Foreign Correspondence

[Amaunet]

Looking past the US, to China

Under Mr. Bush, the US has watched helplessly as an economic trend with potentially huge geopolitical implications takes hold. The doctrine of total war outlined in Unrestricted Warfare clearly demonstrates that the People's Republic of China is preparing to confront the United States and our allies by conducting "asymmetrical" or multidimensional attacks on almost every aspect of our social, economic and political life. While Americans focus on Iraq bigger battles are being lost. -Am


Looking past the US, to China

Posted on Sat, May. 22, 2004

Brazil's president, with hundreds of business people, is visiting China, symbolizing the growing ties with the Asian giant throughout Latin America.

BY RICHARD LAPPER

Financial Times


Through the night, giant trucks drone across the slopes of the huge open-pit mines at Carajas, in the heart of the Amazon jungle. They carry iron ore on the first leg of its journey to China, raw material to feed the insatiable appetite of its industrial sector.

This year alone, Companhia Vale do Rio Doce, the world's largest iron-ore company, will invest $1.8bn to keep the wheels turning. It has just announced plans for what would be the world's biggest cargo ship, to carry the material to market even faster.

''We are working at full capacity 24 hours a day; we just can't keep up with all the orders'', says Fernando Thompson, a CVRD official and one of more than 450 Brazilian business people who will accompany Brazilian President Luis Inacio Lula da Silva on a four-day official visit to China set to begin tomorrow.

Mr. Lula da Silva's mission reflects a feverish enthusiasm for China in Brazil's business community, but it also draws attention to an economic trend with potentially huge geopolitical implications. The link between Brazil and China connects the biggest emerging markets of the Western and Eastern Hemispheres.

In the words of Celso Amorim, Brazil's foreign minister, it could be part of a ''certain reconfiguration of the world's commercial and diplomatic geography''. And that could pose a challenge to US President George W. Bush's administration, with its obsession with the Middle East and its myopia toward developments in its own backyard.

Signs of the China effect abound across the region. Soya farmers from Argentina, Brazil, Paraguay and even Bolivia have enjoyed a bonanza in recent months. The copper mines of Chile and Peru are booming. China's demands last year are one reason that most commodity prices have soared. Now there are signs of a reciprocal Chinese investment boom in the region.

In the next few days, Mr. Lula da Silva plans to discuss plans for Chinese investment in roads, ports and railways, projects that would secure supplies of raw materials.

According to a recent study by the United Nations Conference on Trade and Development, China will be the fifth-largest provider of direct foreign investment this year. And it's set to join the Inter-American Development Bank next year, giving its construction companies access to the bank's infrastructure projects.

The risks for Latin America are obvious. Commodities seem to have peaked, and a sharp deceleration in Chinese economic growth from its 9-plus per cent a year could push prices down further. The bigger worry is that the commodity boom may lock Latin America into a new cycle of dependence on raw-material production, further distorting development patterns.

China's investment rates are certainly unsustainable, but however disruptive it would be in the medium term, a slowdown -- or even a crash -- would not stop its inexorable modernisation.

Commodity dependence may create vulnerabilities, but the boom also offers Latin America the best opportunity since the early 20th century to capitalise on its comparative advantage as a competitive producer of commodities. The way forward is to focus on areas that add value, to produce wine, oil and steel, not just grapes, seeds and iron ore.

The challenge for the US is more complex. The inter-American system, modified at the end of the Cold War to promote market economies and democracy in the region, looks tattered. Under Mr. Bush, the US has watched helplessly as one nation after another has stumbled into financial or political crisis.


http://www.miami.com/mld/miamiherald/business/international/8728718.htm?