No son tiempos fáciles para Venezuela. En el tercer trimestre del año, la escasez de productos básicos continúa siendo una piedra en el zapato del Gobierno, el dólar paralelo—que inició 2012 cotizando en 17BsF—pasó la línea de 40BsF, la inflación se ubicó en 42,5 por ciento para agosto pasado, y la inversión extranjera fue de -15 por ciento, uno de los índices más bajos de la región. Con la debacle económica marcando la opinión pública y, peor aún, la calidad de vida de los ciudadanos, el presidente Nicolás Maduro tomó un avión para China la semana pasada.
La primera visita oficial del heredero político de Hugo Chávez se produce antes de completar un semestre en el Palacio de Gobierno. Fue un viaje expreso, pero con los resultados esperados: en tres días, el mandatario cerró un nuevo préstamo de 5 mil millones de dólares, y la promesa de inversiones por 14 mil millones de dólares en el área petrolera.
Con esta inyección de dinero, Venezuela suma 43 mil millons de dólares en préstamos de China en apenas seis años. El esquema, establecido en 2007 a través de la creación del Fondo Mixto Chino Venezolano, se centra en blindar créditos con la entrega de petróleo a precio fijo por un plazo determinado de años. Fue la fórmula que el entonces presidente Hugo Chávez encontró para materializar su interés por China. Desde el comienzo de su gestión el mandatario buscó caminos para sustentar su retórica anti americana, y una China en plena ebullición parecía, sin duda, la más atractiva de las alternativas.
Asia era un destino tan poco considerado por Venezuela, que cuando Chávez fue electo en 1999 la balanza comercial entre ambos países sumaba 1,9 mil millones de dólares. En la primera década de la revolución bolivariana, el intercambio creció 10 veces, alcanzando los 10,3 mil millones de dólares en 2010. Ese año fue significativo para la relación binacional: China autorizó un préstamo de 20,8 mil millones de dólares, el mayor concedido por autoridades bancarias chinas a un único deudor.
El dinero chino motorizó la economía venezolana. En teoría, debía ser destinado a proyectos de infraestructura nacional, agricultura y a la construcción de dos satélites, sin embargo, la ausencia de una contraloría real en el país dificulta discriminar cuánto se invirtió en proyectos a largo plazo, y cuánto sirvió para sostener el sistema populista y paternalista de Chávez, ratificado en trece elecciones consecutivas. La negociación no sólo ofrecía un atractivo en materia de política externa para alguien necesitado de antagonizar con Washington, sino que también representaba ventajas a lo interno. El dinero entraba rápidamente, sin condiciones que exigieran ajustes económicos inmediatos, y si los venezolanos durante años han dilapidado parte de su presupuesto subvencionando gasolina para consumo interno, ¿por qué iban a cuestionar al Gobierno por comprometer, por lo menos, 11 por ciento de la producción petrolera a varios años?
Mexico and China have often seen each other as rivals as they compete for market share in the United States. However, this perception is outdated. Both countries’ economies have undergone transformations and now have the potential to play complementary roles. This was on full display this week when Chinese President Xi Jinping visited Mexico and came away with stronger bilateral cooperation on a range of issues.
Still, mutually perceived rivalry remains a challenge for cooperation in other areas. Nowhere is this more apparent than in Cancún, Mexico, where resistance to the construction of the commercial complex known as “Dragon Mart” has flared. Dragon Mart is a joint venture between Mexican businessmen, Chengkai Investment Company, and the Chinamex Middle East Investment and Trade Promotion Centre—a business promotion company under the supervision of China’s Ministry of Commerce. The Dragon Mart complex will function as an exhibition center featuring Chinese products and goods from other countries, including Mexico. According to the Chinese media, the project represents a $1.54 billion investment.
Promoters of Dragon Mart have stated that the complex will add 8,550 jobs, but it offers even farther-reaching benefits as it can serve as a point of communication for Chinese and Mexican governments and private enterprises.
Mexican manufacturers have overlooked the fact that Dragon Mart would draw Chinese business at a point when Mexico’s capabilities to export high-value-added goods, such as telecommunications equipment and automobiles, have taken off.
The project’s critics have claimed that Dragon Mart would ease the flow of inexpensive Chinese imports into Latin America, the Caribbean and North American markets. Negative reactions from domestic producers have contributed to local authorities’ recent decision to deny the project’s license, which is likely to cause further delays in construction.
Top stories this week are likely to include: G-20 economic summit in Los Cabos; Rio+20 conference on sustainable development in Rio de Janeiro; the hemisphere reacts to Obama’s immigration policy shift; South Korea’s president and China’s premier embark on separate Latin America tours; and Humala’s approval hits a new low.
G-20 Summit Kicks Off in Mexico: The annual global economic and financial summit known as the Group of Twenty, or G-20, takes place today and tomorrow in Los Cabos, Mexico, after having been preceded by the B-20 business summit. The G-20 is comprised of the European Union members and 19 other major economies; together, they represent 90 percent of the world’s GDP, 80 percent of worldwide commerce and two-thirds of the globe’s population. The world will pay close attention to any developments from the summit, given the fragility of the eurozone and the apparent slowdown in China, which has led to a growth deceleration in Brazil and other economies dependent on Chinese manufacturing. AQ Editor-in-Chief Christopher Sabatini posits, “President Felipe Calderón has promised a major breakthrough on the economic crisis that has the world on edge. But can the G-20 really affect the deeper structural and confidence issues facing the global economy?”
Rio+20 Hits the Ground Running: Although the United Nations Conference on Sustainable Development, or Rio+20, began last week, the high-level meetings take place from Wednesday through Friday after the G-20 concludes. Nearly 115 heads of state are expected to attend this environmental summit, which is the largest UN conference in history—with nearly 50,000 in attendance. However, U.S. President Barack Obama, British Prime Minister David Cameron and German Chancellor Angela Merkel will be noticeably absent. Will Rio+20 produce any tangible results? Notes Sabatini: “What was once considered the starting point of global discussions over environmental issues has unfortunately become just an anniversary. To inject this forum with the importance and urgency that is necessary to change the course of global environmental issues, the United States and other developed nations need to step up—this time for real.”
The Hemisphere Reacts to Obama Policy Shift: Friday’s surprise announcement from the U.S. Department of Homeland Security that the Obama administration will stop deporting young undocumented immigrants with no criminal records and who have completed some college education or military service sent shockwaves around the U.S. and beyond. While critics of the Obama administration, such as Arizona Governor Jan Brewer, derided the move as “backdoor amnesty,” the League of United Latin American Citizens (LULAC) praised the Obama administration for answering “the prayers of families across the nation by implementing a long-awaited change to the current immigration policy.” However, some in Latin America lament the timing of the directive. La Tribuna in Honduras believes that the policy shift “arrived late” for many Hondurans, with La Opinión concurring that the Obama plan came late for “many dreamers.” Says Sabatini: “While appreciated, it’s sad that it’s taken this long to get to an issue that should have been easy three years ago. Has the immigration debate sunk so low and political opportunism climbed so high that this is the most important pro-immigration piece of policy reform that can be passed today—and clearly for electoral reasons?” AQ Senior Editor Jason Marczak agrees: “The president’s executive action is a great moment for the 800,000 undocumented youth who grew up in the United States and will now be able to more fully contribute to our society. But why couldn’t this have been done in late 2010 when the DREAM Act was blocked in Congress? The beneficiaries of this policy could have been legally working without the fear of deportation for the last 18 months if action had been taken sooner.”
South Korean and Chinese Leaders to Visit Latin America: South Korean President Lee Myung-bak will attend the G-20 and Rio+20 conferences, and then depart afterward to Chile and Colombia later this week for bilateral visits. Further, Chinese Premier Wen Jiabao will pay official visits to Brazil, Uruguay, Argentina, and Chile, where he will meet with the presidents of those four countries and deliver a speech at the UN Economic Commission for Latin America and the Caribbean (ECLAC) secretariat in Santiago.
Humala’s Approval Rating Hits New Low: Peruvian President Ollanta Humala’s approval rating has hit its lowest mark since he took office in July 2011, according to a new poll from the Ipsos Apoyo firm published yesterday. His approval rating stands at 45 percent while his disapproval rating is 48 percent. This is likely due to his stance on pushing forward with mining projects and invoking the emergency law to quash protests in northern Peru. Can he turn the unpopular tide? Sabatini says that “President Humala has failed to articulate how his outsider campaign and alleged commitment to social inclusion is different from his predecessors. In the absence of a defined, structured party system, Peruvian presidents are hostage to the vicissitudes of popular opinion—and this can be very dangerous.”
Heads of state from over 100 countries and tens of thousands of representatives from nongovernmental organizations and businesses will descend on Rio de Janeiro this month for the United Nations Rio+20 Conference on Sustainable Development. With the slogan “The Future We Want,” participants will aim to put in place a universal framework to tackle the interlinked challenges of economic and social development, poverty eradication and environmental protection.
Leading up to the summit, however, negotiations are stalled amidst disagreements between developed and developing countries on what should constitute the roadmap to sustainable development. Developing countries are cautious to commit to a framework that might restrain their economic development, and developed countries—most battling severe economic crises—are reticent to include language that would require them to aid poorer nations with implementation, financing and the technology needed to meet agreed goals.
The deadlock is emblematic of a broader shift in the global power structure whereby developed countries, now less able to commit significant levels of resources to multilateral efforts, are leaving a void in global governance that emerging and middle-income economies are gradually beginning to fill. As these new actors rise to global prominence, however, the standoff also points to the difficult path we face in solving global challenges.
In an age fraught with economic malaise and fragmented political interests, can there truly be a unified vision of a future we want?
Rio+20 is unlikely to yield any binding international agreements, and most experts have already deemed the summit a failure. Even so, a look at how some of the largest emerging economies including India, China and Brazil are leveraging their growing economic heft as donors of development aid can provide a glimpse into the kind of future they envision for the world.
Official data on development assistance by so-called “emerging donors” varies considerably as countries lack transparency in reporting and have varied definitions for what constitutes aid. Still, even conservative estimates show that emerging economies are aggressively joining the ranks of international donors, backed by a philosophy that—at least theoretically—represents an alternative to that of traditional donors, specifically members of the Organization for Economic Cooperation and Development (OECD).
In Beijing yesterday Colombian President Juan Manuel Santos said China is “very interested” in investing in an oil pipeline that would run from Venezuela to Colombia’s Pacific coast. President Santos is currently in China on a five-day trip to promote trade and investment ties between the two countries. China is already Colombia’s second-largest export market, mainly for oil and coal, and with demand growing there while the U.S.’ energy market evolves, “we have to start shifting our markets to Asia,” said Colombian Minister of Mines and Energy Mauricio Cárdenas.
On Wednesday the state-owned Chinese Development Bank signed a preliminary agreement with Colombian state oil company EcoPetrol to provide financing for the pipeline. The final route has not been determined, but it is expected to transport 600,000 barrels of Venezuelan and Colombian oil per day by the time it is completed in 2018, ensuring quicker transport of oil to China and other Asian markets. Chinese and Colombian officials also discussed bringing in the state-owned petrochemical firm Sinochem International Corp. as an equity partner.
The ministers accompanying President Santos also held talks with Chinese officials about developing central Colombian reserves of coking coal, which is used to make steel; building a railroad from the center of the country to the Pacific coast to facilitate the exploitation and export of those reserves; and possibly undertaking joint ventures to mine for coltan, a conductor used in many consumer electronic products.
President Santos’ visit comes at a time of evolving relations between the U.S. and Latin America, and of ever increasing ties between Latin America and China. U.S. demand for energy sources such as coal and oil has slowed as its energy mix shifts toward natural gas, while China has increased its investment in oil exploration and production in the region, including an $867-million takeover in 2009 from Emerald Energy PLC of Colombian and Syrian oil assets.
Top stories this week are likely to include: Mexico’s presidential candidates debate; Dilma and the forestry law; Humala and Santos travel to Asia; and Venezuela proposes an alternative to the IACHR.
Challengers Hammer Peña Nieto in Presidential Debate: The leading presidential candidates in Mexico held their first debate last night, and frontrunner Enrique Peña Nieto of the Partido Revolucionario Institucional (PRI) was the biggest target of attacks from candidates Josefina Vázquez Mota (Partido Acción Nacional) and Andrés Manuel López Obrador (Partido de la Revolución Democrática). Peña Nieto’s challengers painted him as a corrupt politician who oversaw a poor economy in Mexico state. During the debate, Peña Nieto noted that Vázquez Mota and López Obrador “seem to have come to an agreement… they’re coming with knives sharpened.” However, political analyst Jorge Zepeda opined that “Peña Nieto survived…I don’t think the debate will have a big impact.” Adds AQ Senior Editor Jason Marczak: “Without a clear winner in last night's debate, look for the campaign to turn increasingly hostile as candidates seek to make up ground against Peña Nieto.” Now that the candidates have squared off in their first debate—the next one will be held in June—look for how the Mexican electorate responds on the campaign trail.
Dilma May Partially Veto the Forestry Law: In a political setback to Brazilian President Dilma Rousseff, Brazil’s legislature approved a controversial forest code on April 26 at the urging of the powerful farmers’ lobby. The code gives way for further deforestation of the Amazon and provides an amnesty from being fined for illegally clearing trees. Rousseff is now being pressured by environmentalists to veto the law, especially ahead of next month’s Rio+20 global summit on sustainable development. Advisors in Brasilia are now indicating that the president may issue a partial veto to two particularly controversial clauses: one on amnesty from prior deforestation and another on reducing vegetation on the margins of the rivers. Look for news this week.
Humala to Asia: Peruvian President Ollanta Humala will make his first official trip to Asia this week, aiming to sell his country as a trans-Pacific destination for trade and investment. Humala arrives in Japan tomorrow for trade talks with Prime Minister Yoshihiko Noda and Emperor Akihito, then continues to South Korea where he will sign a declaration of strategic association with Prime Minister Lee Myung-Bak. “Coming on the heels of nationalizations in Argentina and Bolivia, Humala will likely use the trip to exhibit the stability for investments in Peru,” notes AQ’s Jason Marczak.
Santos in Singapore and China: Colombian President Juan Manuel Santos landed in Singapore yesterday for a six-day trip to Asia that will also include a state visit to China. Santos is accompanied in Singapore by a business delegation and his ministers of commerce, mining, transport and agriculture, and foreign affairs. He lands in China tomorrow to build “a much closer framework of cooperation between the two countries,” according to Xinhua and will depart on Saturday.
Venezuela Proposes IACHR Alternative: After suggesting last week that his country should withdraw from the Inter-American Commission on Human Rights (IACHR), Venezuelan President Hugo Chávez and his administration have proposed an alternative human rights body for Latin American states that would exclude the United States. Chávez has accused the IACHR, under the aegis of the Washington-based Organization of American States, of being a tool of the U.S. government. However, the informal proposal of an alternate commission issued over the weekend in Cartagena, Colombia, by Venezuelan Foreign Minister Nicolas Maduro should bring cause for concern that Venezuela is flouting its international commitments. The move has been criticized by Venezuelan human rights groups and the United Nations. Look for formalized proposals going forward.
A couple of weeks ago, a small but evocative display of 30 abstract sculptures, paintings and engravings by artist Manuel Felguérez opened in the stunning boomerang-shaped museum designed by Japanese architect Arata Isozaki for Beijing's Central Academy of Fine Arts. The exhibition of recent works by Felguérez, one of the most prominent members of the generation that helped pave a new way in Mexican art beyond the aesthetic ideas of Diego Rivera and the Mexican muralists, was quite an event. And indeed it was intended to mark a special occasion: the 40th anniversary of the establishment of diplomatic relations between Mexico and China.
Despite the quality of the exhibition and the presence of the sculptor and painter himself, in reality this is not a common event. Not only is a Latin American art exhibition in China a rare occurrence but, sadly, this cultural exchange mirrors how little importance nations in the region give to a country that has already become their first or second trade partner.
Over the past couple of years only a few major exhibitions have been organized by Latin American countries in China: Colombia brought a large sample of Pre-Hispanic gold objects to the Shanghai Museum and Peru exhibited a range of objects made by Pre-Incan civilizations at the National Museum in Beijing last year. Very little modern art has been displayed, with the possible exceptions of Felguérez and the kinetic works of Venezuela's Carlos Cruz Díez in Ningbo.
But it's not just art. The presence of prominent Latin American intellectuals has generally been scarce. Last year's only high profile visit was that of Mexican writer Sergio Pitol, probably the Latin American intellectual with the closest ties to China, after having lived here for almost a year just before the Cultural Revolution. Argentine poet Juan Gelman and Peruvian novelist—and Nobel laureate—Mario Vargas Llosa have both visited China, albeit on invitations from Spain's Instituto Cervantes. The only important author to visit during this first half of 2012 has been Peruvian writer Fernando Iwasaki, who spoke in the Chinese capital last week.
In March 2012, the Export-Import Bank of China (China Eximbank) and the Inter-American Development Bank (IDB) announced that an approximately $1 billion investment fund to promote sustainable economic development in Latin America and the Caribbean (LAC) would be operational this year. The joint project will invest in the public and private sectors and focus primarily on infrastructure, projects on energy and natural resources, and small- and medium-sized enterprises (SMEs).
At the root of sustainable development is the notion that economies can still grow without endangering resources and the environment for future generations. However, although discussions about economic resources and the environment dominate the spotlight, the central role of future generations, or youth, in driving that notion and identifying related solutions is often relegated to the background.
Leslie Forman grew up in Silicon Valley, California, as the daughter of two serial startup veterans. She lived in China for several years and worked in diverse industries, such as advertising, consulting, corporate social responsibility and education. In 2011, she moved to Chile to take part in Start-Up Chile—a government-sponsored entrepreneurship program.
Given her unique background, Leslie has a coveted window into many worlds. She recently shared some valuable insights related to her entrepreneurial experiences and vision to connect Chile, China, California and beyond.
Internal migration is a common trend around the globe, and China is no exception. It has one of the highest levels of migration, mostly from rural areas to urban centers. According to the National Bureau of Statistics of China, 271 million people did not live in their registered residence for more than six months last year. Some estimates project that number will hit 350 million by 2050.
Rural-to-urban migration in particular continues to stimulate China’s economic development. The largest human migration in the world takes place during the Chinese New Year season, when millions of people travel from major cities to their hometowns to reunite with loved ones. There are many reports, books and documentaries that tell vivid stories of the incredible personal sacrifice migrants and their families make in pursuit of a better life. Those sacrifices can even become so unbearable that families ultimately go back to searching for work or business opportunities closer to home. After the holiday break this year, China experienced a shortage of workers as some failed to return to work.
Not everyone, however, is eager to return home to the countryside. Dominated by the agricultural industry, the rural, Hunan province town in which I reside is home to residents who go to bed far earlier than urbanites and who perform demanding labor that reaps little financial wealth. Many young people in particular have no desire to perpetuate the status quo. It is pretty uncommon to see residents in the 20-plus and 30-plus age demographics.
The Chinese government has started to offer certain incentives to make rural living more appealing (such as subsidies and machinery) and has even considered paying premiums for insurance against bad weather. The combination of such incentives with increasing rural development and family demands has been successful in drawing some residents back. But youth in particular still tend to prefer more urban lifestyles.
Argentine government sources confirmed yesterday that despite the recent signing of a much lauded treaty between Argentina and China to promote food exports—particularly maize (corn) to China, access to the Chinese market will still be restricted due to inconsistencies in health and safety regulations between both countries.
Argentina is the second-largest exporter of corn in the world, after the United States. At current market prices, the Argentine Ministry of Agriculture’s 2012 estimates for corn—between 20.5 and 22 million tons—could generate up to $6.2 billion in revenues for both the private sector and additional tax revenues for the government.
Several Argentine firms have complained anonymously about the disputed health and safety clauses, including one senior executive who said, “No company will risk exporting maize to China because they have the power to reject the shipment once it arrives.” The Argentine Ministry of Agriculture quickly rebuked this claim, saying that “companies should not worry since [such clauses] are very common in bilateral treaties, and will probably not affect overall corn trade.”