Exploring and keeping readers up to date with the growing economic and political ties between China and South America. Including all the good stuff: Commodities, Energy, International Finance, South-South Cooperation, Microfinance and more
Argentina’s stock exchange called on the government to lift capital controls that caused it to become the only major Latin America market classified as “frontier,” adding the move may help lure $10 billion in foreign investment.
A requirement for international investors to deposit 30 percent of what they put in Argentina with the central bank for a year “have stopped making sense,” Adelmo Gabbi, the Buenos Aires stock exchange’s chairman, said yesterday in a speech.
Capital controls prompted MSCI Inc. to remove Argentina from its benchmark emerging-market index in June, assigning it the so-called frontier status along with the world’s least developed markets. The controls have helped Argentina avoid volatility, said President Cristina Fernandez de Kirchner.
Argentina's stock exchange, Buenos Aires Image courtesy of Business Week
“We have to seek a rule so that the inflow of funds won’t be speculative,” she said, without elaborating.
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“The deposit requirement was imposed in 2005 and was one of the forces that allowed us to confront the brutal volatility of the markets during the crisis,” Fernandez responded yesterday in a speech at the Buenos Aires stock exchange.
Fernandez’s husband and predecessor Nestor Kirchner imposed deposit requirement in order to discourage speculators from investing in local markets after the country restructured about $104 billion in bonds...
Click here to access the full article from Bloomberg
China has become a "privileged partner of Latin America," and the region needs to define a joint strategy to develop its ties with China, an official of the Economic Commission for Latin America and the Caribbean (ECLAC) said Wednesday.
The "post- (economic) crisis will find a bigger and more important China than the one it has been in the world economy," said Osvaldo Rosales, ECLAC's director for international trade and integration.
Citing the World Trade Organization's report on Tuesday that China had displaced Germany in the first half of 2009 as a leading exporter, Rosales observed that "this has been reflected in its (China's) growing relative presence in the world's trade, mainly in Latin America." "The numbers of destinations and exporters show that China has become a privileged partner of Latin America," Rosales told Xinhua in an interview.
This was because the Chinese government had "already defined the strategy for Latin America in its white book," Rosales explained, adding that the region needed to do the same.
Regarding bilateral trade relations, Rosales worried about Latin America's export structure, which focused on a few products and natural resources. He called for a diversification of the export basket.
"Latin America is in some ways linked with China, the world economy's engine of the 21st century, but it is doing that with an export structure from the 20th century," Rosales observed.
Chinese students in Australia are scared for their safety following a string of disappearances and murders involving Asians in the country. Jia Li, 29, a University of Sydney student, said young Chinese were staying away from late-night events and avoiding walking alone. "I don't go out at night and ask friends to accompany me after night courses. I avoid the back seats in buses. I tell my boyfriend before I go somewhere and my classmates also tell friends about their whereabouts ...
Two articles grabbed my attention from Chinamining.org this morning. They both relate to the fact China's ethnic regions also happen to be home to a great proportion of the countries commodity and energy wealth.
You can click on the titles of each respective article to access the stories in full from Chinamining.org.
--> Tibet has copper ore reserves of 30 mln t, half of China's total Southwest China's Tibet Autonomous Region has geological copper ore reserves of more than 30 million tons, accounting for over a half of the country's total, according to the region's geological prospecting bureau.
The bureau director said that Tibet is the largest region in China by its copper resources reserves. By 2008, 329 copper ore deposits had been found in the region, including 11 large deposits and six mid-size ones. Its Qulong copper ore mine, the largest one in Asia, is estimated to possess copper reserves of more than 10 million tons.
Tibet - Potala Palace [Photo I personally took during a trip I made to the region in December 2006, Bennett A. Reiss]
--> 1st Kunming Mining & Cooperation Forum (Sept 2-4, 2009) Entering the 21st century, the global mining industry is writing a new chapter. It is an era of resource economy. Mining market becomes more open and capitalized. Mineral exploring as well as financing becomes more diversified.
Yunnan is rich in natural resources, known as "the Kingdom of non-ferrous metals". More than 150 kinds of minerals have been proved there, accounting for 92.6% of Chinese total. Among the proved 92 minerals, 9 of them have the largest reserves in China and 21 of them are listed within top three. Mining as one of the five pillar industries in Yunnan plays an important role in the development of the local economy.
Earlier this summer another ethnic region grabbed world headlines. Does the region of Xinjiang ring any bells? Xinjiang is home to a large number of China's ethnic Muslims, is culturally quite similar to other republics in central Asia and is often referred to as East Turkestan. Xinjiang is also on track to become China's most important oil and gas producing region.
This article, "Xinjiang's oil and gas equivalent ranks first in China" is from little over a year ago (July 2008), asserts that Xinjiang has already passed Daqing (China's other oil producing region) as the number region in oil and gas output.
As one hand seizes development, the other taps into the potential to allow Xinjiang's oil output to soar. The latest statistics show that Xinjiang's annual oil and gas equivalent output has already exceeded that in Daqing and ranks the first in the country.
The third national resources evaluation shows that: Xinjiang's total oil and natural gas resource reserves exceeded 30 billion tons. Although it is rich in resources, Xinjiang still requires development and a reduction in consumption. Recently, Xinjiang has been producing 75,000 tons of crude oil daily, occupying 14.4 percent of the country's daily crude oil output. In 2007, Xinjiang's oil and gas equivalent reached 44.94 million tons, and ranked at the top. In all likelihood, the development of commodity sectors in these regions will be controlled by Beijing...not locals. What industries can these regions develop as to diversify their economic development from commodity sector led growth?
Yunnan and Tibet have great potential for becoming tourist meccas in China. Yunnan, the less politically sensitive of the two, has already emerged as one of China's most popular tourist destinations.
Furthermore, Yunnan's strategic location in SE Asia put it in a good place to be at the center of the future growth of trade and exchange between China and the countries of Vietnam, Myanmar and Laos.
[Map courtesy of leafgovso.co.uk]
Tibetan tourism is growing as well, but remains inhibited by the sporadic changing of restrictions and the need to acquire a special internal visa or permission to visit.
When analyzing this situation from a the perspective of the people in the Chinese government determining domestic policy, China can not and will not simply let three of its most resource rich regions control the development their natural resource industries.
Sad as it may be for some members of the minority groups in these regions, one thing is sure--Xinjiang, Tibet and Yunnan are all going to remain integral pieces of China for a long time and be subject to increased inflows of ethnic Han Chinese seeking economic opportunities.
Let me clearly state, the opinions expressed in this analysis not reflect how I the author, (Bennett A. Reiss) feel on a personal level. Allow me to try to put things into perspective with two analogies which I feel help explain the Chinese point of view.
Canada is full of resources from top to bottom. I am by no means an expert, but I highly doubt the Eskimo and Native American populations have much say about development of Canadian mining and energy companies in their ancestral territories.
Likewise, a more mainstream analogy might be the US in Iraq. To the "logic" driven Chinese bureaucrat, China is far more justified in their domestic policy towards these resource rich regions than the United States is in Iraq. On the surface the US is subjugating a foreign population in a country half way across the globe from its own territory. China in its own official opinion is not subjecting anyone, and to further add to the Chinese argument, these regions have been a part of China for centuries if not thousands of years.
Even if your feelings on the war in Iraq produce other rationalizations for the US invasion (outside of oil), try to justify this to a country with over 1.4 billion people to feed and improve the lives of.
I welcome debate in this area to any readers who would like to discuss this topic further.
Venezuela's golfers react after Chavez says their sport is bourgeois and calls players lazy, as the government shuts down courses to build low-income housing.
The company has also announced it is planning a "rapid" overseas expansion in order to secure energy supply adequate to feed Chinese demand.
[Sinopec I passed on a bus ride to Shanxi, October - 2006]
The announcement, along with the company's record gains in profit come as other global giants in the energy industry such as Royal Dutch Shell and Exxon Mobil have seen their earnings decline as prices plummeted and demand waned when the global slowdown ensued at the end of 2008.
According to Bloomberg, Sinopec supplies 80% of China's fuel needs and is China's largest refiner of crude oil. The company is looking for new foreign partners, expand its refining capacity and reduce operational costs. The company expects demand will remain strong in China and that oil prices will continue to rise throughout the second half of the year.
Here are a few highlights from the Bloomberg article, "Sinopec to Boost Expansion Abroad After Profit Surges to Record," which you can access in full by clicking here.
“Sinopec’s main business is refining and it needs to increase its oil reserves and reduce its reliance on other oil producers,” said Larry Grace, an independent oil analyst based in Hong Kong. “There’s a government directive to increase overseas oil and gas assets.”
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Sinopec gets almost all its revenue from refining and the sale and distribution of fuels. Oil production accounted for just over 2 percent of sales, according to its 2008 annual report. The company imports about 80 percent of the crude it processes.
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Su said the company will accelerate its “go global” strategy.
Parent company China Petrochemical Corp. said on Aug. 18 it had concluded the C$8.3 billion ($7.7 billion) acquisition of Addax Petroleum Corp. to secure reserves in Iraq and Africa. China Petrochemical has assets in Russia, Angola, Ecuador, Australia, Canada, Kazakhstan and Myanmar.
Sinopec’s parent completed the purchase of Tanganyika Oil Co. for about $1.8 billion in December. Vancouver-based Tanganyika holds stakes in two Syrian production-sharing agreements covering the Oudeh and Tishrine/Sheikh Mansour blocks after expanding from Tanzania in 1996.
