China Sets Sights on S. American Resources
Between 2000 and 2005 China represented nearly 40 percent of the global growth in world demand for oil, one of Latin America’s leading export commodities aside from agricultural commodities, minerals and other raw materials.
Trade between China and Latin America increased 1200 percent, from $10 billion to $130 billion between 2000 and 2009.
That value of trade increased to $241.5 billion in 2011, Chinese Trade Ministry data indicated. Only the United States was a larger trading partner.
In 2009, 7 percent of Latin America’s exports were to China — mostly raw materials and commodities including copper, iron ore, oil and soybeans.
Meanwhile, Bloomberg reports China may take South American soymeal shares as demand increases:
Spare soybean crushing capacity in China big enough to process Argentina’s entire crop means the world’s largest oilseed consumer may start exporting more soy meal to southeast Asia, reducing demand for the livestock feed from Western Hemisphere suppliers, Rabobank International said.
China crushed about 61 million metric tons of soybeans last year, less than half the country’s processing capacity of 136 million tons, Rabobank analyst Pawan Kumar said today in an e- mailed report. Processors, which crush whole soybeans into meal used in feed and oil used for cooking, have expanded as China’s livestock herds grew. China’s imports of raw soybeans increased fivefold since 2001 to 58 million tons last year, while soybean meal exports are about 1 million tons, Kumar said.
Southeast Asia accounts for about 20 percent of world soybean meal trade, and about 76 percent of the region’s imports come from Latin America, Kumar said. In the past two years, meal shipped to the region from the Western Hemisphere was about $57 a ton cheaper than Chinese supplies. Still, Chinese processors could sell meal at a discount or break-even price to gain market share, or the government could allow shipments to be treated as re-exports, providing tax reimbursements, Kumar said.
China, which accounts for about 60 percent of U.S. raw soybean exports, may consume 76.7 million tons of the oilseed this season, according to the U.S. Department of Agriculture. Brazil is set to become the world’s largest grower, producing 83.5 million tons, compared with 82.1 million from the U.S. and 53 million from third-place Argentina. China’s domestic crop is about 12.6 million tons, the USDA estimates.
Aside from their interest in Latin America’s natural resources, China has announced it will invest $2 billion in the Inter-American Development Bank (IADB). From Reuters:
The contribution by the People’s Bank of China will be used to co-financeup to $500 million in IADB public sector loans and up to $1.5 billion in private sector credit, available over the next three to six years, the IADB said in a news release.
The goal of the fund was to alleviate poverty and boost competitiveness.
China has invested tens of billions of dollars in the region, from Mexico toArgentina, over the last decade to acquire strategic assets or companies in sectors such as oil, minerals and food products.
Last March, China’s export-import bank and the IADB announced a joint $1 billion dollar fund for private and public sector investment in the region, reflecting the country’s eagerness to link up with prominent institutions in the region.