PRESIDENT Xi Jinping’s state visits to Peru and Brazil hold significant strategic and economic importance for China and the respective host countries. In Peru, Xi’s visit elevated the China-Peru comprehensive strategic partnership to a new level. This included deepening political mutual trust and expanding cooperation in various fields such as mining, infrastructure and trade. China has been Peru’s largest trading partner for over a decade. The visit underscores ongoing and future projects, including the inauguration of the Chancay Port which is expected to enhance trade connectivity.
Xi’s attendance at the APEC Economic Leaders’ Meeting in Lima highlights China’s commitment to regional economic integration and cooperation within the Asia-Pacific region. His visit to Brazil marks a significant step in strengthening the China-Brazil strategic partnership, emphasizing a shared future and cooperation in various fields such as sustainable infrastructure, energy transition and digital economy. The two countries signed nearly 40 agreements covering diverse sectors such as agriculture, trade, investment, infrastructure, and technology.
China has been Brazil’s largest trading partner since 2009. Both countries emphasized their roles in promoting a more just and equitable international order. They discussed cooperation on global issues like climate change, sustainable development and peace initiatives. Both nations committed to promoting a more just and equitable international order, addressing global issues likes climate change, sustainable development and peace initiatives. China and Peru signed multiple agreements aimed at enhancing trade and investment. According to a report released by the United Nation Economic Commission for Latin America and the Caribbean last month, the annual trade in goods between China and Latin America increased 35 times from 2000 to 2022. By comparison, the region’s trade with the rest of the world rose four times in the same period.
The rapid expansion of trade between China and Latin America can be attributed to several key factors. China’s industrial growth has driven a high demand for raw material and commodities which Latin America is rich in. Countries like Brazil, Chile and Peru export significant amounts of minerals, soybeans oil and other raw materials to China. Conversely, Latin America imports a wide range of affordable consumer goods, electronics and machinery from China, creating a mutually beneficial trade relationship. China has invested heavily in Latin American infrastructure, including ports, railways and energy projects, under initiatives like the Belt and Road Initiative (BRI). These investments facilitate smoother trade flows and enhance connectivity.
China has signed several free trade agreements with Latin American countries, reducing tariffs and trade barriers which have significantly boosted trade volumes. Latin American countries have sought to diversify their trade partners beyond traditional markets like the US and Europe. China’s growing economic presence offers new opportunities for export growth and economic diversification. These visits reflect China’s broader strategy to enhance its influence and partnerships in Latin America, fostering mutual economic growth and addressing global challenges collaboratively. Strengthened diplomatic ties and high-level visits between Chinese and Latin American leaders have created a conducive environment for trade and investment. Participation in regional forums and organizations, such as the China-CELAC Forum, has facilitated dialogue and cooperation on economic and trade issues. To address the concerns of trade imbalance and
the potential negative impact of Chinese imports on local industries and jobs in Latin America, several strategies can be implemented. Governments can implement policies that support local industries, such as subsidies, tax incentives, and grants for small and medium-sized enterprises (SMEs). This helps enhance their competitiveness against imported goods. Investing in R&D can foster innovation and improve the quality and efficiency of local products, making them more competitive in both domestic and international markets.
Providing training programs to upskill the workforce can help workers transition to higher-value industries and reduce the impact of job losses in sectors affected by imports. Investing in infrastructure, such as transportation and digital networks, can improve the efficiency and productivity of local industries. Latin American countries can diversify their export markets to reduce dependency on a single trading partner. Exploring new markets in Africa, Asia and Europe can help balance trade flows. Encouraging the production and export of value-added products rather than raw material can increase export revenues and create more jobs. Promoting sustainable and environmentally friendly practices in local industries can create a competitive advantage and appeal to global markets that prioritize sustainability. Conducting social impact assessments for major trade and investment projects can ensure that the benefits are widely distributed and that negative impacts on local communities are mitigated.
By implementing these strategies, Latin American countries can address the challenges posed by trade imbalances and protect their local industries and jobs. This approach not only fosters economic growth but also ensures that the benefits of trade are more equitably distributed across society. The Chancay Port has the potential to be a transformative project for Peru and the broader Latin American region. By enhancing trade efficiency, boosting economic growth, and increasing regional connectivity, it can play a pivotal role in the economic and strategic landscape of Latin America. However, addressing security concerns and ensuring inclusive benefits will be key to its long-term success.
President Xi Jinping’s signed article published in Peru and the China-Peru joint statement have mentioned that China is ready to launch more “small and beautiful” livelihood projects in Peru. Some notable examples of “small and beautiful” projects highlight the growing cooperation between China and Latin America. These include Cauchari Solar Park solar energy projects in Argentina. Chinese companies like Huawei have been involved in projects to improve telecommunications infrastructure in rural areas of Peru. Chinese firms have partnered with Brazilian agricultural companies to introduce smart farming technologies. These initiatives include the use of drones, Al, and IoT (Internet of Things) to improve crop yields and sustainability. Latin American countries can benefit from Chinese expertise and technology in areas such as cybersecurity, surveillance, and military hardware. Enhanced security cooperation can contribute to regional
stability, which is beneficial for both Chinese investments and the economic development of Latin American countries.
-The writer, Retired Group Captain of PAF, is author of several books on China. ([email protected])
