China and Latin America may be distant geographically, but they share a long history of friendship and common challenges. The two sides are at similar stages of development, and both seek development. As our economies grow closer, we are pursuing even greater opportunities for mutual understanding and closer cooperation.

The Chinese government views its relations with Latin America and the Caribbean strategically, and from this perspective it is seeking to build and develop a comprehensive and cooperative partnership of equality, mutual benefit and common development with Latin America and the Caribbean.

The last decade has witnessed dramatic progress in China-Latin American relations. What began as primarily a trade relationship—in which trade between the two sides has grown exponentially—has developed into a multifaceted relationship. Exchanges of high-level visits occur regularly. China has established strategic partnerships with Brazil, Argentina, Mexico, Chile, and Venezuela. Conduits of communication between China and Latin America have expanded and now serve as mechanisms of dialogues and exchanges between departments of both sides at all levels including foreign ministries. New channels have opened for people-to-people exchanges. And many countries now collaborate in multilateral institutions and forums.

China and Latin America also share common or similar positions on many issues. China and the emerging powers in Latin America now consult, coordinate and collaborate well in many formal and informal multilateral forums like the grouping of BRIC (Brazil, Russia, India and China) countries, the G20, the UN Conference on Climate Change, and the UN Conference on Environment and Sustainable Development. These pragmatic trade and economic relationships have not only consolidated political relations; they have also brought tangible benefit to the well-being of both peoples.

China has signed free-trade agreements with Chile, Peru and Costa Rica. It has become one of Latin America’s major trade partners , and the number-one trade partner of Brazil and Chile. The pattern of trade has deepened and continues to improve. With the aim of realizing economic complementarity, it based on the principle of mutual benefit and the sustainable development of both sides.

China’s demand for energy, agricultural products and minerals has been constantly growing as China's economy and standard of living have grown. The mix of these products accounts for the largest share of Latin America’s exports to China. But at the same time, Latin American countries are also invested in the high-end potential of China’s economic development and its ever-growing market demand. These offer the opportunity for Latin America and the Caribbean producers to improve the quality of their economic and trade cooperation with China by taking advantage of their rich energy and mineral resources and the relatively developed agricultural products.

The progress that has already been made through our cooperation is obvious. In 2010, the volume of trade between China and Latin America and the Caribbean reached $183 billion, and China’s non-financial investment to the region reached $11.09 billion.

The diversification of trade with China has served Latin America well in recent years. A stable and healthy Chinese economy contributed to Latin America’s—and much of the world’s—ability to avoid the destabilizing effects of global financial fluctuation and recession.
Latin America and the Caribbean on China’s “Strategic Plane”

Chile was the first Latin American country to establish diplomatic relations with China, the first to enter into negotiations for China’s access to World Trade Organization (WTO), and the first to sign a free-trade agreement with China. Following in the same vein, Brazil is now in a fast track of developing comprehensive cooperation relations with China. Not only is it China’s most important Latin American partner in terms of investment and trade, Brazil has also engaged in high tech cooperation. We are currently jointly engaged in developing a satellite, which for us the is best example to date of south-south cooperation in aviation and technology.

As a reflection of these growing relations, in November 2008, the Chinese government released its first-ever strategy paper on its relations with the region. According to China's Policy Paper on Latin America and the Caribbean, China has three political, economic and cultural objectives in developing relations with Latin American and Caribbean countries: 1) politically, to support each other and become reliable and all-weather friends; 2) economically, to realize complementary advantages and become cooperation partners of mutual benefit based on new issues; and 3) culturally, to communicate closely and to establish a constructive pattern of dialogue across the cultures.

China has played, and will continue to play, the role of a responsible power in global development. It has sought to accomplish this through a policy of pursuing “reform and opening-up, seeking economic development and improving well-being of the people.”   Because it believes that this path is a positive one, China welcomes all countries of the world to participate in China’s development, and to share China’s development opportunity. —By doing so, China will share its prosperity with people all over the world.
This year China starts its “12th Five Year Program.” The program seeks to further implement a strategy of mutual benefit. This includes: enhancing the level of our opening to the outside world, improving the structure and dynamic of foreign trade, improving the efficiency of foreign investment, accelerating China’s strategy of “Going abroad” and actively promoting global economic governance and regional cooperation. The program also supports development and trade by increasing China’s openness to the global economy, and actively creates new comparative advantages for China to engage in international economic cooperation and competition.

China is well positioned to do this. Globally it has become the largest exporter, the second largest importer, and the second largest economy in the world. And in terms of innovation it is the world’s fourth largest holder of patents.

Regionally, China has become the second-largest trade partner of Latin America, and Latin America has become the fastest growing destination of Chinese imports. All Latin American countries, regardless of size, political system or development model or level, seek political stability, economic development and well-being of the people. This is true of China as well. Pursuing the goals of economic development and improving the standard of living has become the foundation and condition for greater cooperation between China and Latin America.

Observers and policymakers in the region have declared with confidence that this is the “decade of Latin America” and its development. They believe that the world economic recovery will largely depend on Asia and Latin America, and the Latin American countries especially the big powers in South America will embrace great opportunity for development,and that the coordination between economic growth and poverty reduction will be feature of the “Age of Latin America” in the next decade.

For example, the Brazilian government has announced its second “Growth Acceleration Plan,” which involves the investment of 955 billion reais ($534 billion) in the construction of infrastructure. Similarly, the Argentine government has announced a “2020 Strategic Industrial Plan” that outlines a blueprint for the country’s development.

Meeting those plans for domestic development will require foreign investment to compensate for the shortage of domestic savings. At a time when China is turning to its own strategy of “Going abroad”—which includes using its vast foreign exchange reserves more efficiently and strengthening economic relations with the world, the region’s goals offer much in the way of mutual interest for China and Latin America.

Still, the China-Latin American relationship will face various challenges in the future. The uncertainties in the world economy, including the financial and currency turbulence caused by the debt crisis in the West, could affect both sides. Other challenges include he severe disparity in development between the north and the south; the rising pressure of inflation in China and Latin America—fueled in part by the rising prices of international commodities; the excess of international liquidity; and the huge cross-border inflow and outflow of funds. China and Latin American countries are also facing shifts in their industrial structure caused by the integration in the global economy and the challenge of building infrastructure to meet need.

To further develop China-Latin American relations, both sides need to work hard to increase pragmatic economic and trade cooperation and to expand social and people-to-people exchanges. That will help consolidate political relations between both sides.

China and Latin America also need to train a new pool of technical professionals in areas such as economic and trade cooperation to match the demands of China-Latin American relations in all areas. These professionals must be knowledgeable in policies, guidelines and the rules of economics and trade of their partners. And as with any effort at education, both sides must work to retain those new professionals. Preventing brain drain is as important as boosting the levels of education and science and technology.
Both China and Latin America need to be strategic in promoting their economic and trade cooperation. Their cooperation will contribute to the economic growth of both sides.

To this end, governments should pay particular attention to creating the space to develop new trade diversity and expanding areas of cooperation. Adhering to the principle of mutual benefit, they should adopt different means of cooperation.

To be candid, China-Latin American economic and trade cooperation is both complementary and competitive. But when differences over specific cases emerge, both sides must seek to address them through dialogue and friendly consultation. We should not allow inevitable narrow disagreements or frictions to disrupt our overall bilateral economic and trade relations. Trade protectionism is not the solution to problems and will only undermine our cooperation. As part of this, when Chinese enterprises invest in Latin American countries, they should take greater account of social responsibility and make a greater effort to integrate in local development.
In some quarters, we hear concerns about the so-called “China threat” and “China looting” (that unfair trade practices will undermine local economies). Nothing could be further from the truth: the China-Latin American relationship is a normal one featuring mutual respect and interest. China’s growth of investment and trade in Latin America is organized entirely around the principles of cooperation, mutual benefit and common development.

Some people also claim that the development of China-Latin American relations, especially economic and trade relations, threatens the interests of other powers in Latin America. I believe the contrary. Not only do our economic and trade relations not pose any potential threat to the interests of the United States and European countries in Latin America; they will instead help alleviate the pressure of the United States and European countries to provide aid to Latin America.

Of course, China and Latin America are not the first priority in either side’s foreign policy strategies. For China, the U.S., the European Union and the countries on the periphery of China in Asia are its first diplomatic priorities. At the same time, Latin America’s diplomatic priorities are the U.S., the European Union and its hemispheric neighbors. That’s only natural. And it is for that reason that the development of China-Latin American relations will not affect the positions of the U.S. and EU in respect to their relationship or diplomacy with Latin America.

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