Brazil Pressures China to Appreciate Currency

April 23, 2010

Brazil may be at odds with Washington when it comes to sanctions against Iran, but Brazil and the U.S. are in agreement when it comes to China's currency.

Henrique Meirelles, head of the Brazilian central bank, said this week that a stronger Chinese yuan was “absolutely critical for the equilibrium of the world economy” while addressing the Brazilian Senate's economic affairs committee. His remarks came ahead of his trip to Washington DC for today’s G-20 finance meeting.

His comments coincide with statements from India’s central bank condemning the undervaluation of China's currency. “If some countries manage their exchange rate and keep them artificially low, the burden of adjustment falls on some countries that do not manage their exchange rate so actively,” said governor of the Reserve Bank of India Duvvuri Subbarao.

The United States had put strong diplomatic pressure on China to strengthen its currency in the run-up to the release of the U.S. Treasury Department’s now-delayed April 15 report on international exchange rate policies.

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Argentine President Cancels China Trip

January 20, 2010

Skeptical of leaving the country for 10 days, Argentine President Cristina Fernández de Kirchner postponed her Asian trip on Tuesday, calling it “too long especially when the country’s Vice President does not fulfill the role that has been assigned to him.” She went on to say that Vice President Julio Cobos cannot serve his role and be a “dissident.”

Cobos and Fernández de Kirchner have been at odds most recently over her desire to force Central Bank President Martin Redrado to step down. But the vice president urged her to "reconsider the situation" and go to China, promising that he would not sign any decrees in her absence without consent.

The January 25-28 trip would have been the first state visit to China since taking office in 2007. Her agenda was scheduled to have included meetings with Chinese President Hu Jintao, Chairman of the Standing Committee of the National People's Congress Wu Bangguo and Premier Wen Jiabao. Numerous cooperation agreements were to have been signed.

Bilateral relations grew tense last month after an Argentine judge had requested that Interpol issue an arrest warrant for former Chinese President Jiang Zemin over treatment of Falun Gong practitioners. With concerns mounting about Argentina’s debt, neither side would discuss whether China was prepared to provide any aid or grant loans.

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Beijing Consensus?

November 13, 2009

Less than five years ago, few analysts could have predicted China’s role in the global economy would be as significant as it is today. But the economic recession has helped to catapult China into becoming an engine for global economic growth.

China’s growing influence in the world—and particularly in Latin America and the Caribbean—is currently the source of much debate in Washington. (In fact, a Fall 2009 AQ book review on this very topic has already generated two Letters to the Editor.)  Some worry that Beijing is trying to undermine U.S. influence in the region, while others see China’s interest in our hemisphere as merely a reflection of its drive for a bigger piece of the world’s economic pie.

China has quickly become one of the region’s most important trading partners. In 2009, it overtook the United States to become the top trading partner of both Brazil and Chile.  Beijing also has free-trade agreements in force with Peru and Chile and is currently in negotiations with Costa Rica. A bilateral investment treaty was signed with Colombia on the sidelines of the 2008 Asia-Pacific Economic Cooperation (APEC) Leaders’ Meeting. Later this month, Bogota will host the third China-Latin America Business Summit, a meeting with more than 1,000 investors expected to attend. 

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Weekly Roundup from Across the Americas

October 28, 2009

From the Americas Society/Council of the Americas. AS/COA Online's news brief examines the major—as well as some of the overlooked—events and stories occurring across the Americas. Check back every Wednesday for the weekly roundup.

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Mujica to Face “Pink” Alliance

During the first round of Uruguay’s presidential elections on Sunday, the Broad Front coalition’s José Mujica lost the majority needed to avoid a November runoff against the National Party’s Luis Alberto Lacalle. Mujica won a large majority at the polls, pulling in 48 percent—20 points above Lacalle. However, Mujica signaled concern about the “Pink” alliance made up of the National and Colorado Parties. While the Broad Front maintains a majority in Congress, it could lose its majority control in the lower house.

Read a new Americas Quarterly web exclusive on the Uruguayan elections by Adolfo Garcé of the Institute of Political Science at the University of the Republic in Montevideo.

Colombia, Venezuela Exchange Barbs over Espionage Accusations

Caracas announced the arrest this week of two officers from the Administrative Department of Security (DAS), Colombia’s intelligence agency. Bogota denied the allegations. Colombia’s ambassador in Venezuela, María Luisa Chiappe countered that Colombia is more concerned with identifying those responsible for the recent abduction and murder of ten amateur Colombian soccer players in a Venezuelan border town.

Tensions between Colombia and Venezuela have been heightened over a bilateral U.S.-Colombian agreement to give Washington access to seven of its military bases. Colombian Defense Minister Gabriel Silva announced that the deal could be signed as early as Friday this week. He added that the deal was not a recent development, but an extension of US-Colombian cooperation against drug trafficking.

Read an AS/COA analysis of the military deal.

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China, Bolivia Announce Joint Technology Venture

September 24, 2009

China will construct a $300 million communications satellite in Bolivia, President Evo Morales announced Thursday.

Morales discussed future plans for cooperation with his Chinese counterpart, Hu Jintao, in New York during the annual United Nations General Assembly session.  The two leaders’ discussion comes a week after the International Telecommunication Union (ITU), a UN agency, pledged to assist Bolivia with orbital positions and frequency bands.

The project could be financed with Bolivia’s own resources, Morales told AFP Thursday, adding that securing access to preferential credit from a country like China would help his country.  He anticipates the satellite’s launch into orbit within three years.  Morales also explained that a satellite would greatly benefit the country by connecting poor Bolivians with the modern world through improved Internet access. This remains a challenge in Bolivia where ITU reports that only 10 out of every 100 people are Internet users—far below Chile, 32 per 100, and Venezuela, 25 per 100.

In 2008, Chinese scientists built and launched the Venezuelan satellite, Simon Bolivar (ABC). For President Hugo Chávez, a goal of that satellite is to secure technological independence from the West.

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Australia's Natural Gas Project Calls into Question Latin America's Energy Tactics

September 14, 2009

Prior to the economic crisis that began exactly one year ago with the Lehman Brothers collapse, Latin America was on an economic tear.  For over five years the region had enjoyed historic economic growth, reducing poverty and building the small but growing middle class.  Growth was based primarily on the commodities trade; Asian nations, particularly China, were sucking up virtually everything Latin America could grow, mine or drill. Many Latins are now looking at the prospects for renewed mid-term growth in Asia as the key to restoring their own economic fortunes.  On the surface, that makes sense.  But if the idea is simply to return to the previous model exporting primary commodities, with a healthy dose of politics thrown in, the result may not be as lucrative for Latin America as the immediate past proved to be. 

Primary commodities face competition no matter where they come from; there is generally little product differentiation absent efforts to add value through processing and refinement, technology, manufacturing, branding, or other knowledge-based inputs.  This is particularly true in energy, and a major new project off the west coast of Australia could, in extremis, challenge Latin America’s development model. 

The Gorgon Project, according to the Financial Times, among the world’s most ambitious and costly natural gas projects, is set to be given the official go-ahead this week.  Once fully on-line, the project will catapult Australia to the top ranks of global producers, changing the pan-Pacific energy profile, particularly with reference to liquefied natural gas, or LNG.  The project will help China and Japan reduce their dependence on coal while amplifying Australia’s role in supplying the Asian nations—China, Japan, India, and South Korea—that Latin America has targeted for commodities exports.  In contrast, Latin Americans continue to tie themselves in knots over basic questions of ownership, production and basic supply arrangements in the natural gas sector, even to the point of foregoing uncertain gas supplies from immediate neighbors such as Bolivia and Argentina to import LNG from Asia. 

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Weekly News Roundup from Across the Americas

August 19, 2009

From the Americas Society/Council of the Americas. AS/COA Online's news brief examines the major—as well as some of the overlooked—events and stories occurring across the Americas. Check back every Wednesday for the weekly roundup.

Sign up to receive the Weekly Roundup via email.

Washington and Bogota Agree on Defense Pact

On August 14, the United States and Colombia finalized a defense agreement that will allow the U.S. military to operate out of Colombian bases to coordinate counternarcotics operations. The agreement comes in the wake of the closure of a U.S. base in Manta, Ecuador. In a U.S. Defense Department news briefing, U.S. General James Cartwright said the goal of the pact is “to be able to provide to the Colombians what they need in order to continue to prosecute their efforts against the internal threats that they have.” The accord awaits signature by the U.S. and Colombian governments.

Still, the bilateral pact stirred up hemispheric tensions in recent weeks, particularly between Colombia and its neighbor Venezuela, as Liz Harper writes in the Americas Quarterly blog. On Tuesday, after meeting with Colombian Foreign Minister Jaime Bermudez, U.S. Secretary of State Hillary Clinton sought to squelch concerns about “what the agreement does and does not do,” saying it involves bilateral cooperation rather than the creation of U.S. bases in Colombia.

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Costa Rica and China Begin the Next Round of Trade Negotiations

June 16, 2009

China’s chief trade negotiator entered into a third round of negotiations with his Costa Rican counterpart on Monday to establish a bilateral free-trade agreement.  This latest round occurs only 7 months after Chinese President Hu Jintao announced the start of free-trade talks on a visit to San José in November 2008.  Both countries say they hope to complete the agreement this year. 

A free-trade accord between Costa Rica and China, which only established diplomatic ties in 2007, would be China’s third such agreement in Latin America. An agreement was ratified with Chile in 2005 and negotiations were concluded with Peru in 2008. China is especially interested in expanding ties with Latin American commodity exporters, an area that has seen two-way trade exceed $120 billion dollars per year. 

Reports indicate that Beijing is offering to open its economy to 94.4 percent of Costa Rican products, with the notable exclusion of top exports like sugar and coffee.  The Costa Ricans have held firm against liberalizing imports of textiles and machinery, a top Chinese concern.  Both parties have affirmed their commitment to making progress in the negotiations, which are schedule to conclude on Wednesday.

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