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1) Asia-Latin America Collaboration by Lim Hng Kiang

Most people think of Latin America and Asia as two regions separated by culture, language and history. Yet, Asia and Latin America are more connected than we imagine.

In recent years, political and economic ties between Latin America and Asia have deepened. Not only have government–to-government links and interactions grown, but companies from both regions have increasingly come to realize the potential for doing business with each other. The growth in total trade flows between Latin America and Asia bear testament to this, having risen to reach US$267.3 billion in 2007, an increase of 24 percent over 2006 (click here to read more)....

ASEAN AND UNASUR

In ASEAN, there has been good progress made towards achieving the ASEAN Economic Community. The recent conclusion of negotiations for the ASEAN-Australia-New Zealand FTA as well as the ASEAN-India FTA Trade in Goods during the ASEAN Economic Ministers Meeting in August will not only continue to deepen ASEAN’s internal integration, but also expand its external reach. In Latin America, 2008 bore witness to the establishment of the Union of South American Nations or UNASUR, which aims to create a single market and to integrate infrastructure (click here to read more)...

SINGAPORE'S GROWING LINKS

While trade links between Asia, as well as Singapore, and Latin America have grown, there is scope to do much more. For example, bilateral trade between Singapore and Latin America increased at a compounded annual growth rate (CAGR) of 17 percent over the last three years to reach US$8.89 billion (SS$ 13.4 billion) in 2007. But this only represents 0.07 percent of total world trade and 1.6 percent of Singapore’s total trade with the world last year. There are many areas where there are opportunities for collaboration, be it in agri-business, food and beverage, electronics, oil and gas, transport, logistics or infrastructure. In fact, an increasing number of our companies have made successful inroads into Latin America in these sectors. To date, there are about 56 Singapore-based companies with 191 points of presence throughout Latin America engaged in a variety of business and investment projects.

Latin America’s infrastructure sector in particular has attracted the interest of a number of Singapore companies. Latin American governments are placing increasing emphasis on investing in robust, well-integrated and efficiently managed infrastructure to sustain growth. This presents opportunities in transportation & logistics, urban planning, water and waste management, industrial park development, and oil & gas, amongst others, in both regions. Latin America’s need for expertise in infrastructure development dovetails well with Singapore companies’ infrastructure development capabilities and search for new markets (click here to read more).

Click here to access the full article from Latin Business Chronicle


2) Venezuela's Chavez calls for creation of an Oil Bank reports Rigzone via Dow Jones Newswires

Venezuela's President Hugo Chavez on Tuesday called for oil producing countries to create an oil bank and warned oil prices could fall further.

"We once proposed the creation of an OPEC Bank...but it wasn't adopted. Lets work with the idea of an oil bank, a couple of oil (producing) countries can do it," Chavez said as he arrived in Brazil for a state visit.

Click here to access the full article via Rigzone.com


3) China has muscles to push domestic growth - Xinhua

SINGAPORE, Sept. 30 (Xinhua) -- China has the muscles to push short-term domestic growth, but Japan and South Korea will continue to grapple with various difficulties in trying to rev up their sluggish economic engines into higher gear, said Standard & Poor's Ratings Services here on Tuesday.

In recent separate reports on the three countries, S&P said China will steer its economic policy toward supporting growth, despite some anticipated hurdles, while Japan and South Korea both face political stalemates, high oil and food prices, decelerating growth, among other issues.

The report said China is counting on its strong domestic demand to pull its economy ahead this year and next, "We expect tight labor market conditions, together with the implementation of the new Labor Contract law this year, to keep wage growth strong and lower uncertainties faced by employees."

Click here to access the full article from Xinhua


4) China's economy in good shape despite global financial chaos

TIANJIN, Sept. 27 (Xinhua) -- China's economy was in good shape and capable of maintaining financial stability despite global chaos, Liu Mingkang, chairman of the China Banking Regulatory Commission (CBRC), said on Saturday.

Liu made the remarks at the ongoing 2008 Summer Davos forum, also known as the Annual Meeting of the New Champions 2008, which kicked off on Saturday in the north China metropolis of Tianjin.

Though feeling gloomy about the outlook of the world economy, most attendees were confident about China's economic prospects.

"China has full confidence and capabilities to ensure sound and fast economic growth for a long period of time," Premier Wen Jiabao said at the opening ceremony.

Click here to access the full article from Xinhua


5) South American leaders blame financial crisis on US irresponsibility reports Mecropress

Four of South America’s leaders meeting in the Amazon accused the United States on Tuesday of "irresponsibility" in its handling of a financial crisis that has dried up credit markets and threatens economies around the world.

Brazil’s Lula da Silva said that rich nations are responsible for the global financial crisis, and called on the US Congress to pass a solution quickly. Emerging markets, including Brazil, are better prepared to weather the crisis than the US, he said.

“We did our homework and they didn't”' Lula said. “Those that spent the last three decades telling us what to do didn't do what they had to do. The crisis is very serious and so profound that we don't know how big it is”.

Venezuelan President Hugo Chavez warned the crisis could slow economic growth across Latinamerica and predicted that US economic power is in dramatic decline.

"This crash of capitalism and of neo-liberalism will be worse than that of 1929" Chavez told reporters at the Manaus city meeting. “No country can say it won't be affected''.

Click here to access the full article from Mercopress


6) Brazil and Argentine markets suffer record day losses

Brazil’s Bovespa suffered its greatest loss in one day since 1999. Trading dropped 13.8% before beginning to recover towards the end of the day.

Before President Lula da Silva had to come out and insist that the global financial crisis would have a limited contagion for Brazil. Trading had to be stopped for 30 minutes after the crash reached the 10% threshold but once restarted continued to fall until at the end of the day the index settled at 46.028 points, down 9.4%.

In Argentina the MERVAL index skid 8.7% and in Mexico the IPC, 6.4%; in Chile the loss was 5.7% and in Colombia, 2.37%.

For Chile it was the worst daily fall in a decade and for Argentina’s Merval the blackest day since February 11, 2002 when the market crashed 10.68%. The Argentine stock exchange has lost 13,5% in September and 30% since the beginning of the year.

Click here to access the full article from Mecropress


7) US representatives extends benefits to Andean Countries

The United States House of Representatives voted unanimously on Monday to approve a one-year extension of trade benefits for Colombia, Peru, Ecuador and Bolivia that expire at the end of the year....

Click here to access the full article from Mercopress


8) Lima's stock market plunged 15.35% in September

Lima, Sep. 30 (ANDINA).- Lima Stock Exchange (BVL) plunged 15.35 percent in September, the second biggest month drop in 2008, after a 18.73 percent decrease in July, amid an international financial crisis worsening, said Tuesday the general manager of Seminario Brokerage (SAB), Roberto Seminario. The BVL was hurt by external factors linked to a metal price drop and a collapse of several American financial institutions such as Lehman Brothers, Merrill Lynch, Bear Stearns and Washington Mutual...

Click here to access the full article from Andina News


9) Chinese buyers of Indian Iron Ore demand discounts

Chinese buyers of Indian iron ore are defaulting on import contracts and refusing to lift the ore unless the seller offers a discount on contracted prices, a top industry official said on Monday.

"Our exports are in deep red as there is no demand from China," said Rahul Baldota, president of the Federation of Indian Mineral Industries and managing director of miner MSPL Ltd.

Chinese appetite for Indian ore has fallen despite rival Brazilian miner Vale`s demand for higher prices for the ore it exports to China -- a move that initially cheered Indian suppliers.

Nearly 75% of India`s annual iron ore exports of about 100Mt go to China, and shipments normally rise after the annual rainy season ends in September.

"The Chinese are backing off old contracts. They are saying either you reduce the price or we can`t take the shipments," Mr Baldota said. "I, myself, have had to suffer two cancellations."

Click here to access the full article from Mining-Journal

Peru, China reaffirm will to negociate FTA -- reports Chinaview.cn

Chinese state media Xinhua News reported on July 3rd -- Peru, China reaffirm will to negociate FTA

Editor: Sun Yunlong

LIMA, July 3 (Xinhua) -- Peruvian Minister of Foreign Trade and Tourism (Mincetur) said Thursday that Peru and China have reaffirmed their political will to continue negotiations for a bilateral Free Trade Agreement (FTA).

Mercedes Araoz made the remarks after the 4th Round of FTA Negotiations between the two countries concluded here Thursday.

"The dialogue must not stop, we have had work meetings at negotiators level, the vice minister (of Exterior Trade, Eduardo Ferreyros) and myself have talked with the chief negotiator of China and we have agreed that there is all the political will to find a solution," Araoz said.

"We want the agreement to be something viable for both countries, to seek mutual benefit, not to affect our interests," Araoz added.

Araoz said the Peruvian negotiation team, formed by members of Mincetur, is also discussing with the Peruvian private sector to take their position into account to ensure a proper negotiation.

Peru and China aim to sign an FTA during the APEC summit scheduled for next November in Peru.

China-Peru begin 4th Round of Negotiations for a Free Trade Agreement

China - Peru, 4th Round of Negotiations for a Free Trade Agreement between China and Peru began yesterday, June 28th in Lima, Peru according to Andina, a leading Peruvian news agency.

Topics on the agenda in this round include:

- Access to the Market,
- Rules of Origin,
- Trade Defense,
- Services,
- Investments,
- Sanitary and Fitosanitary Measures;
- Technical Obstacle to Trade,
- Solutions of Controversies,
- Customs Procedures
- Institutional Affairs.

Updates and developments to come. It seems both China and Peru are eager to sign this agreement. It would make it China's second in South America, Chile having already sealed a FTA with China back in 2005. (Click here to read the article published by the China-Daily, back in 2005)

Peru and Chile are attractive countries for China because of a variety of reasons. First, Peru and Chile are the world's leading copper producers. In 2004, the two nations, together mined nearly 6.4 million tonnes of copper; equal to 44% of global copper production. Together, the two countries accounted for 50% of China's total copper imports from abroad (International Copper - World Copper Study Group; 2007). Chinese copper demand is unlikely to shrink any time soon, granted the fact copper is used in the production of semi-conductors, automobiles, infrastructure, IT hardware, and in the construction industry (Trinh; 2006).

Second, macroeconomic and political stability and impressive growth makes Peru and Chile ideal entrance gates for Chinese investments, exports and imports to and from Latin America. Chinese ambassador to Peru, Gao Zhengyue, stated this year at a conference on pacific cooperation hosted in Lima; “one of the advantages that Peru (and Chile) offers to China as economic partners is its strategic economic convergence of complimentary economic structures. Derived from its geographical position in the continent, as a bridge between Asia and South America and the Atlantic Ocean through the bio-oceanic corridor. Peru is also important due to its projection towards a sub regional extended market through the Andean Community (CAN) and Mercosur. (China-Peru Free Trade Agreement Joint Feasibility Study; 2005-06).”

It would be nice is China and Peru could get this deal sealed and further increase trade with one another. It will be to the benefit of both countries. Reported on Chinese Governments homepage of the Ministry of Commerce, Vice Minister of Commerce Yi Xiaozhun stated:

"Peru is now China’s important trade and investment partner in Latin America. The China-Peru bilateral trade surged by 49.59% year on year to US$6.014 billion, out of which China’s export hit US$1.678 billion, up by 66.43%, and China’s import hit US$4.336 billion, up by 49.03%. The cooperation on mutual investment, contract projects and labor cooperation, etc., between the two countries also enjoys relatively quick development."

Many would agree other countries are equally or of greater significance to China... Such as the closest competitor to Peruvian copper--Chile. Perhaps Brazil, which China has become increasingly dependent upon for foodstuffs and is has also heavily invested in infrastructure, iron ore and energy projects throughout Brazil.

No less, Chinese rhetoric however exaggerated, does offer some evidence to suggest the agreement will pass and be speedily implemented. China can be very respectful, gracious and giving when they want something to move ahead. Whether Peru is truly emerging as China's most "important" partner in Latin America is questionable, but China's and the Peruvian governments efforts to move this foward, show both parties feelthe FTA would be beneficial.

Viva El Peru! -- Various developments and stories from the Andean Republic

Since beginning this site, I aside from mentioning Peru within posts, most of my longer and more in depth analytical pieces have been on Argentina, Ecuador, China, commodities and rising food costs.

I would like to dedicate this update and perhaps the one to come later this afternoon (July 18- 2008) to recent developments in Peru, one of Latin America's best preforming economies in recent years and quickly gaining international recognition for both its economy and equally important-- Peru's unique culture.

I begin today's focus on Peru, with a chart I assembled for my dissertation on Sino-South American relations and economic cooperation, providing a general picture of how Peru's economic growth compares with its neighbors. My dissertation focused on the below countries and their growing relations and trade with China.

I must mention Ecuador and Uruguay each experienced their own respective healthy growth rates in 2006 and 2007. Information has been assembled from the International Monetary Fund (IMF), and account for inflation which is on the rise throughout the continent, but is particularly high in Venezuela and Argentina.

As you can observe above, comparing Peru with other countries in the region, it is preforming quite well and the IMF forecasts healthy growth for the country foward to 2009, at which point it has also been estimated Peru's economy will achieve fast. At the time of writing of my dissertation (Jan-April, 2008), estimates and future forecasts by the IMF were as follows. Please, by all means, let me know if the figures have been significantly altered since earlier this year.


Latin America - Country Growth Rates 2006-2009 (r = Real GDP percent change, e = expected and f = forecast)

Source: IMF GDP calculations adjusted for inflation

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Peru has many good things going for it right now. First, copper unarguably one of Peru's most important natural resources has risen sharply in value over the past few years, in addition to other raw material exports Peru has in abundance-- fishmeal, gold, silver and zinc. Copper is a key input in economic development-- and even if as of recent days the price has dropped, it will remain a commodity in strong demand for quite some time-- thanks in large to China which now relies on Chile and Peru for 50% of its total imports of copper from abroad.

Below is a graph which predicts copper demand and China's economic growth based off the proportional level of copper demanded from other countries at similar levels of development, using South Korea as the primary benchmark due to many similarities its own plan for initiating their economic development and similar needs of having to import many of the inputs necessary to industrialize.



Below is a graph generated from the London Metals Exchange home page, using their price graph generator.

LME copper spot 2002-2008

Thankfully, as Mr. Michael Reid states in his new book, the Forgotten Continent: The Battle for Latin America's Soul it seems Latin American countries are in a different position than they where during past commodity booms. Today, thanks in large to the BRIC countries and to emerging market demand, the current commodity boom will remain in swing for longer than ones of the past. Second, from historically failing to re-distribute profits from commodity booms to constructive areas of the economy to ensure sustainable growth after commodity prices fall many leaders now know better.



Peruvian present Alan Garcia, who had previously been considered a charismatic, populist, has shown he's learned from many of his past mistakes and currently retains pretty decent support and popularity rating in Peru.

In his first term as president in the late 1980's, his economic and internal policies lead to escalating violence from the war then in full swing, with the Peruvian state on one side, fighting the Maoist Shining Path Guerrillas on the other. Escalating violence and failed economic plans also lead the nation to experience the worst hyper-inflation of Peru's history.

Today he is viewed as a healthy moderate, leading the way with other popular Peruvian politicians such as Lima's mayor who also enjoys high popularity ratings as of recent polls, in investing profits from commodities in constructive projects. New water facilities are being built for Lima, which sits in the driest desert on the planet, highways are being built / repaired, ports are being upgraded and new airports are being built in Northern Peru (a region historically ignored in large by the central government).

I end this post (with more to come later), with a article I saved from March's APEC summit which took place in Lima.

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China sees Peru as the gate to South America - Andina News

Lima, Mar. 10 (ANDINA).- Macroeconomic and political stability and impressive growth makes Peru the ideal entrance gate for Chinese investments and trade to Latin America, said Chinese ambassador to Lima Gao Zhengyue.

One of the advantages that Peru offers to China as economic partners is its strategic economic convergence, derived from its geographical position in the continent, as a bridge between Asia and South America and the Atlantic Ocean through the bioceanic corridor.

Peru is also important due to its projection towards a sub regional extended market through the Andean Community (CAN) and Mercosur.

Chinese Ambassador to Peru
Gao Zhengyue

So far this year, around 30 delegations have visited Peru, and probably this number would increase when the Free Trade Agreement (FTA) between Peru and China is signed, he told Andina news agency.

Chinese business leaders are very interested in diversifying investments to Peru, currently concentrated in mining, in sectors such as ports, airports and road construction.

The Chinese government is interested in taking part in the social programs promoted by Peruvian government, as "Agua para Todos" (Water for Everybody) and "Techo Propio" (My Own Roof), he said.

"Whenever the Peruvian government can show projects to the Chinese business leaders, they will start to study them and decide to make investments", he said.

Gao Zhengyue told Andina that he is very satisfied with the firts two Rounds of Negotiations to sign a Free Trade Agreement (FTA) between Peru and China and hopes the FTA could be signed at the end of this year, so it would come into effect immediately.

The Chinese diplomat said his country is ready to welcome Peru's President Alan Garcia when he visits China next week.

(Accessed via Andina news agency -- China-Peru Free Trade Agreement Joint Feasibility Study; 2005-06).”

Peru hopes to seal free trade pact with China during APEC Summit - 2 years later - big change in diplomacy as noted

Peruvian foreign minister, José Antonio García Belaunde, hopes to reach a Free Trade Agreement with China during the APEC Summit of Leaders in November, taking advantage of Chinese president Hu Jintao's visit to Peru.

“Peru is very interested in establishing a Free Trade Agreement with China. We are already negotiating it and maybe we will have it signed by November this year when Asia-Pacific leaders will meet in Peru at the APEC Summit of Leaders”, he said.

Peruvian FM García Belaunde said that such an important agreement would be a great achievement for the country, because most Peruvian exports go to the United States, Europe and China.

“We hope to sign a FTA with China when (Chinese) president Hu Jintao will arrive in our country on an official visit”, he pointed out.

"We must not concentrate all our efforts on reaching agreements with the United States, but we have to look towards other world's leading economies such as China and the European Union", added García Belaunde.

News source: ANDINA

http://www.livinginperu.com/news/6530