EDITOR'S note:

This is the second and final part of an interview on Mexico-China economic relationship Shanghai Daily reporter Ni Tao did with Dr Enrique Dussel Peters, coordinator of Centro de Estudios China-Mexico at the Universidad Nacional Autonoma de Mexico on Tuesday at the Shanghai Institutes for International Studies.

Q: Mexico is China's second-largest trade partner in Latin America after Brazil. Can Mexico be a gateway for China to expand its economic footprint in the region?

A: Mexico can serve as a springboard to not just Latin America but also the US. But Chinese firms have to be aware that they need to prepare themselves to understand the rules and norms of how to work in Mexico.

From the rest of Latin America it will be very hard to export to the NAFTA (North America Free Trade Area). Most of the preparation can and should be done in China, to work through the investment, labor and tax laws.

Q: Besides raw materials and energy, what industries are most attractive to Chinese investors in Latin America?

A: In 2010 I think 87 percent of China's investment in Latin America went to raw materials and energy, and more than 90 percent of Latin American exports to China are in raw materials and energy. Where is China probably going to expand? I think in two broad sectors.

One is investment in infrastructure. China has enormous financial strength in infrastructure such as ports, airports, trains, transportation, but also has its own technology.

I came yesterday from Beijing to Shanghai by bullet train in less than five hours. China controls most of the core technologies to do this (bullet train). And there is not one single such train in Latin America.

The second is the manufacturing sector. This would require a lot of learning process for Chinese companies in Latin America, which means Geely, Cherry, FAW, ZTE and Huawei ought to start producing in Latin America, not just exporting and assembling.

Q: Senior policy adviser to the Inter-American Development Bank, Andrew Powell, told Xinhua on March 18 that the future is bright for Latin America and China to resettle trade in yuan. Do you think time is ripe for this initiative, as dollar remains the foreign exchange reserve of choice in the region?

A: I would agree that from the Chinese perspective Latin America can be an important learning field on many topics, on corporate, manufacturing, financing, and also experiment with the yuan becoming an increasingly international currency. This has already happened in Argentina. It has been exchanging goods with China using the yuan since 2009. And this might happen between China and Brazil as well. China is Brazil's No.1 trading partner.

But again trade resettlement in yuan in Latin America is a learning process. You have to work step by step, work out the differences in respective countries. In countries such as Mexico this will be more difficult, for the US is still a major trading partner. But I assure you there is a lot of openness.

Q: Ever since the Monroe Doctrine, the US has perceived Latin America as its "backyard." Will China's growing economic presence in the region and the yuan's possible challenge to dollar worry some regional leaders?

A: There is a long and ongoing discussion on this topic. Today, I do not see concrete signs of the US being upset by China's closer relationship with Latin America.

On the contrary it depends on the interests of China and respective Latin American countries. It depends on the political, socioeconomic situation in Latin America and China.

I always joke that China was once not in the statistics because its volume (in trade) was so small. And today it is in the statistics books of any country.

Q: How will the expected slowdown in the Chinese economy this year affect Latin American economies?

A: The slowdown in Chinese economy is a very slow slowdown. I don't think it will make any big difference. Growth rate falling from 9 percent to 7.5 percent isn't a significant slowdown.

On the contrary, if you compare China's growth rate with those of countries and entities such as Japan, the US and the EU, their growth rates are much, much slower. Even with this slowdown, the relationship between China and Latin America will grow. The share of China's investment in Latin America will also grow.

Q: Let me rephrase the question, from a microeconomic perspective. Won't the expected slowdown reduce demand for Chilean copper and Brazilian iron ore and disrupt their growth?

A: I would say no. It is very clear based on the three days when I was with the Mexican mission at the State Council. There is an increasing belief that China's central government has to, has already started and would deepen the shift away from exports toward domestic demand. The share of Chinese exports in the next few years would decrease substantially.

And the country is in the process of urbanization and a tendency toward services. That will probably increase demand in China for raw materials for construction and other goods. Even if Chinese GDP falls as a result of this structural shift within China, expectations are that demand in China will grow much larger than exports.

I expect Latin America and China to deepen their relationship. Remember, Latin America today is the fifth-largest trading partner for China and soon would be the fourth. If we take the region as a group, it'll be bigger soon than South Korea. So from China's perspective, Latin America is becoming more and more important.

Q: Latin America is in general awakening to the pains of liberalist economic principles over the past two decades. Is China's economic model and experience appealing to the region?

A: You will find a lot of different experiences in Latin American countries ranging from Cuba, to Venezuela, to Bolivia and Mexico. For some governments, China is appealing but for others less.

In all the cases, independent of how appealing China might be, it is becoming a main topic. Nobody can leave China aside, not in political, bilateral or multilateral relationship, trade or investment, whatever.

As for the China model, there is very little knowledge in the Mexican public about it.

I would say in some parts and circles in Mexico and Latin America, China has inspired fears, fears that China is stealing our jobs and competing with us unfairly, thus, it is a threat to us.

However, in some parts of our society China is pretty much admired for whatever reason. So you have wildly different perceptions of what China is, yet very limited understanding of what is going on in China. This is why I propose that we feel each other, to foster understanding of China.

China is a huge economy but also a poor economy, with average per capita GDP much lower than Mexico's.

This paradox has to be understood. Otherwise China would seem like a huge, frightening dragon in people's senses. Fears are not a good basis for having dialogue and cooperation.

On the other side of the equation, I would say knowledge of Latin America in China in concrete terms is also very limited. We have huge room and space for positive cooperation in the long term but we have to feel each other.

If we don't do this, our relationship is going be fraught with fears, phobia and a lot strange feelings.

Source of documents：shanghaidaily.com