China's big move into Latin America
Brazil's largest trading partner is no longer the US – it's China. Beijing is investing billions of dollars and filling a vacuum left by the United States.
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China's growing role has alarmed policymakers in Washington. However, China has been careful not to establish a military presence in the region, since doing so would antagonize Washington. The US has considered Latin America to be in its sphere of influence since the Monroe Doctrine of 1823.Skip to next paragraph
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China "treats [Hugo] Chávez as they do [Álvaro] Uribe and Lula," said Alexandre Barbosa, a consultant to the São Paulo-based consulting firm Prospectiva, referring to the presidents of Venezuela, Colombia, and Brazil, respectively. "They're interested in business."
And what a voracious interest in business they've shown. Trade between Latin America and China rocketed from $10 billion in 2000 to $140 billion in 2008. China is buying zinc from Peru, copper from Chile, and iron ore from Brazil. It's shipping electronic equipment to Brazil, buses to Cuba, clothes to Mexico and cars to Peru.
The Peruvian connection
Peruvian President Alan Garcia is trying to position his country as a major commercial hub for China in South America. He's hoping to capitalize not only on Peru's ports in the center of South America but also on a shared history: Thousands of Chinese emigrated to Peru in the 19th and early 20th centuries to do manual labor. These immigrants have left a legacy of the so-called "chifa" restaurants, which offer Chinese food throughout Peru.
Today, China's biggest appetite is for Peru's plentiful minerals.
Two Chinese companies are moving forward with major mining projects in Peru while companies from other countries are suspending or canceling theirs, said John Youle, the executive president of ConsultAndes, a Lima-based firm.
China generally has been investing little money in Latin America, however. This has prompted criticism that it's simply tapping into the region's vast raw minerals, just as colonial powers did for centuries.
Although China has become a major player over the past decade, trade between the United States and Latin America still dwarfs China's trade with Latin America.
China has cash to lend
Beyond trade, China suddenly is rivaling the World Bank and the Inter-American Development Bank as a major lender to Latin America, at a time when China is flush with cash and many companies can't get access to bank loans.
Petrobras is borrowing $10 billion from China, to be paid off by shipping 150,000 barrels of crude per day to China this year and 200,000 barrels per day for the next nine years, said Erico Monte, a Petrobras spokesman.