China's Role in Realizing 'Latin America Decade'

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Brazilian President Dilma Rousseff arrived in China today accompanied by 300 business leaders on a visit aimed at boosting a growing economic partnership.

Brazilian President Dilma Rousseff landed in China today to shore up trade and business ties, just a month after President Obama traveled to South America to lobby on behalf of US businesses.

The presidential hopscotch underscores the growing competition between the US and China for a foothold in Latin America. While the United States is an important partner, says the chief of the Organization for Economic Cooperation and Development (OECD), China is "the perfect fit" as Latin America looks to boost infrastructure, technology, and overall economic growth.

"There is no limit," says OECD Secretary-General Angel Guerria, referring to Chinese investment opportunities in Latin America. Average economic growth regionally was 5.5 percent in 2010, he says, with a slightly lower projection for this year. Millions of jobs are being created, he adds, and with the region's vast natural resources future economic growth "potential is enormous."

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China is making big moves to unlock that potential. The Asian tiger is investing heavily in the region, edging out the US and boosting ties with leaders such as Brazil's new president. Ms. Rousseff, on her first foreign trip since taking office in January, is reportedly accompanied by some 300 business leaders on a visit that will include meeting with President Hu Jintao and participating in a summit of BRICS (Brazil, Russia, India, China, and South Africa).

Investments amid apprehensions

With new investments of nearly $30 billion in Brazil focused in the energy and mining sectors, China last year surpassed the US as the South American giant's biggest trading partner. The Monitor has tallied at least $65 billion in Chinese deals throughout the region since 2010.

To be sure, there is much apprehension over China's aims. "We don't want to be China's next Africa," a Mexican official told a US embassy economics officer, according to a February 2009 cable published by WikiLeaks, referring to the criticism that China has taken advantage of Africa's natural resources without developing the continent. Another cable two months later quoted the Brazilian consul general in Shanghai saying that "China's strategy in Latin America is clear: it wants to 'control the supply of commodities.' "

But Mr. Guerria is more optimistic. With the help of Chinese investment in infrastructure projects throughout the region, "Latin America is tapping into global markets," says Guerria, who formerly headed Mexico's Finance Ministry and Foreign Affairs Ministry. Integration with the global economy "is absolutely integral," he says, and it will be key toward realizing a "Latin America decade."

The first transcontinental highway is to open later this year. It will connect Brazil to Peru's Pacific ports for the first time and bring it closer to the economies of China, South Korea, and Japan. Only about 25 percent of the region's roads are currently paved, compared to the 80 percent average among OECD nations, says Guerria.

Region must boost education, equality

But Chinese investment won't alone guarantee success. "I'd like to inject some caution into our discussions," Guerria said in an April 2 speech at a business conference on Latin America at the Massachusetts Institute of Technology (MIT) in Cambridge, Mass. "This will not be Latin America's decade if Latin American countries continue to top global rankings of inequality."

The region must boost educational standards and social programs while tackling income inequality, lax tax collection, and weak rule of law, he said.

Guerria called it unacceptable that the region's richest 10 percent earn 40 percent of all income, while the bottom 10 percent earn 1 percent of all income. …

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