To­ward re­newed China-LAC co­op­er­a­tion

China Daily (Hong Kong) - - VIEWS -

Dur­ing his re­cent trip to South Amer­ica for the Asia-Pa­cific Eco­nomic Con­fer­ence lead­ers’ meet­ing, Pres­i­dent Xi Jin­ping laid out a vi­sion for deeper Chi­nese en­gage­ment with Latin Amer­ica and the Caribbean (LAC) in the con­text of an in­creas­ing Asia-Pa­cific eco­nomic in­te­gra­tion. This agenda is an op­por­tu­nity to strengthen and ex­pand this re­la­tion­ship, as our re­gion’s ties with China will be cen­tral to our fu­ture de­vel­op­ment strate­gies.

The tim­ing is for­tu­itous, as the China-LAC re­la­tion­ship is en­ter­ing a new phase af­ter a decade of ex­tra­or­di­nary growth. Trade grew by an av­er­age 31 per­cent a year be­tween 2003 and 2011. China in­vested bil­lions of dol­lars in en­ergy, min­ing, in­fra­struc­ture and man­u­fac­tur­ing through­out our re­gion. And LAC gov­ern­ments forged closer ties with Bei­jing through a host of free trade agree­ments, co­op­er­a­tion ini­tia­tives, and mul­ti­lat­eral en­gage­ment on var­i­ous is­sues.

This ini­tial boom brought con­sid­er­able gains for all part­ners. LAC saw a surge in ex­ports that drove record growth, while China gained ac­cess to key in­puts and new mar­kets. How­ever, trade growth has stalled amid a chal­leng­ing global en­vi­ron­ment. This new sce­nario com­pels us to find new driv­ers, as well as to ad­dress re­main­ing bar­ri­ers to closer in­te­gra­tion. Xi iden­ti­fied sev­eral ar­eas where we should work to­gether.

Given the strong com­ple­men­tar­ity of our economies, trade will con­tinue to be a key driver. China is ex­pected to im­port $8 tril­lion worth of goods over the next five years. LAC has a strong in­ter­est in gain­ing a larger share of those im­ports, build­ing on its com­par­a­tive ad­van­tage in nat­u­ral re­sources to pro­vide a broader range of food prod­ucts, re­fined min­er­als and met­als to Chi­nese con­sumers and com­pa­nies.

China is also poised to play a larger role in in­ter-re­gional in­te­gra­tion. The Free Trade Area of the Asia-Pa­cific, first pro­posed by China in 2014, has re­newed mo­men­tum af­ter the APEC meet­ing, as has the Re­gional Com­pre­hen­sive Eco­nomic Part­ner­ship, which at­tracted at­ten­tion from sev­eral LAC coun­tries.

Bi­lat­eral agree­ments re­main im­por­tant mech­a­nisms to deepen trade. China al­ready has free trade agree­ments with Chile, Costa Rica and Peru. Xi an­nounced a “com­pre­hen­sive strate­gic part­ner­ship” with Chile and Ecuador — the high­est level of Chi­nese diplo­matic re­la­tions with other coun­tries — and fur­ther en­hanced its com­pre­hen­sive strate­gic part­ner­ship with Peru.

Di­rect in­vest­ment, par­tic­u­larly in in­fra­struc­ture, is an­other key pil­lar. En­hanc­ing con­nec­tiv­ity through in­fra­struc­ture is a ma­jor pri­or­ity for LAC, where trans­port costs still hin­der trade. China can lever­age re­sources and ex­per­tise to pro­mote in­fra­struc­ture de­vel- op­ment in our re­gion, in­clud­ing its ex­pe­ri­ence with the Belt and Road Ini­tia­tive (the Silk Road Eco­nomic Belt and 21st Cen­tury Mar­itime Silk Road) will fa­cil­i­tate trade and smooth op­er­a­tions of Chi­nese en­ter­prises in our re­gion.

As China grows as a ma­jor source of out­ward for­eign di­rect in­vest­ment, which Xi es­ti­mated at $750 bil­lion over the next five years, Chi­nese cap­i­tal will tar­get a grow­ing range of man­u­fac­tur­ing, ser­vices, tech­nol­ogy and nat­u­ral re­source sec­tors in LAC, help­ing us de­velop our eco­nomic ap­pa­ra­tus while giv­ing Chi­nese com­pa­nies greater ac­cess to our mar­kets.

A fi­nal pil­lar for strength­en­ing China-LAC re­la­tions is govern­ment-to-govern­ment co­op­er­a­tion. Op­por­tu­ni­ties ex­ist in ar­eas such as tack­ling global chal­lenges. Xi made cli­mate change a key theme of his mes­sage to LAC lead­ers, and China re­cently an­nounced it would con­vene a global di­a­logue on the topic.

China’s suc­cess in mak­ing tech­no­log­i­cal leaps in in­dus­try holds de­vel­op­ment lessons for our re­gion, while LAC coun­tries have been pi­o­neers in so­cial poli­cies, such as con­di­tional cash trans­fers, which are rel­e­vant to the Chi­nese con­text.

Fi­nally, we should deepen our cul­tural, ed­u­ca­tional, and peo­pleto-peo­ple ties. China has made great strides through its Con­fu­cian In­sti­tutes. As with other ar­eas, co­op­er­a­tion can be pur­sued both through bi­lat­eral agree­ments as well as mul­ti­lat­eral ini­tia­tives such as the China-CELAC fo­rum.

The China-LAC re­la­tion­ship has evolved into a ma­ture part­ner­ship based on trade, in­vest­ment and co­op­er­a­tion. But there are many op­por­tu­ni­ties to build on the past decade’s gains. As China as­sumes a lead­ing role on more and more global is­sues, the time is right for us to move for­ward on this agenda of mu­tu­ally ben­e­fi­cial en­gage­ment.

The au­thor is pres­i­dent of In­terAmer­i­can De­vel­op­ment Bank, a lead­ing mul­ti­lat­eral source of long-term fi­nanc­ing for Latin Amer­ica and the Caribbean. China joined the IDB as a donor mem­ber coun­try in 2009.

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