Latin Business Chronicle, Tuesday, November 23, 2010 **
www.latinbusinesschronicle.com/app/article.aspx?id=4652
China moves beyond mere trading with a growing role in financing
China-Latin American business.
BY CHRONICLE STAFF
The Inter-American Development Bank is looking at potential Chinese bank
participation in large renewable energy and transportation projects in
South America.
"We are exploring potential Chinese bank participation in large
renewable energy and transportation projects in Guyana, Ecuador and
Colombia," IDB President Luis Alberto Moreno tells Latin Business Chronicle.
Meanwhile, several Chinese companies have become suppliers of
IDB-financed infrastructure projects in Latin America.
The IDB has ramped up its China focus as a result of the growing trade
and business between Latin America and the Asian country. Last year,
trade reached $118.2 billion, according to a Latin Business Chronicle
analysis of data from the International Monetary Fund.
China is now the second-largest trade partner for Latin America after
the United States, according to a Latin Business Chronicle ranking of
trade data from the region's top trade partners.
Last month, IDB announced that it had signed a letter of intent with the
Export-Import Bank of China to finance up to $200 million worth of
China-Latin America trade.
SINOHYDRO EXPANDS
One Chinese company looking to boost its business in Latin America is
Sinohydro Corporation, China's top dam builder. It is pursuing projects
in several markets, including Argentina, Bolivia, Colombia, Chile,
Ecuador, Panama, Peru and Venezuela, according to Song Dongsheng, the
company's Executive Vice President.
It currently has two gas plants on Venezuela and a hydro power project
in Ecuador as well as representative offices in five cities in Latin
America.
Chinese interest in Latin America and vice versa is expected to increase
after the IDB co-organized the China-Latin America Business summit in
Chengdu, China last month.
"The event in Chengdu surpassed our expectations," Moreno says. "It
brought together more than 1,200 participants, including top executives,
trade promotion agencies and senior public officials from Asia and the
LAC region, including 400 participants from both governments and private
sectors from all 26 IDB borrowing member countries in LAC. … On one
remarkable single day, there were more than 700 matchmaking business
sessions ranging from agri-business to clean energy. "
Among the participants was Sinohydro's Song Dongsheng. "Since the
difference between Latin America and China may be the largest comparing
with any other region of the world, such kind of activities are always
useful," he says.
The $200 million loan program isn't the only major China initiative from
the IDB. It also has an agreement with China-based Alibaba, the largest
electronic trading platform, to promote SME trade between China and
Latin America. "We have signed financial cooperation agreements with
Chinese banks [and] several Chinese banks have joined the IDB's trade
financing program," Moreno points out.
BROAD ASIA FOCUS
The Chengdu summit follows major IDB summits in Korea in 2007 and in
Japan in 2008. "We are truly stepping up our efforts to help forge a
strategic relationship between China and Asia and Latin America and the
Caribbean," Moreno says.
The IDB plans an event in Asia next year as well. The purpose of the
Asia-Latin America Business Summits the IDB has been promoting in recent
years is to bring together top level government officials and business
executives to expand and strengthen the commercial ties between both
sides of the Pacific Rim.
Next year, IDB expects to launch in 2011 an ambitious program financed
by China for high-level economic officials from the private, public
sectors and academia to participate in an exchange program to share
business models, economic development and integration.
"This is one of the first steps and we are looking forward to an
exponential growth in this relationship," Moreno says. "I am a firm
believer that this is the moment of opportunities for Latin American and
Caribbean and our future should be built in part by increasing the
relationship with Asia, by creating the conditions and building the
partnerships to promote this South-South cooperation."
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