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Opinion / Op-Ed Contributors

Rising power of good relations

By Yuan Dongzhen (China Daily) Updated: 2014-07-18 07:44

The high complementarity between the Chinese and Latin American economies still acts as the fundamental driver of the cooperation between them. China has a huge demand for energy sources, minerals, grain, cultivated land and fresh water resources all of which Latin America can provide, while China is capable of supporting Latin America with funds, technologies, consumer goods and mechanical equipment.

The strong sustainability of mutual demand is one of the advantages of the economic cooperation between China and Latin America. On the basis of bilateral strategic partnership, Beijing has increasingly valued Latin America as a prime provider of mineral resource and agricultural products, as well as an important overseas market for its consumer goods. Latin American nations, on the other hand, are calling for more diversified investment from China in manufacturing, infrastructure and agriculture, rather than just energy and mining.

Despite that the bilateral trade volume hit $261.6 billion in 2013, economic exchanges between China and Latin America are yet to be improved as there has been increasing trade friction in recent years. Some Latin American countries seeing China not only as a cooperative partner but also as a competitor have resorted to imposing high import tariffs on Chinese goods to try and protect their manufacturing industries. Their reluctance to acknowledge China's full market economy status casts a shadow over the overall trend of friendly relations between China and Latin America.

Meanwhile, the cooperation model between China and Latin America, in which the latter exports primary commodities to China and imports manufactured goods from it, is yet to include high-tech products and other high value-added products. In addition, the instabilities in some Latin American countries can deal a blow to Chinese enterprises' confidence in investing in the regional market.

To minimize the risks to the ever-strengthening cooperation between China and Latin America, more pragmatic measures to upgrade the preexisting trade model are expected to be delivered during Xi's trip. The Chinese government is likely to implement more specific and focused policies toward different Latin American nations on the basis of their national conditions.

However, Beijing also has to provide timely responses and solutions to address Latin American countries' concerns over the current trade model. Moreover, to raise the level of the current two-way cooperation, Chinese investment should focus more on industries that can improve local livelihoods in Latin American countries.

The author is a researcher with the Institution of Latin American Studies under the Chinese Academy of Social Sciences.

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