The Strengthening Relations between China and Central and South America

|China

China which has continued high-level economic growth in recent years, has taken aim at food and energy security, and is concentrating on the strengthening of relations with Central and South America. Behind this lies a change in the lay of the land in both the political and economic spheres.

Firstly, in the political realm the basic situation in Central and South America has changed. Entering the 2000s there was a string of the coming to power and reelection of left-wing governments in Central and South America in general. Consequently for China, Central and South America, what is called “America’s Backyard,” became easier to approach. Furthermore, regarding a Free Trade Area of the Americas (FTAA) which the United States is leading, consultations between Brazil, the leading country of Central and South America, and the United States remain effectively suspended, and to a certain degree a distance has arisen between Central and South America and the United States. On the visits of President Bush to Argentina and Brazil in recent years, the welcoming mood from the general public was low-key. Discerning such awkward relations between Central and South America and the United States, China has actively drawn closer to Central and South America.

Next, in the area of economics the situation has changed on the Chinese side. China, where national income has risen via growth, has switched to being a net-food importer, through eating habits becoming westernized and the increase in the volume of consumption of cooking oil and wheat, etc. With the upsurge of the acceleration of motorization and the construction of high-rise buildings and condominiums, it is also faced with an increase in demand for resources and raw materials, such as energy and iron ore. Put simply, in order to maintain growth, it has the urgent task of securing a stable supply of foodstuffs and resources.

Reflecting this situation, in the case of foodstuffs the largest customer for Central and South America, the world’s leading area for producing soybeans, is China. Brazil, the number two in global production, and Argentina, the number three, are increasing their soybean exports to China. China has been number one for about the last five years in a row as a destination for Brazil’s soybean exports. Additionally, Argentina’s soybean exports to China comprise approximately 60% of its soybean exports as a whole. China, meanwhile, depends on Central and South America for more than 80% of its import volume.

In the resource sector, including energy and raw materials, Venezuela, while also having a radical left-wing administration, commenced the export to China of approximately 150,000 barrels per day (hereinafter abbreviated to b/d) in 2005. Venezuela, the United States’ largest crude-oil-import counterpart, increased its exports to 500,000 b/d within five years, and in the future has in its sights exports to China of up to 1,000,000 b/d. In addition, for Brazil, which became an oil-exporting nation in 2006 with deep-water oil fields being developed one after another, although the United States is ranked number one as the destination for that crude oil, China has made it to number three. Furthermore, recently the biggest purchaser of Brazilian iron ore has been China. China has imported iron ore from Brazil exceeding approximately 60 million tonnes annually, and the amount of exports to China of Brazilian iron ore has expanded more than five-fold over the last five years.

Amid these circumstances, China is embarking on formal membership of the Inter-American Development Bank, and has a line of putting in order systems to strengthen still further trade and economic relations between Central and South America and China. At this juncture, regarding the work to widen the Panama Canal and plans for a trans-South America highway, moves are also being seen to push the realization thereof. Due to the competition of the United States and Europe, which have deep geographical and historical relations with Central and South America, it is thought that China, in going as far as getting hands-on involved in the construction of distribution routes, hopes to obtain with surety the abundant foodstuffs and resources of Central and South America.

[Translated by ERINA]