Introduction -China and Latin America have a long time relationship -That includes inmigration, diplomatic links, and increasingly trade and investment -The nature of the present trade and investment relationship call for a cooperative approach and a common agenda is called for it. -The two will become increasingly linked.

1. China and Latin America
relations: Past, Present and
Future
November 2016
China-Lain America Think Tanks Dialogue
Carlos Aquino, Professor, San Marcos National University, Lima, Peru
Director of the Institute of Economic Research

2. Introduction
• China and Latin America have a long time relationship
• That includes inmigration, diplomatic links, and increasingly trade and
investment
• The nature of the present trade and investment relationship call for a
cooperative approach and a common agenda is called for it.
• The two will become increasingly linked.

3. I. Similarities between Andean, Mesoamerican (Pre-Columbian
civilizations) and Chinese civilizations.
• The presence of humans in the American continent is relatively new.
They come from somewhere.
• It is estimated that the first humans that inhabited the American
continent came from Asia, probably around 13,500 years ago,
crossing what is now the Bering Strait.
• They first arrived to North America and then went to Central and
South America
• There are some racial similarities between Asian and American
original inhabitants.

5. Sanxingdui (三星堆) and Moche culture masks
http://elcomercio.pe/mundo/actualidad/china-y-restos-que-demostrarian-pasado-ligado-al-peru-noticia-1782612

6. • Gavin Menzies in a book titled “1421: The year China discovered
America” (published in 2002) wrote that Zheng He “郑和” (born Ma
He “马和”) a Chinese fleet admiral in the early Ming dynasty, reached
the America continent in 1421, 70 years before Christopher
Columbus. In 1492 Columbus reached the America continent.

7. II. History of old relations between China and Latin America, The
Galleon trade: Manila-Acapulco
• From 1565 to 1815 some ships were crossing the Pacific Ocean linking
Acapulco (in Mexico) with Manila (Philippines). At that time Mexico
and Philippines were colonies of Spain.
• The ship carried mainly silver from Mexico (and from Peru and
Bolivia) in exchange for spice, porcelain, ivory, lacquerware,
processed silk and other valuable commodities. Many of these goods
were brought from China.
• But also other goods from Latin America reached China at that time.
These were potato, sweet potato, corn, cacao, peanuts, chili, tomato,
pepper, pineapple, tobacco.

8. https://www.google.nl/search?q=galleon+trade&espv=2&biw=1366&bih=667&tbm=isch&imgil=Vdqe-tZlR7hb_M%253A%253Ba-
m9JptBZdspVM%253Bhttp%25253A%25252F%25252Fwww.slideshare.net%25252FofficialLSAINTZ%25252Fgalleon-trade2&source=iu&pf=m&fir=Vdqe-tZlR7hb_M%253A%252Ca-
m9JptBZdspVM%252C_&usg=__0nrOfkwTEr_slsIz0uZw8Zue59k%3D&ved=0ahUKEwi-t5Hd5tLNAhUF6xQKHWaDAlMQyjcIRQ&ei=Aqp2V76uHYXWU-aGipgF#imgrc=3-15akhPV9-
4FM%3A

9. III. Chinese immigration to the region from the 1840s and
diplomatic relations from 1874 onwards
• Since China was opened to the world after the Opium war, Chinese began
leaving the country and many of them went to the American continent.
• Peru was the first country in Latin America were large scale immigration of
Chinese began.
• Chinese come to Peru from 1848 and up to 1874, probably 100 thousand of
them arrived.
• The reason why they came to Peru is that there was a scarcity of labor
force in the plantations of sugarcane and cotton in the Coastal region.
Traditionally slave force was used here (people from Africa brought by the
Spaniards when they conquered the Inca Empire).
• But by the middle of the XIX century the slave trade was being forbidden in
the world and when finally in 1854 slavery was forbidden in Peru the
scarcity of labor become a big problem.

10. • Because of an incident on a ship carrying Chinese laborers Peru
established in 1873 diplomatic links with Japan.
• The following year diplomatic relations were established with China.
• Peru was the first country in Latin America to establish diplomatic
links with Japan and China. Mexico for example established
diplomatic links with Japan in 1888. Mexico and Imperial China
established diplomatic relations in 1899.
• As a result of early Chinese immigration, in Peru there is the large
chinese community in Latin America (and the seventh largest in the
world).

11. IV. China and Latin America economic relations: Trade, Investment
and Cooperation
• The presence of China in Latin America is increasing. China has become the
second trade partner of the region (for some of them it is already the first).
• If we exclude Mexico (which trade a lot with United States), China is the
biggest trade partner of the region.
• China is also becoming a big investor in Latin America, specially in the
natural resource sector.
• China is proposing the construction of a bioceanic railroad linking Peru and
Brazil. This will increase Chinese presence not only in the field of trade but
also in investment in infrastructure projects.
• It could compete with the route of the Panama channel, and also there is
the option of building a channel through Nicaragua

12. • From the last decade trade between China and Latin America has
increased very fast.
• Most of Latin American exports are primary goods: mineral, energy
and agricultural goods.
• Most of import of goods from China are manufactured goods.
• The region has a trade deficit with China, especially Mexico
• Cheap manufactured goods have improved the standard of living of
many Latin American but also caused strong competition to
manufacturers in the región.

13. Source: CEPAL, May 2015: “Latin America and the Caribbean and China: towards a new era in economic cooperation” http://www.cepal.org/en/publications/38197-latin-america-and-
caribbean-and-china-towards-new-era-economic-cooperation,

14. Source: CEPAL, May 2015: “Latin America and the Caribbean and China: towards a new era in economic cooperation” http://www.cepal.org/en/publications/38197-latin-america-and-
caribbean-and-china-towards-new-era-economic-cooperation, Page 37

15. • Regarding investment, in the last years Chinese companies are investing
large amounts in Latin America, especially in the primary sector.
• But it is no easy to get the exact figures because official statistics does not
register it, or because Chinese companies invest form places outside China,
like from Australia.
• Besides, as can be seen in the following Graphics, China is the biggest
source of lending for Latin America, specially for some countries.
• It lends more money than the World Bank and the IMF put togheter
• Since 2005 to 2015 China has lent more than 125 billion dollars to the
region, and more than a third of this was to Venezuela.
• The next Graphic is from the study “Latin American Economic Outlook 2016
: Toward a New Partnership with China” published by OECD/ECLAC/CAF in
2015

16. PERU: ESTIMATED PORTFOLIO OF MINING PROJECTS BY MAIN INVESTOR, March 2016
Source: Ministerio de Energía y Minas: “Cartera estimada de proyectos mineros, Marzo 2016

18. Source: Dialogo Chino: “China aumenta préstamos a Latinoamérica” http://dialogochino.net/china-aumenta-prestamos-a-america-latina/?lang=es

19. V. Towards a new type of China Latin America relationship
• China has FTA with three countries from Latin America. With Chile since
2006, with Peru since 2010 and Costa Rica since 2011.
• China will continue being an important partner of Latinamerica and its role
will increase in the future.
• There is a recognition that some aspects of the relationship should be
improved.
• One is the still asymetric trade relationship. Latinamerica depend so much
on the export of the natural resources to China, and with prices of them
lower the región has suffered some setbacks.
• Second, Chinese investment is concentrated in the natural resource sector.

20. • Third is the low level of understanding of each other. Still people on both
sides see each of them as distant.
• President Xi Jinping in the 1st Forum of China and the Community of Latin
American and Caribbean States (CELAC) celebrated in Beijing in January last
year, outlined a strategy to double the amount of trade and investment
with Latin America.
• The aim is to reach a trade volumen of 500 billion dollars in the year 2025
and 250 billion dollars in investment.
• Prime Minister Li Keqiang in his July visit last year to several countries in
Latin America set up several funds to promote Chinese investment in
industrial projects in the region.
• This is the year of cultural exchanges between China and Latin America

21. • China is in a new state of development, with a growing middle class
and urbanization and there is new demand for productos that Latin
America can supply.
• In order for Latinamerica to produce more value added good it needs
to industrialize its natural resources. It needs more skilled labor force
and to graduate more enginers and scientists.
• China has a strategy in its relationship with Latinamerica, does
Latinamerica has one?
• A common agenda to further realize “the win win” relationship is
needed.