China closes deals worth billions with four South American nations

Chinese Prime Minister Li Keqiang wrapped up his Latin American tour on Monday with a pledge from his country to pump €229 billion in investments into the region over the next 10 years.

In Santiago, the last stop on Li’s four-nation visit, Chilean President Michelle Bachelet took part in six events and ceremonies with the Chinese prime minister – a clear sign that her country, as well as other Latin American nations, are eager to boost their business relationships with the Asian giant.

Latin American nations are eager to enhance their business partnerships with the Asian giant

Li had already signed trade agreements with Brazil, Colombia and Peru before arriving in Chile, where he also hammered out a series of similar accords at La Moneda presidential palace before attending a state dinner in his honor.

Among the agreements is one that will end double taxation on foreign businesses and another that will allow currency exchanges between the two country’s central banks.

Financial cooperation between Chile and China is a key factor in bilateral relations at this moment as Beijing readies to put into operation the China Construction Bank, the second-biggest lender in the Asian nation.

“We have a very deep trade relationship and [China] is our major trade partner. It is a relationship that has been blossoming and will continue to get stronger,” said Chilean Finance Minister Rodrigo Valdés after taking part in the agreement-signing ceremony with Li.

Chile was the first country in South America to officially recognize the People’s Republic of China around 45 years ago, and was the first in the continent to sign a free-trade agreement with Beijing.

Although China has become the region’s third-largest trading partner, Chilean officials believe Chinese investment could soon start to wane because of the poor growth figures predicted for both countries in the coming years, which could impede new investment opportunities.

According to a study released on Monday that was conducted by the Economic Commission for Latin America and the Caribbean (CEPAL), Latin America’s biggest challenge in its trade relations with China is the diversification of its exports.

Only five primary products make up 75 percent of all the regional exports headed to the Asian country

While bilateral trade between the region and China multiplied by 22 times between 2000 and 2004, only five primary products make up 75 percent of all the exports headed for the Asian country.

CEPAL Executive Secretary Alicia Bárcena said that Latin America needs to “accomplish advances in productivity, innovation, infrastructure, logistics and human resources training” if it wants to diversify its exports.

“These advances are fundamental for growth with equality, in the context of accelerating technological change,” she said in the report.

Li, who began his Latin tour in Brazil on May 19, signed 35 investment agreements worth $53 billion with Brazilian President Dilma Rousseff.

At least $10 billion will go to building a trans-oceanic rail line that will run from the Atlantic to the Pacific through Brazil and Peru.