When the world gets closer.

We help you see farther.

Sign up to our expressly international daily newsletter.

China 2.0

China Enters "Second Generation Investments" In Latin America

Li Keqiang in Rio De Janeiro on May 21
Li Keqiang in Rio De Janeiro on May 21
Wu Haishan

BEIJING — China's Prime Minister, Li Keqiang, completed a tour last week of four South American countries — Brazil, Colombia, Peru and Chile — that marks a turning point between the Asian power and the Latin American region.

With his arrival in Brazil on the second day, May 19, Li unveiled a major achievement: a Chinese-Brazilian agreement that includes 35 separate projects amounting to a total of $53 billion. The deals include building infrastructure, finance, aviation, agriculture, renewable energy, telecommunication, and other high-tech sectors, among which are the much talked about "Two-Oceans railway" and the "Belo Monte hydroelectric dam." It is in such deals that we see a shift in China's way of working in Latin America.

Linking the Atlantic Ocean on the Brazilian coast to the Pacific Ocean on Peru's coast, the Two-Ocean Railway will be 5,000 kilometers long, with a total investment of over $10 billion and five years of construction time. Unlike previous Chinese companies' foreign cooperation programs, this project not only involves engineering contracting, but also the post-construction operation.

The two countries' joint statement stressed the crucial importance of the railway project for South America's goal of creating an integrated infrastructure network across the continent.

Peruvian newspaper El Comercio called the railway linking the two oceans "the new Silk Road to Latin America." Peru's Ambassador to China, Juan Carlos Capuñay, pointed out this railway's importance to the country for helping to facilitate trade between Peru's coastal region and inland areas, as well as promoting trade with the Asia-Pacific region.

As for China, once the railway is built, it will no longer need to send ships through the Panama Canal to import bulk commodities such as soybeans and iron ore from Brazil and Argentina.

Ultra high voltage

Currently under construction, the Belo Monte hydroelectric dam will be Brazil's second largest hydroelectric dam complex, and marks the first time that China exports an ultra-high-voltage transmission project. In February 2014, China's State Grid Corp and Brazil's Eletrobras formed a 51% to 49% consortium and successfully won a bid to build and operate a 30-year franchise on a transmission line running from the Belo Monte Amazon dam in northern Brazil to the southeast of the country. This is the first ultra-high-voltage transmission line on the American continent; and the 2,084-kilometer transmission line is estimated to be ready in 2017.

As Renato Baumann, a Brazilian international affairs expert, put it, Brazil would have preferred developing its own large projects, unfortunately it has been "out of breath" in recent years, and funding from China is essential.

Currently in preparation for the 2016 Olympics, Brazil's economy is predicted to shrink one percent this year. Not only will the $50 plus billion of investments promised by Prime Minister Li provide immediate support to the country's shrinking economy, but it will also upgrade China's investment in Latin America.

Compared with China's so-called "first-generation investment," which mainly involved trading raw materials, China is now focusing on heavy industries and deals to build infrastructure.

Such a transition is prompted in part by the decline in commodity prices in the past two years. Latin America was once one of China's raw materials bases. In addition, taking on project contracting and operations help China achieve its goal of expanding globally. Investing farther along on the industrial chain not only reduces risks and increases profits, but it can also upgrade China's industry back at home.

The four countries on Prime Minister Li's tour makes up 57% of the continent's trade volume with China. Meanwhile China has a growing interest in increasing its direct investments in the region and, in particular, in construction projects such as roads, bridges and railways.

As Chinese government data shows, at the end of 2014, China's direct investment in Latin America totaled around $99 billion.

For the first time, in January this year, leaders from Latin America and the Caribbean gathered in Beijing to attend the first Latin America Forum. Chinese President Xi Jinping announced that in the next 10 years China will invest $250 billion in Latin America.

You've reached your limit of free articles.

To read the full story, start your free trial today.

Get unlimited access. Cancel anytime.

Exclusive coverage from the world's top sources, in English for the first time.

Insights from the widest range of perspectives, languages and countries.

Sources

Indigenous Women Of Ecuador Set Example For Sustainable Agriculture

In southern Ecuador, a women-led agricultural program offers valuable lessons on sustainable farming methods, but also how to end violence.

Photo of women walking in Ecuador

Women walking in Guangaje Ecuador

Camila Albuja

SARAGURO — Here in this corner of southern Ecuador, life seems to be like a mandala — everything is cleverly used in this ancestral system of circular production. But the women of Saraguro had to fight and resist to make their way of life, protecting the local water and the seeds. When weaving, the women share and take care of each other, also weaving a sense of community.

With the wrinkled tips of her fingers, Mercedes Quizhpe, an indigenous woman from the Kichwa Saraguro people, washes one by one the freshly harvested vegetables from her garden. Standing on a small bench, with her hands plunged into the strong torrent of icy water and the bone-chilling early morning breeze, she checks that each one of her vegetables is ready for fair day. Her actions hold a life of historical resistance, one that prioritizes the care of life through the defense of territory and food sovereignty.

Mercedes' way of life is also one that holds many potential lessons for how to do agriculture and tourism better.

In the province of Loja, work begins before sunrise. At 5:00 a.m., the barking of dogs, the guardians of each house, starts. There is that characteristic smell of damp earth from the morning dew. Sheep bah uninterruptedly through the day. With all this life around, the crowing of early-rising roosters doesn't sound so lonely.

Keep reading...Show less

You've reached your limit of free articles.

To read the full story, start your free trial today.

Get unlimited access. Cancel anytime.

Exclusive coverage from the world's top sources, in English for the first time.

Insights from the widest range of perspectives, languages and countries.

The latest