S.-Latin America relationship is going to remain a central relationship in the region.”


High Energy Costs are Chile’s ‘Achilles Heel,’ Experts Say at IOA Roundtable

High Energy Costs are Chile’s ‘Achilles Heel,’ Experts Say at IOA Roundtable

SANTIAGO- As Chile strives toward the laudable goal of becoming South America’s first developed country, the fragility of its electric transmission system and, more broadly, its energy sector has become an Achilles heel said Minister of Energy Jorge Bunster.

“We need to enhance the resources the country has; hydroelectricity and also nonconventional renewable energy sources, but without casting aside conventional energy” Bunster told almost 100 representatives from across Chile and the hemisphere at the Institute of the Americas November 12 Chile Energy Roundtable in Santiago.

In a keynote address and in responses to questions during a roundtable discussion, Minister Bunster acknowledged that energy costs will remain high for the next four to five years as the nation grapples with project delays, uncertainty over interconnecting the nation’s two electric grids, as well as opposition to large-scale energy projects from an increasingly sophisticated public.

“Today we have a fragile system in terms of transmission” Minister Bunster said. “We have an Achilles heel that must be resolved.” He added that Chile’s “energy future must be diversified.” Chile imports roughly 60% of its energy needs.

Minister Secretary General of the Presidency and former IOA Fellow, Cristián Larroulet, speaks at lunch during the Institute of the Americas Chile Energy Roundtable.

The Piñera government, with the Carretera Eléctrica Pública and Ley de Concesiones para Sistemas de Transmisión initiatives before Congress is working to address the deficiencies and weaknesses of the nation’s transmission and distribution system, but a short-term solution is unlikely noted the minister.

Given the nation’s economic development trends and development goals, many speakers echoed Minister Bunster’s affirmation of the need for a diversified energy matrix and further support in addressing the issue of interconnection of the country’s two electric grids.

But serious concerns over recent cancellations, delays and opposition to major energy projects and how the government has managed the sector permeated the discussions.

Indeed, participants from across a diverse roster of major energy players in Chile called for increased government attention to the project approval process.  Uncertainty for energy project development and execution will continue to impact the country’s near-term energy outlook they contended.

The need to understand and learn from the lessons of the past several years in Chile’s energy sector was paramount argued several speakers. [inset side=left] “The investment effort underway will provide the energy that Chile needs.” Cristián Larroulet[/inset] Efforts undertaken by the Ministry of Economy to address economic development and investment issues remain important to identify the existence of problems that are in the interests of the government and private sector to solve.

Participants implored an energy matrix that maximizes Chile’s abundant hydro resources as well as further assessment of the global natural gas price and supply upside, particularly given decisions made over the last few years to develop liquefied natural gas infrastructure and recover the use of natural gas as a fuel source.

How to deal with public outreach and communication and the image of the energy industry proved topics of concern and ones that drew great introspection but few immediate answers.

A more positive note was sounded in a lunchtime keynote address by former Institute of the Americas Fellow and current Minister Secretary General of the Presidency, Cristián Larroulet, who stressed that “the investment effort underway will provide the energy that Chile needs.”

China and Philippines Locked in Escalating Dispute as U.S.-Philippines Ties Strengthen

China and Philippines Locked in Escalating Dispute as U.S.-Philippines Ties Strengthen

LA JOLLA – Despite China’s historic ties to the Philippines, the two countries are now locked in an escalating dispute over the South China Sea.

China told its citizens on May 10 that they are not safe in the Philippines and state media warned of war as a month-long dispute over the South China Sea threatened to spin out of control.

“The political relationship is very challenged because China claims the entire South China Sea,” the U.S. Ambassador to the Philippines, Harry K. Thomas Jr., said at a May 7 presentation at the Institute of the Americas.

China claims virtually all of the South China Sea — which is believed to sit atop vast oil and gas reserves — as its territory, even waters close to the coasts of the Philippines and other Asian countries.

The United States, which closed its last naval base in the Philippines in 1992, is not likely to intervene in the dispute. On the question of reopening U.S. military bases in the Philippines, Thomas was emphatic.

“We don’t bases. We don’t need bases. We are not asking for bases. I’m very serious about that,” he said.  “Bases are not what we want, need or ask for.”[inset side=right] “We would like for the Philippines to be one of the Asian tigers,” Thomas said.[/inset]

As China and the Philippines dig in for a protracted dispute over the rights to the Sea, Thomas said China is becoming a larger trading partner for the Philippines. China is not the Philippines’ largest trading partner, but there is an extensive andlong-standing economic relationship between the Philippines and Taiwan, Hong Kong and the People’s Republic of China.

Thomas predicted that “China will continue to expand its economic relationship with the Philippines.”

While political tensions grow between China and the Philippines, Thomas noted that the U.S.-Philippines relationship is “broad and deep.”

“Filipinos, like Americas, love democracy, freedom of speech.  That love of democracy, freedom of speech, those are the things that bind us,” Thomas said.

The “Achilles heel, our great concern, is economic trade,” he said.  Trade between the United States and the Philippines is down about 20 percent due to the tsunami  and quake that struck Japan last year and disrupted the global semiconductor industry.

Still, the Philippines is the Unites States’ 30th largest trading partner, and is the 12th largest trading partner for food and beverage.

President Obama selected the Philippines as one of four countries for enhanced economic development. “We would like for the Philippines to be one of the Asian tigers,” Thomas said.

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