China sets trade pace

Role in Latin Amer­ica runs counter to pro­tec­tion­ism

China Daily (USA) - - FRONT PAGE -

China and Latin Amer­ica are im­por­tant part­ners in trade and in­vest­ment, and this re­la­tion­ship is bound to in­crease with time given that the two economies are com­ple­men­tary. China has be­stowed the honor of core leader on Pres­i­dent Xi Jin­ping, strength­en­ing his lead­er­ship at a time when the Chi­nese econ­omy has reached a new­stage. The world econ­omy is fac­ing newchal­lenges such as trade pro­tec­tion­ism. Don­ald Trump, who promised to take pro­tec­tion­ist mea­sures dur­ing his elec­tion cam­paign, has been elect­edUS pres­i­dent.

The new­stage of the Chi­nese econ­omy and the re­forms to make it more com­pet­i­tive and health­ier will cre­ate op­por­tu­ni­ties for Latin Amer­ica. China’s sup­ply-side re­forms aimed at re­duc­ing over­ca­pac­ity of en­ter­prises means that Chi­nese com­pa­nies will be look­ing for in­vest­ment op­por­tu­ni­ties abroad. For ex­am­ple, Chi­nese con­struc­tion com­pa­nies and rail­ways will want to win projects abroad, and it is in these ar­eas that Latin Amer­ica lags be­hind. The re­gion has a huge deficit in in­fra­struc­ture such as roads, rail­ways, sea­ports and air­ports. And these are the ar­eas where China not only has com­pa­nies with a lot of ex­pe­ri­ence but also can in­vest.

Through the mul­ti­lat­eral fi­nan­cial in­sti­tu­tions in which China is the driv­ing force, such as the Asian In­fra­struc­ture In­vest­ment Bank (to which Peru has ap­plied for mem­ber­ship and will prob­a­bly be ad­mit­ted at the next meet­ing in Jan­uary 2017), BRICSNew De­vel­op­ment Bank, and State in­sti­tu­tions like the China De­vel­op­ment Bank, Bei­jing could make avail­able fi­nance for sev­eral in­fra­struc­ture co­op­er­a­tion projects that could boost Latin Amer­i­can coun­tries’ eco­nomic de­vel­op­ment. Such a project al­ready ex­ists — whenPremier LiKe­qiang vis­ited Latin Amer­ica last year, Chi­naand Brazil reachedan­in­fras­truc­ture agree­ment worth $27 bil­lion.

The al­ready dif­fi­cult in­ter­na­tional en­vi­ron­ment has now be­come more un­cer­tain with the elec­tion of Trump who said dur­ing his cam­paign that the US would fol­low an “in­ward-look­ing pol­icy”— which means pro­tec­tion­ism. The open en­vi­ron­ment for trade and in­vest­ment has ben­e­fited many coun­tries, China in par­tic­u­lar, so China should take the lead­er­ship role in ar­eas where the US does not want to ven­ture any more. For ex­am­ple, Asia-Pa­cific coun­tries have de­vel­oped fast thanks to open trade and in­vest­ment. But since this trade ar­range­ment is at risk, China, as the sec­ond largest econ­omy in the world and the big­gest trade part­ner of most of the coun­tries in the re­gion, should as­sume the lead­er­ship role in Asia-Pa­cific.

The Trans-Pa­cific Part­ner­ship Agree­ment, of which the US was the lead­ing ad­vo­cate, is now prob­a­bly dead. The TPP was the model pro­moted by the US for the Asia-Pa­cific. Its com­pet­ing trade agree­ment is the Re­gional Com­pre­hen­sive Eco­nomic Part­ner­ship, in which China is the big­gest econ­omy, al­though ne­go­ti­a­tions are still go­ing on. A new sce­nario for the Asia-Pa­cific and for China could emerge once the RCEP ne­go­ti­a­tions are com­pleted, and it can be­come a model for the whole re­gion. China can play an im­por­tant role to make it a mean­ing­ful trade in­te­gra­tion agree­ment. And it could pro­mote talks on the Free Trade Area of the Asia-Pa­cific, another ver­sion of a free trade agree­ment in the re­gion.

China should be the cham­pion of open trade and in­vest­ment. With Xi at­tend­ing the Asia-Pa­cific Eco­nomic Co­op­er­a­tion Eco­nomic Lead­ers’Meet­ing in Lima, Peru, China can show the re­gion, and the world, that pro­tec­tion­ism is not the way to sus­tain the world econ­omy.

China and Latin Amer­ica can deepen their eco­nomic re­la­tions by ink­ing more trade and in­vest­ment agree­ments such as the ones that al­ready ex­ist be­tween China and Chile, China and Costa Rica, and China and Peru. Deeper co­op­er­a­tion is needed to en­hance free trade in an en­vi­ron­ment of ris­ing global trade pro­tec­tion­ism and anti-glob­al­iza­tion sen­ti­ments. And China should take the lead in pro­mot­ing this co­op­er­a­tion. The au­thor is a pro­fes­sor of eco­nom­ics at SanMar­cos Na­tional Univer­sity in Lima, Peru.

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.