A comprehensive collection of scholarly, personal, and editorial articles relating to the growth and development of economic / political ties between China and South America-- with a focus on commodity rich countries in South America and commodity/energy markets.
The current economic crisis has hit commodity producers in South America hard. All the talk about decoupling, booming domestic demand and well planned budgets will be tested as commodity exports plummet.
The big names in financial news (Reuters, Bloomberg, FT) reported this morning Brazil, Colombia and Chile have plans to sell bonds in international markets. All three of these economies depend heavily on revenue which is derived from commodity exports The recent tumble in commodity prices is not welcome news for these countries, which until just recently where some of the fastest growing emerging markets in the world.
Bloomberg LP reports Brazil will sell $1 billion of 10 year-notes, Colombia plans to raise what it calls a “benchmark offering” of roughly $500 million, and Chile has yet to release a figure on how much it will raise but its finance minister has confirmed it is very plausible the country will indeed issue its first foreign bonds since 2003 in order to help fun its fiscal stimulus plan.
More bad news was released this morning when Brazil reported Industrial output dropped the most in 7 years. This is not a good sign. Internal demand from consumers in countries like Brazil and China remains high, but is not sufficient to keep these economies growing at the rates they have enjoyed during the past few years.
According to economists at Bloomberg, Brazil will expand at its slowest pace this year since 2003. Growth forecasts made by the Central Bank of Brazil are being cut in half for 2008 and economists are now predicting interest rate cuts later in January.
One bit of good news comes from Braskem SA, Latin America's largest petrochemical company. It is currently in the midst of a 4-day rally in Sao Paulo trading. The gain comes as Peru announced plans to construct a new petrochemical plant in the southern port of Marcona.
Braskem, has been actively seeking natural gas and raw materials at competitive prices in South America. Peru has lined up $8 billion for its energy industry. Additionally, Braskem already had plans to build a plant in Peru that would be supplied by the Camisea gas fields.
Recent developments in Peru seem to have bolstered investor confidence in the company which had previously been exploring natural gas investments in Bolivia and Venezuela. In both cases, there were various difficulties that emerged in working with the governments of Morales and Chavez. It seems, Braskem's new choice of opting to work in Peru is being interpreted by the market as the correct one.
I find it pretty interesting, that the mere construction of a Petrochemical plant in Peru, can turn the heads of investors and cause a petrochemical company trading in Brazil to go on a 4-day rally. It just shows how markets can move based on people's perception of regions they know little about.
I just hope investors realize that the rosy picture the international financial community paints of Peru may change if the government continues to fail at bringing prosperity the more remote regions of the country where much of Peru's raw materials are extracted from. For now though it seems the investors are content with Braskem's decision to avoid working with the left wing, anti-American regimes in Bolivia and Venezuela...
On December 1-3, Uruguay Energy Ministry and ANCAP, the National Oil Company, will launch the offshore licensing round for exploration and exploitation of gas and oil. The blocks on offer, lie in the Punta del Este and Pelotas basins, where water depths range from 50 to 1500 meters, as well as another basin further offshore called Oriental Del Plata. The blocks' areas range from 2,500 to 10,000 square kilometers...
PetroLatina has announced a further operational update to that released on November 7, 2008.
La Paloma
The Company commenced drilling Colon-1, the first exploratory well to be drilled on the La Paloma block, located in Middle Magdalena Valley, Colombia, on Sunday, November 24, 2008. The Colon-1 well has been drilled vertically to a total depth of approximately 600 feet, to date. Drilling continues to be undertaken vertically to an expected total depth of approximately 9,072 feet in order to test the La Paz, Lisama and Umir formations. Drilling is scheduled to take 25 days in total at a cost of approximately $6 million...
Petrobras announced that platform P-53 kicked-off its operations yesterday, November 30. This is the first production unit installed in the Marlim Leste field, in the Campos Basin.
The P-53 unit has total production capacity of 180,000 barrels per day of heavy oil, 20 degrees API, and compressing capacity up to 6 million cubic meters/day of natural gas. The platform's oil production will be offloaded to shore by shuttle tankers with the assistance of Autonomous Re-pumping Platform PRA-1 and the FSO Cidade de Macae. Part of the gas that is produced will be consumed by the platform itself as fuel to generate electricity, and the remaining will be exported to shore via the Campos Basin's gas network. The platform will reach peak production in the first half of 2010.
GeoPark Holdings Limited has announced the successful testing of the new Manekenk 1 well on the Fell Block in Chile at an initial rate of approximately 1,300 barrels of oil per day equivalent (boepd). Geopark operates and owns a 100% working interest in the Fell Block...
Lima, Dec. 01 (ANDINA).- Production in Peru's mining and hydrocarbons sector expanded 4.57% in October from the same month last year, as the mining sub-sector increased 2.72%, the National Statistics Institute (INEI) said Monday...
PetroChina Co. has started developing an offshore block in Bohai Bay with an output target of 3 million metric tons a year or 60,247 barrels a day, parent company China National Petroleum Corp. said Monday.
The Yuedong block, located in shallow water near Liaoning province, has rich reserves of heavy oil, CNPC said on its Web site, without elaborating.
Yuedong is part of the Liaohe field, China's largest heavy oil field, with annual output at 12 million tons a year or 240,986 barrels a day...
China North East Petroleum has announced preliminary results for its October 2008 oil production.
Crude oil production for the month ended October 31, 2008 increased 135%, or 40,479 barrels, to 70,545 barrels from 30,066 barrels for the month ended October 31, 2007. On a sequential basis, crude oil production increased 4,627 barrels, or 7%, compared to the month ended September 30, 2008...
A slew of energy developments in a handful of countries in South America has made headlines in the past day or so. For starters Venezuela and Ecuador made headlines this morning once again... this time for successful drilling and exploration in the Amazonian region. The newly established supply of crude will eventually be sent to the new refinery being build on the pacific coast.
Petrobras’ average oil and natural gas production abroad was 218,117 barrels of oil equivalent per day (boed) in June, 8.1%.
Added to the volume lifted from the domestic fields, Petrobras’ total production in June set a monthly record, topping out at 2,421,155 barrels of oil equivalent, 3.3% more than a year ago and 2.3% higher than May 2008.
Arduous Process of getting the Camisea facilities in Peru up and running - Wood Snag 3-Year Maintenance Contract for Camisea Facilities
The Camisea Project comprises the exploitation The San Martin and Cashiriari fields natural gas fields, the construction and operation of two pipelines, one for natural gas (NG) and one for natural gas liquids (NGL) and the distribution network for natural gas in Lima and Callao. The pipelines wiII make NG and NGL available for domestic consumption and for export.
Natural gas wiII be transported to the main consumption center in Lima, where it will be used for residential and industrial purposes and to generate electricity, that will then be distributed nationwide through Peru’s existing transmission infrastructure (click here to read more about the Camisea Project)
Wood Group Production Facilities has been awarded a three-year, performance-based contract by Pluspetrol Peru Corporation to provide integrated maintenance services for the Camisea facilities in Peru. The Camisea project includes the largest natural gas field in the region.
Shell to invest $300m in search for oil and natural gas in Peru
Royal Dutch Shell is ready to invest as much as $300 million in exploring for oil and natural gas in Peruvian waters as part of a agreement with BPZ Energy, executives from the two companies said Thursday.
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In March, U.S.- and Peruvian-owned BPZ found an estimated 60 million barrels' worth of crude oil and 40 million cubic feet of natural gas in the same region off Peru's northern Pacific coast.
The accord announced Thursday calls for Shell to spend up to $300 million on exploration and - if reserves are found - exploitation of natural gas, while BPZ will put the same amount into searching for crude oil along with an additional $150 million to build an electric plant in the area.
Under the deal, BPZ will get 51.75 percent of any oil or gas produced and Shell will claim the rest.
Geopark Grabs up Additional Petroleum Block in Chile
GeoPark Holdings Limited announced that the Ministry of Mining in Chile has awarded the Otway Block in southern Chile to a consortium consisting of GEOPARK (42%), Methanex Corporation of Canada (16%) and Wintershall Energia SA, a division of BASF Ag of Germany (42%).
The Otway Block is a large new attractive exploration area (5,992 square kilometers) located in the Magallanes region near GEOPARK's Fell Block operation in Chile. GEOPARK is the first and only private-sector oil and gas producer in Chile and the addition of the new Otway Block will further enhance GEOPARK's position as the premier private-sector oil and gas operator in Chile.
Click here to access a previous post in regard to GEOPARK's natural gas discoveries in the Magallanes Region -- published on South-South Cooperation on June 17th, 2008. Click here to access the full article from Rigzone
Colombia to create oil price stabilization fund
Colombia's government is creating an oil price stabilization fund (FEPC) that will be used to cushion domestic oil prices from unexpected rises on international markets, government news agency SNE reported.
Congress has approved the fund, which is included in the national development plan and must go to the president for final authorization. The finance ministry would administer the fund, which would receive financing from the existing oil stabilization fund (FAEP) owned by state oil company Ecopetrol.
Venezuela and Colombia are set to discuss possible joint development projects in the oil rich Orinoco belt when the presidents of both countries meet Friday, the Colombian ambassador to Venezuela, Fernando Marin, said.
"The Venezuelan government has told us that it's important for them to have Colombian presence in the Orinoco belt. It's something that we're eager to talk about," Marin told Dow Jones Newswires.
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Allowing for Colombia's presence in the Orinoco belt would be a surprising gesture by Venezuela, given the recent diplomatic disputes between both countries, which escalated to threats of war in March. Chavez has threatened on several occasions to shut imports from Colombia.
Bloomberg LP - click above to access article direct or click on Bloomberg's link and go to the Latin America section. Experts copy and pasted below.
By Helen Murphy
July 4 (Bloomberg) -- The T-shirts with images of Ernesto ``Che'' Guevara convinced Ingrid Betancourt. She assumed the men with the iconic revolutionary on their chests were ushering her into the helicopter for transfer to yet another rebel camp.
Instead, Betancourt, along with 14 other hostages, was taking her first steps toward freedom after six years of captivity at the hands of the Revolutionary Armed Forces of Colombia. Less than 24 hours later, she would be reunited with the two children she hadn't seen since her capture.
The white helicopter Betancourt climbed into was piloted by Colombian troops, and the six men wearing Che shirts were soldiers who tricked the rebels into following ``orders'' to move the prisoners. Colombian intelligence had infiltrated the group, known as the FARC, and started planning the rescue mission as long as a year ago.
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The day of her release, Betancourt awoke as usual at 4 a.m. to listen to a radio program that broadcasts news and messages from family members to the FARC's more than 700 captives. She and her fellow hostages were told by their guards an international aid helicopter would come and take them to the encampment of Alfonso Cano, the drug-funded group's leader.
`Surreal'
``The helicopters arrived, and these absolutely surreal characters came out,'' said Betancourt, gripping rosary beads after she landed at Bogota's military airport. ``They were wearing Che Guevara shirts and I thought, it's the FARC.''
The captives were handcuffed and manhandled onto the aircraft by the undercover agents. ``It was very humiliating,'' she said.
After the unmarked helicopter flew over the jungle and out of range of the FARC camp, the hostages saw the men in Che T- shirts spring on their captor. Gerardo Antonio Aguilar Ramirez, known by his alias as Cesar, was tied up, stripped and blindfolded. Then the Colombian troops revealed their identity.
``We are the national army, you are free!'' the agents told them. ``The helicopter almost fell out of the sky because we jumped and screamed, we hugged and cried,'' Betancourt said.
`Movie-Style'
Colombian intelligence officials were able to plan the rescue, code-named Operation Check for the end-game chess move, with information from John Frank Pinchao, a police official who escaped in April last year and helped pinpoint the FARC camps. ``This was a movie-style rescue that freed 15 people who had been tortured for so many years,'' Defense Minister Juan Manuel Santos told reporters.
A sustained barrage of air and ground attacks on the FARC has weakened the group, and local commanders have largely lost contact with the senior leadership, ex-guerrillas say.
The military placed covert operatives inside the camp holding Betancourt about six months ago. They started to gain the trust of the commander Cesar, according to General Freddy Padilla, chief of the armed forces.
With help from a FARC leader who hasn't been identified, the military was able to con Cesar into thinking he'd been given the mission of transporting three groups of prisoners to Cano, who replaced the FARC's founder Manuel Marulanda in May after his death of a heart attack. Those who arrived in the helicopter were given acting lessons to pretend to be aid agency personnel, said General Mario Montoya, the army's top officer.
``I never expected to get out alive,'' said Betancourt, who thanked the military for its ``impeccable'' mission.
Plan B
The military had a Plan B. Some 30 helicopters and 58 men surrounded the camp, ready to strike or offer payments to the captors if the covert plan failed, Padilla said.
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``In all these years, I thought that as long as I was alive, as long as I continued to breathe, I must continue to hope,'' she said.
To contact the reporter on this story: Helen Murphy in Bogota at hmurphy1@bloomberg.net Last Updated: July 4, 2008 00:01 EDT
As described in my previous post... Latin America is sadly trapped within mass media as a mere "attention grabbing story." I in no way what so ever intend to make this sound as if I am criticizing, Reuters, I have nothing but the utmost respect for the organization which is why I use their video "embed" feature. They truely do strive to offer unbiased reporting and are represented by the best of the world's journalists.
This post is simply a effort to convey the particular and unique attention that is given to Latin America as a whole. Colombian cocaine seizures soar --- Reuters
June 17 (Bloomberg) -- The yuan extended gains to 20 percent since China ended a fixed exchange rate to the dollar in 2005, passing the milestone as Treasury Secretary Henry Paulson prepares to meet with Chinese officials.
The currency climbed to a post-peg high of 6.8918 per dollar today as the People's Bank of China seeks faster appreciation to curb the cost of imports and slow inflation. The so-called Strategic Economic Dialogue in Annapolis, Maryland today and tomorrow will focus on energy and the environment after the yuan's advance eased trade tensions with the U.S. that dominated previous meetings.
``Inflation remains the dominant policy issue in China,'' said Sue Trinh, a currency strategist with Royal Bank of Canada in Sydney. ``The focus will be on more rapid appreciation of the yuan.''
The currency climbed 0.12 percent to 6.8918 a dollar in Shanghai as of 1:03 p.m., from 6.9004 yesterday, according to the China Foreign Exchange Trade System. It's risen 1.7 percent this quarter compared with a 4.2 percent advance in the previous three months.
The yuan may rise to 6.5 by the end of 2008, Trinh said.
China's trade surplus, which rose to a record in 2007, narrowed in May, for the first time in five months, while foreign-exchange reserves surged 40 percent to $1.68 trillion in March, flooding the economy with cash and fueling inflation.
Trade-Weighted Index
Goldman Sachs Group Inc. said in a report yesterday that the yuan will gain about 10 percent in a year as China stems inflation that slowed to 7.7 percent in May from the almost 12- year high of 8.5 percent in April. To cool inflation, the central bank has ordered banks to set aside bigger reserves five times this year after raising interest rates six times last year.
The currency has strengthened almost 6 percent against the dollar this year, nearing the 7 percent gain for all of 2007.
The Westpac Nominal Effective Exchange Rate, a trade- weighted index for the yuan that includes the euro and the yen, has climbed 5.7 percent so far this year, compared with the 3.4 percent gain for all of 2007. Gains in the yuan may accelerate versus the euro as policy makers calm criticism from officials in Europe and the dollar rises against major currencies.
``We are expecting to continue to see trade-weighted appreciation,'' said David Mann, a senior currency strategist at Standard Chartered Plc in Hong Kong. ``So the moves in the yuan may be more dictated by the broad dollar than was the case previously.''
Reform is Critical
China needs to move ``more quickly'' on yuan appreciation and exchange-rate reform will be ``critical'' to the country's social stability, said Paulson on June 10 in Washington. China's central bank said on May 14 that it will further increase the exchange rate's flexibility to curb price increases.
Gains in the currency attract speculative capital, injecting cash into the financial system already awash with money from the trade surplus and foreign direct investment.
China will strengthen monitoring of money inflows after the surplus for the capital and financial account, a measure of investment flows, jumped more than seven-fold in 2007 to $73.5 billion from $10 billion a year earlier, the State Administration of Foreign Exchange said on June 5.
The People's Bank of China said yesterday in a report that investors' expectations for continued appreciation of the yuan are attracting inflows of ``hot money,'' and should such expectations turn around, a ``massive outflow'' of money will affect China's financial security.
Forward Rates
The central bank may ``unexpectedly adjust the pace of yuan appreciation, like the stagnation in April, to deter investors betting on one-way appreciation,'' said Yang Shengkun, a currency analyst in Beijing at China Citic Bank Co., a unit of China's biggest state investment company.
China slowed yuan gains to 0.35 percent in April, the smallest monthly advance in more than a year, prompting traders to pare bets for the extent of yuan appreciation in the next 12 months. Inflows of ``hot money'' into China may have reached $500 billion last year due to trade, investment and firms borrowing abroad, according to research by Shanghai Securities Co. published in the China Securities Journal.
One-year non-deliverable forwards contracts, agreements in which assets are bought and sold at current prices for future delivery, show traders are betting on a 6.6 percent rise in the yuan to 6.4680 in the next 12 months. The yuan will reach 6.65 per dollar by year-end, according to the median estimate of 23 analysts surveyed by Bloomberg News.
Sneaking this in at the end of the post for all those out there who know what Bembos is--the Peruvian Fast Food Chain which competes quite admirably with Mc Donalds, KFC and other mainstream and international fast food names. The video is a bit long and can get boring, but here is the explanation of it from youtube. In short... a Peruvian fast food chain is expanding to India. It is simply incredible the exchange going on in today's globalized society, 20 years ago no one would have thought emerging markets like Peru and India would be cooperating in fast food among all else. The first video simply describes the deliciousness that is Bembos... sadly it's in Spanish, and I apologize for those of you out there who do not speak / understand it. There are subtitled videos available if you use either my search provided by google or go straight to youtube and simply type in "Bembos."
The South American fast food chain Bembos opened its first outlet in Delhi NCR yesterday at the Great India Place Mall in Noida.
Bembos has been maintaining its leadership in hamburger sales in front of strong competitors in the international market like Mcdonalds & Burger King in South America and are now eying the Indian market.
"Our three Bembos outlets in Mumbai are doing exceptionally well & we are very excited at the proposition of catering to people in the Delhi NCR region," said an upbeat Anil Kapur, the master franchisee of Bembos in India.
So what makes bembos special? Apart from the colourful interiors, the size, taste & price points are the USP of the Bembos burgers.
"We are elated at Bembos coming to India," said Carlos A Yrigoyen, the acting Ambassador of Peru in India, who along with his wife Regina inagurated the outlet. "Nothing is as delicious as a Bembos grilled burger, " Yrigoyen said.
Also present at the inaguration were Rahul Mittra CEO Brandsmith with wife Sarina, Dimple Kapoor, Bharati Chajjed Associate Director Standard Chartered, apart from heavy print & electronic media.
"Brandsmith is very happy to be associated with such a premium brand from South America, " said Rahul Mittra who has been accredited with successfully managing international brands like Ceres juices from South Africa & Weetabix from UK." We will ensure it gives the big daddies a run for their money, "said Mittra.
Thanks to a link from Southamericadaily.com I discovered this morning The Economic Times of India, a relatively new news agency that so far looks pretty credible and I personally like the focus of what they choose to report / analyze.
Ecuador... thankfully has worked out the problems that have emerged between the government and foreign oil companies, which Ecuador as President Correa knows, can not afford to have abandon their Ecuadorian operations. The problems arose when the government, largely spurred by President Correa decided to levy a new oil tax on foreign companies which the government argued was fair in light recent record breaking prices of crude oil (Bloomberg LP article from June 16th, 2008 on oil prices).
Despite representing a "left wing government," Correa is no Chavez. Chavez, lush with money from his own countries oil exports, has been able to offer campaign (financial) assistance to many potential candidates running for high office in Latin America. Even if it is illegal to directly contribute campaign financing, he finds other ways to facilitate their elections, even if it means going in person to campaign as he did in Costa Rica (one country off the top of my head I recall him doing so in). The candidates tend to have characteristics such as being anti-US, socialist, anti-privatization, nationalistic, pro-nationalization of key industries, popular among the poor, and or a flashy ability for political rhetoric among the many.
The US media, however overplays the true relations which develop for many reasons, usually beginning with the fact the leader in question tends to have been elected in place of the candidate the US would have ideally desired to win the elections, and second because it's a way to "check" the capacity of Chavez's influence and power to further increase. This Washington Post Article does a decent job at showing readers the views held by the political elite of Washington.
Correa may share some of those traits, and was openly supported by Chavez during his campaign for president, but he for one lacks the passion and fever Chavez displays quite openly and most importantly his "golden tongue" for speeches. Second Correa is smart enough to realize Ecuador does not share the same luxury of being capable of completely implementing Chavez style reforms to the extent Chavez and to a certain degree Evo Morales have done in Venezuela and Bolivia respectably. Ecuador can not afford to miss out on the record high prices of many commodities they produce, and has already noticed total exports are decreasing, meaning the governments state revenues are also in decline.
Comparing Ecuador with Bolivia, which in reality lacks the economic resources to successfully build a new system with new and respected institutions, as Morales is trying to accomplish, is also difficult and unlikely to even be possible in Ecuador. Ecuadorian society is not as divided as it is in Bolivia between people of pure Andean decent and mixed and or people of foreign decent (predominantly European). An interesting fact Bolivians tell me, is that Bolivia is the only Spanish speaking country in Latin America where it is said you are a minority if you can ONLY speak Spanish. Most of society speaks either both Spanish and a native tongue, usually Quechua or Amyara, or, only speak a native language--that is they never learned Spanish, probably aren't Catholic, and definitely do not share the same cultural and social characteristics of the more mixed or European Bolivians. Ecuadorian society therefore in my opinion will not support a total overhaul of its countries institutions as Morales is attempting, and succeeding to a certain degree in doing so in Bolivia.
During a interview Correa said, "Most of the companies have said yes" to the offer, meaning somehow a agreement was reached. No mention of concessions where stated, but since foreign companies could not be reached for immediate comment, some where probably made. Loosing the presence of foreign oil companies in the long run is not in Ecuador's best interest, as it has generally brought problems in other countries which have lost foreign investors, Venezuela being the obvious answer. Although, Venezuela might be able to create its own refining capacities, explore for its own oil, repair its degrading industry in the long run-- it will not come easily and many now argue (even those who support Chavez) if complete nationalization was a good idea after all... Ecuador will not be able to so and needs the presence of such oil companies which include; Spain's Repsol, Brazil's Petrobras, China's Andes Petroleum and France's Perenco. The tax was viewed by foreign companies as a tactic for the government to fatten the state coffers. Unlucky for Ecuador, that such a move in some situations would be justifiable, and even with Western companies tendency to argue and fight them, as of recent there have been many situations in countries in Latin America, Africa and elsewhere, when foreign owned companies do concede to some if not all demands. The problem is this move comes after a great deal of anti-US, left-wing rhetoric, and general fear that has been factored into the markets originating from Correa's campaign for President; where he expressed interests of nationalizing Ecuador's oil industry.
Therefore, a great deal of uncertainty has been factored into the market but the foreign companies, and since expectations largely guide many aspects of how investors view and access investments, it was natural they would scale back their plans and operations in Ecuador. Correa, overall, from my perspective has done a poor job of making Ecuador look like a good place for foreign investors... allying himself too closely with Chavez and attempting reforms a bit too far to the left in economic and political theory.
Among the many factors that did not help Ecuador's image was the recent potential outbreak of war with Colombia. When Colombian troops entered Ecuadorian territory in search of FARC rebels who where hiding within Ecuador, along the countries Colombian border, Ecuador immediately as sovereign nations usually do in similar situations by asking for an immediate explanation and deeming the entry illegal.
It was at this point from my perspective, when Chavez and Correa from my analysis of the situation saw a opportunity to promote some anti-US fever and ignite nationalism in their own countries. The two countries instantly declared themselves allies, and threatened war against the "US puppet of Latin America," Colombia--sending troops to their respective borders with Colombia. (See Reuters Article here, written by Saul Hudson and Alonso Soto).
As I searched for articles to provide links for all readers to credible sources I realize Western media has almost forgotten this even happened, and some even predicted that if Chavez's threats came to be reality, the U.S. would attempt to convince countries it has friendlier relations with to help Colombia. Their first calls would probably go in my opinion (in ranking order) go to Panama, Peru, Chile and then to what the US knows would have been a very reluctant Brazil.
As nice as it is for South American countries to be spoken about on major US media, it is aggravating they do so mostly during times like these (war), or perhaps natural disaster (ex: 2007 summer earthquake in Peru), and or even when the daughters of president Bush get robbed while US secret service is supposedly accompanying them and protecting them as they shopped in Buenos Aires, Argentina (good work secret service!).
I personally disagree with many things Correa has done in Ecuador, and I think he has managed his international policy horrendously, but despite all this he is not a horrible president, especially when you look back on Ecuador's track record. From all my analysis, readings and opinions expressed by others to me about Ecuador, it seems the country is stuck as a Chavez ally and will be associated as one until until a change of government occurs, yet it realizing it would have been in the country's general best interests to have chosen a more neutral path in foreign policy such as Brazil or Chile's left leaning government have. Regionalism is something South America needs and should have, but as it stands now, Chavez is too strong a character, unpredictable and temperamental to lead the region which despite his calls for decoupling from the domination of Latin America by both the US and the old colonial powers which now compose the European Union, the region simply put... needs them (the US and EU).
As it stands, a “new economic order” is emerging as a global re-balancing of international economic power and influence occur. This “new economic order,” to be described in this working paper can be largely attributed to the increasing importance and presence of emerging markets in the world economy and inter-emerging market cooperation. Accounting for only the populations of the four largest developing nations; Brazil, Russia, India and China (BRIC countries), roughly 2.7 billion economic agents have become active competitors in the global economy. This research study focuses on the growth and cooperation of the emerging markets of China and the South American commodity exporting countries of Peru, Chile, Colombia, Brazil, Argentina and Venezuela, and, how to understand their cooperation the ramifications in the field of international investing..
Chinese expansion in the fields of trade and investment in South America, the general growth in Sino-South American relations and in particular, the countries of focus in this paper, has greatly altered the expectations of many economist and investors around the world. Economists and international investors have responded through creating new international models for their respective fields. For instance, many within the investment community have developed alternative investment strategies and portfolio diversification strategies with a international focus. Strategies, typically consider international factors such as market volatility, political risks, growth forecasts, and or advancements in technology—all of which are important indicators which help investors identify a strategic mix of investments in which to construct an international portfolio.
A unique aspect behind China's emergence as a global economic power, is that China remains (by western standards) a developing country, home to over 350-400 million people living below the international poverty. Never the less, China has managed to achieve global recognition while still being classified as an emerging market. With hundreds of millions in China yet to benefit, the country's economic growth and development is far from complete. Furthermore, China's recent materialization as the world’s second largest economy (in PPP terms) provides a clear message; no developed or developing country can afford to ignore or marginalize the affects of China's rapid economic growth (Colombia Futures Group; 2005). Referred to by many as; “the work shop of the world,” China has is now a major center of economic activity with ample capacity to further expand its influence and position.
Emerging markets such as China and India, both of which have over a billion people, evolve and become new engines of global growth—much like North America and Western Europe. Additionally, in light of globalization and ever increasing levels of international commerce and production matrices, emerging market cooperation has developed into its own respective engine of growth for developing countries—facilitating the rise of commercial exchange between regions which may have previously had little or no connections with one another, as China and South America have (Estevadeordal; 2006).
In response to the ever-increasing interconnectivity of economic activity in the world economy, emerging markets have managed to develop both their domestic capacities and establish significant levels commercial exchange with other emerging markets. When the global credit crises of late 2007-2008 emerged, it led to world-wide market corrections in developed countries real estate, banking, and financial sectors. The developing world, including the countries in this research, in part, where able to use their domestic and regional economies to compensate for the adverse effects of economic slowdown or recession in the US.
Despite problems which need to be addressed in the global economy, emerging markets discussed here show signs they will achieve favorable growth in 2008 and for the next few years to come. The countries of focus in this research all managed to achieve very positive growth rates in 2007. GDP growth rate data from 2006 and 2007, has been adquired from Bloomberg L.P reports. China achieved avg GDP growth of 10.7% over 2007. While, in South America GDP growth were calculated as: Peru 9%, Chile 5.2%, Colombia 7.8%, Brazil 4.8%, Argentina 8.7% and Venezuela 8.4%.
In 1970, two-way trade between China and all of Latin America, which includes Central America and the Caribbean region, was reported to be a meager $150 million. Additionally the majority of this exchange occurred between China and Cuba, largely because of ideological. In 1980, the figure had begun to change drastically, increasing 1000% o ver ten years to $1.5 billion (Li; 38-39). From 1984-2004, Chinese commodity imports from Latin America surged by a factor of 20. By 2005 two-way trade between the regions had increased another 900%, growing to over $50 billion. Trade data from 2004, provided by the International Monetary Funds direction of trade statistics estimates the total value of Chinese commodity imports at $200b USD (Santiso; 2007).
This blog will be a resource for all those interested in participating in exploring this new dynamic relationship.
Up to date news and relevant developments from reputable news agencies will be posted when they pertain to this growing cooperation and the emerging markets of South America and China.
Captivated observer and active participant in the growing exchange between countries in the Americas and East Asia.
Exhilarated by the process of identifying and growing local and international business opportunities.
Committed towards expanding my reality and nurturing a network of like-minded individuals and organizations from across the globe. Including but never limited to -- entrepreneurs, creative talent, educators, students, innovators, investors and new media journalists.
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