■ Xu Deshun
Latin America is the region of the Americas south of the United States, including Mexico, Central America, the West Indies, and South America。According to the World Bank and the United Nations Statistics Agency, the area of Latin America was 2013.940,000 square kilometers, accounting for the world's total area of 15.48%;Population in 2021 is about 6.5.8 billion people, accounting for the total global population 8.4%;Gross domestic Product (GDP) in 2021 is 5.$49 trillion, global share 5.71%。
According to the World Bank's threshold standard for high-income countries in 2021, seven countries in Latin America, including Chile and Uruguay, belong to the high-income economy, and most of them remain in the middle-income stage for a long time。Regional organizations such as MERCOsur, the Pacific Alliance, the Central American Common Market, the Community of Andean Nations and the Caribbean Community have promoted the process of economic integration in Latin America。
Good foundation for cooperation
Since 1994, China has expanded its economic footprint in Latin America。Up to now, China has established strategic partnerships with 10 Latin American countries (Peru, Brazil, Mexico, Argentina, Chile, Venezuela, Ecuador, Uruguay, Bolivia and Costa Rica)。Twenty-one countries in Latin America (Argentina, Brazil, Chile, Guyana, Bolivia, Uruguay, Suriname, Peru, Costa Rica, Panama, Cuba, Mexico, Venezuela, Ecuador, Grenada, El Salvador, Dominica, Trinidad and Tobago, Antigua and Barbuda, Barbados, Jamaica) have joined the Belt and Road Initiative。
During the COVID-19 pandemic, the "Silk Road for Health" has helped China and Latin America work together。In terms of trade cooperation, China has become the second largest trading partner in Latin America。Since 2018, China-Latin America trade has exceeded US $300 billion for four consecutive years, reaching US $451.6 billion in 2021 and reaching US $282.8 billion in the first seven months of this year, an increase of 14 percent year-on-year.4%。In terms of investment cooperation, Latin America has great investment attraction for Chinese enterprises。Since 2011, China's investment in Latin America has been increasing year by year. In 2020, China's total direct investment in Latin America will reach 6,298.$100 million, up nearly tenfold from 2011。In 2021, Latin America has become the second largest destination for Chinese enterprises' outbound investment。In terms of foreign project contracting, the Latin American market has won the attention of Chinese foreign project contracting enterprises, and Latin America will be the fourth largest market for China's overseas project contracting in 2020。From 2011 to 2020, the cumulative turnover of China's foreign contracted projects in Latin America was 1,225.Us $6.8 billion, a total of 1,722 new contracts signed.$0.3 billion。Financial cooperation is also close。The China-Latin America Development financial Cooperation Mechanism established in April 2019 has injected strong financial impetus into China-Latin America economic and trade cooperation。Argentina, Brazil and other countries have signed currency swap agreements with China, which will help the internationalization of the RMB。
Face new challenges
The United States has implemented industrial policies such as "nearshore outsourcing" and "nearshore investment" to contain China。In recent years, the United States has promoted "nearshore outsourcing" and "friend-shore outsourcing" of its manufacturing supply chain, and launched the so-called "Partnership for Economic Prosperity in the Americas" (APEP) initiative at the ninth Summit of the Americas in June this year to rearrange and consolidate economic exchanges and cooperation in the Western Hemisphere and reduce its dependence on China's manufacturing industry。The EIU believes US nearshore investment appears to be working, particularly in Mexico。The industrial policy mix of US policymakers against globalization and away from the free market has added to the destabilizing factors of China-Latin America cooperation。
The Latin American economy is facing three pressures, and the Russia-Ukraine conflict aggravates the economic difficulties。Debt pressures, the food crisis and the challenge of poverty reduction are weighing on Latin American economies。The US Federal Reserve has raised interest rates continuously, posing challenges to Latin America, where foreign debt is at a high level, and countries with high external debt balances such as Argentina are facing debt risks。According to the World Bank, Latin America's public debt-to-GDP ratio in 2021 will be 71.At 6%, it is the highest since the early 1990s (around 80%)。Food inflation in Brazil, Chile, Colombia, Mexico, Paraguay and Uruguay reached double digits in the first half of the year, raising concerns about regional food security。Poverty and extreme poverty rates in Latin America are expected to exceed 2021 levels in 2022。Latin America has long imported a lot of fertilizer, iron and steel from Russia and Ukraine, and the Russia-Ukraine conflict has added to the grim trade situation in the region。Brazil, for example, imports more than 80 percent of its fertilizer from abroad, much of it from Russia。
Latin America is financially vulnerable to external conditions and inflationary pressures remain high。In the economic and trade cooperation between China and Latin America, the US dollar is the main denomination currency。Latin American countries rely heavily on the US dollar, and the US dollar exchange rate fluctuates greatly, which is easy to cause additional losses to enterprises and threaten the security of Chinese loans and investments in Latin America。According to the United Nations Economic Commission for Latin America and the Caribbean, the regional inflation rate will be 6 percent at the end of 2021.6 percent, rising to 8 percent by April 2022.1%;By the end of June 2022, the cumulative inflation rate in Venezuela and Argentina this year has exceeded 50%, and the inflation rate in Brazil, Chile and other countries has also reached a recent high。
Latin American countries have frequent trade remedy cases against China and face a cycle of political instability。Most Latin American countries have a low level of market openness, weak intra-regional links, and are more inclined to domestic trade protection。With the increase of China's export volume to Latin America, the trade friction between China and Latin America has intensified。From January 2011 to July 2022, Latin American countries filed more than 200 anti-dumping and anti-subsidy cases against China, mainly in Brazil, Mexico and Argentina, according to the China Trade Remedy Information Network。Latin America is in the midst of a new election cycle, with most countries due to hold presidential or parliamentary elections within the next three years, and some countries could face political unrest due to domestic inflation, protests and strikes。
Seize new opportunities
Latin American countries have great room for further opening up their trade, providing a broad market for China-Latin America economic and trade cooperation。According to the data of the World Bank, from 2015 to 2020, Latin America's trade accounted for 46% of its GDP on average, lower than the global average of 55%, indicating that Latin America's trade development potential has a broad market space。In addition to the lack of traditional infrastructure, such as ports, roads, railways and telecommunications, Latin American countries are inadequate，New infrastructure construction, including 5G base station construction, UHV, intercity high-speed railway and urban rail transit, new energy vehicle charging piles, big data centers, artificial intelligence, industrial Internet, etc., is even more inadequate，New opportunities for financial investment。
Digital trade and green cooperation have added wings to China-Latin America economic and trade cooperation。The Belt and Road Initiative has connected the infrastructure construction of China and Latin America, and cross-border e-commerce service platforms and innovative industries represented by "Internet Plus" have become new growth points for China-Latin America cooperation。Latin America is entering an effective stage of industrial transformation and upgrading, and digital economy, green economy and low-carbon economy will become new highlights of China-Latin America economic and trade cooperation。
The global value chain system is undergoing restructuring, providing new opportunities for the deep economic and trade integration between China and Latin America。Participation in global value chains remains low for most countries in the region。At the time of the restructuring of the global value chain system, the accelerated integration of sub-regional organizations within Latin America is conducive to the participation of Latin American countries in the global value chain, the deepening economic and trade integration of China and Latin America, and the increasing participation of Latin American countries in the Asian value chain space, including China。
Strive for new achievements
To consolidate the foundation for development, meet new challenges and seize new opportunities, China-Latin America economic and trade cooperation will surely make new achievements。If China and Latin America carry out cooperation on the basis of mutual respect, equality and pragmatism, and refrain from delimitation by ideology or interference in other countries' internal affairs, China-Latin America economic and trade cooperation will be stable and lasting。
We suggest that we continue to promote the "BRICS plus" South-South cooperation model，Implement the Global Development Initiative proposed by China in September 2021，Promote the China-CELAC Joint Action Plan on Cooperation in Key Areas (2022-2024)，We support China in diversifying financial investment risks，Enhance the understanding of Latin American culture and laws, and encourage Chinese enterprises to actively assume social responsibilities in host countries。
(The author is a researcher at the Research Institute of the Ministry of Commerce)
(Article from International Business Daily)