Given that China and Iran have signed a 100 billion dollar gas deal that eventually could take the total value to as much as 200 billion dollars and that China is known to trade weapons for oil or gas, these showcased weapons could already be in Iran’s hands. #msg-4431516
Through bilateral agreements, rather than international mechanisms, and using arms sales and dual-use technology transfers - nuclear equipment, guidance systems for missiles - to cement ties, China has obtained oil exploration and exploitation rights in some of the most turbulent nations in the Middle East and North Africa - Iran, Sudan, Libya, Algeria and, until the recent war, Iraq. #msg-3830816
-Am
China to showcase military might in air show
BEIJING (AFP) Oct 30, 2004
China will showcase a range of advanced military hardware, including missiles and satellites, at a major air show and exhibition in southern China next week, state media reported Saturday.
One of the highlights of the Fifth China International Aviation and Aerospace Exhibition in Zhuhai will be the first showing of a new "short-range ultra-low-altitude portable air defence missile", Xinhua news agency reported.
The missile, developed by China Aerospace Science and Industry Corp, is primarily for conducting field operation air defence and can be used against low-flying military helicopters, ground-attack aircraft, unmanned aircraft and cruise missiles, said Xinhua.
The Chinese government-owned aerospace company will also display a range of short-range air defence missiles and surface-to-air missiles, plus various small civilian communications satellites.
Among other first showings at the exhibition of some 100 weapons and aerospace products between November 1-7 will be a short-range surface-to-surface missile with a range of 150 kilometers (93 miles), Xinhua said.
The air show will feature stunt teams from Britain, France, Russia and China.
So inept is Bush that he has ‘boxed in’ the United States.
Bush has failed so miserably the US is basically in a ‘no-win situation’.
The biggest success Bush has enjoyed is the pawning off on the American people the false premise we are engaged in a ‘war on terror’. Terror is only one aspect, albeit graphic, of Unrestricted Warfare. Terrorists are supported not only by Saudi Arabia but China and the United States among others. They are at best tools or weapons in the hands of more dominant powers. #msg-4106028
Secure in the knowledge that Bush, who hypocritically is a long time supporter of terrorists including the Chechens, AUC, TNI and Uighurs, is winning the war on terrorism Americans remain oblivious to the real war, a confrontation with China that we have initiated but cannot possibly win because Bush has left the United States rather ‘boxed in’.
The following text reiterates that one would be tempted to consider Iran now under China’s protection. The dragon roared without firing a shot, while Iraq pulls the United States deeper into a quicksand of its own making. #msg-4431516
Also note: China and Iran have signed a 100 billion dollar gas deal that eventually could take the total value to as much as 200 billion dollars and China is known to trade weapons for oil or gas. #msg-4432149
There is the potentially huge challenge in an emerging new China-Iran axis.
-Am
Two reasons why America must take a special interest in China
Economic slowdown and Iran relations are crucial to whoever is President
Sun 31 Oct 2004 OF THE many challenges posed by China to the US, I focus today on two, and will begin with the smaller. As the frenetic US presidential election campaign entered its final stretch, there came news of a surprise 0.27% rise in interest rates. The markets took feverish note. This was a major move. No, not from the US Fed - but from the Bank of China.
China’s first change in interest rates since 1995 takes the key lending rate to 5.58%. Suddenly the oil price dropped and prices of basic metals and commodities also cooled.
Ten years ago such an announcement would have scarcely caused a ripple. Now it brings an immediate realignment of currencies and markets and intense speculation as to what it all means for Asia and the world. Yet again, China makes its presence felt. But it is not the only China challenge that the new incumbent in the White House is going to face. There is the potentially huge challenge in an emerging new China-Iran axis.
But first the economy and the outlook for the White House. The growing likelihood of a China slowdown leading a global slowdown next year has big implications for America. Whoever wins the US Presidential election on Tuesday is going to face two immediate challenges on the economic front - a soaring budget deficit and a record trade deficit without recourse to that most efficacious of treatments: higher growth.
On Friday the US dollar fell to fresh six-month lows against the yen and drifted close to recent eight-month lows against the euro on news that the American economy slowed in the third quarter. Growth eased to a lower than expected 3.7%, significantly below its 4.2% increase in the second quarter.
Also on Friday came figures showing that US consumer sentiment deteriorated in October as rising energy costs and persistent job worries made Americans less optimistic about the future. The University of Michigan said its consumer confidence index dropped to 91.7 in October, down from 94.2 in September.
Fighting off this slowdown in the economy is not going to be easy, whoever wins this week. The immediate worry for Wall Street is that no clear winner emerges on Wednesday morning, with results being challenged by armies of adversarial lawyers.
For markets, businesses and America’s reputation abroad, the worst outcome would be a repeat of the ‘hung jury’ 2000 election which resulted in a 36-day legal delay, ultimately settled in the Supreme Court. That delay and associated uncertainty cost the Dow Jones Industrial Average about 700 points.
Citigroup investment bank analyst Tobias Levkovich says: "This could undermine confidence in American democracy and cause investors to flee US markets." He reckons such an outcome could wipe between 7% and 10% from the Dow Jones.
Historically, US election outcomes have had little effect on markets. In only one of the presidential elections over the past 75 years did equity markets really shift. This was in 1948 when Harry Truman won re-election though the polls favoured Thomas Dewey. Wall Street fell 10% in the subsequent month. The most positive market move was in 1980, with a 5.8% gain in the month following Ronald Reagan’s first election to the White House.
But this winter America’s economy is at a turning point, with growing uncertainty as to what the interest rate policy now is and where the next growth story will come from. Alan Greenspan, chairman of the US Fed, has made no secret of his desire to see further rises in rates. There is a clear, incipient danger of higher inflation. But with signs the economy is already slowing, higher rates would compound the pain for business.
Given the global nature of the slowdown and the failure of Europe to act as an economic counterweight, whoever wins the White House is going to be boxed in. If George Bush wins, the existing size of the budget deficit is likely to restrain any new spending programmes. At the same time, a Kerry presidency would have to contend with a Republican House of Representatives. And it may not choose to enact Kerry’s reforms.
On tax and business regulation policy, a Kerry presidency could come to unnerve investors in three ways: stricter environmental controls hitting traditional energy stocks (and stiffer petrol efficiency rules which could hit car makers); more powers for the Food and Drug Administration which could mean more regulation for the big drugs, food and tobacco industries (the latter is also likely to face a push for new federal excise duty increases on tobacco products); and potentially more control over media ownership rights.
Kerry has pledged to roll back the Bush tax cuts on dividends for top income earners - those earning more than $200,000 (£109,000) a year - and the bulk of dividends go to individuals in this tax bracket. Already there is pressure on US companies to lift dividend pay-outs as a share of earnings (see chart). Again, it is by no means certain that the House of Representatives would go along with this. On the upside, a Kerry presidency should be good for bonds. But, at present, Wall Street is wary of buying bonds because of contingent inflation worries from dearer oil and a falling dollar.
However, a weak dollar does provide a powerful competitive edge for US exporters. The US currency has already fallen by 25% against the euro since January 2002. How much further it has to go is anyone’s guess. But dollar weakness should provide the springboard for an export-led recovery in US manufacturing in due course.
But the dominant concerns will continue to be geopolitical. How will the northern hemisphere economies cope over the winter period if oil prices do not fall back much from current levels? The price is also vulnerable to any deterioration in the security situation in the Middle East. And here the challenges of a China intervention are as big for a Kerry presidency as a Bush one.
Kerry’s aim is to build, or rebuild, an international coalition to provide longer-term security for Iraq. But the security problems are by no means confined to that country. There has been growing concern in Washington over the determination of Iran to secure nuclear weapons. Kerry would prefer a coalition approach offering trade deals that might dissuade Iran from pursuing a nuclear programme. But this could be fraught with difficulty at the United Nations.
On Friday, the Chinese state oil giant Sinopec announced it has signed a $70bn (£38bn) oilfield development and liquefied natural gas agreement with Iran. China is desperate for oil, and this is its biggest energy deal with the number-two Opec producer.
What is in it for Iran? Iran could court China’s favour on the UN Security Council, where Beijing holds a potential veto over any action against the Islamic Republic’s nuclear programme.
It doesn’t take much imagination to see how this could pose potentially huge problems in seeking to secure any US-led pressure on Iran through the UN were China to use, or threaten to use, this veto. This could be a long way off, but looking at the security implications of such a stand-off for the whole of the Middle East, this has the makings of a China challenge that could come to dwarf the economic one.
China who is known to trade weapons for oil has signed a 100 billion dollar gas deal with Iran which eventually could be worth as much as 200 million.
This virtually puts Iran under China’s protection.
On Nov. 1: State-run Indian Oil Corporation has clinched a $3-billion deal to develop a gas block in the gigantic South Pars gas field of Iran and sell LNG from it, making it the oil titan’s largest overseas investment.
The involvement of both India and China will make it even more difficult for Bush to confront Iran.
-Am
Indian Oil clinches $3bn Iran gas deal AGENCIES AND OUR BUREAU
Step on the gas Tehran/New Delhi, Nov. 1: State-run Indian Oil Corporation has clinched a $3-billion deal to develop a gas block in the gigantic South Pars gas field of Iran and sell LNG from it, making it the oil titan’s largest overseas investment.
IOC will partner Iran's Petropars in bringing to production one of the 30 phases planned to develop the 500 square mile South Pars field that is estimated to hold 436 trillion cubic feet of gas reserves, officials said.
The two will also put up a liquefaction plant in south Iran which is designed to make 9 million tonnes per annum of LNG available for exports to India and other countries.
“The deal will be formally signed after it is approved by the Iranian authorities,” they said, adding IOC director (business development) Naresh K. Nayar and Petropars chairman Akbar Torkan are tying up loose ends.
The Indian company will have a 40 per cent stake in upstream development, while the remaining will be with Petropars. In the liquefaction plant, IOC will have a 60 per cent stake and the marketing rights to sell the entire 9 million tonnes of LNG.
Petropars is a subsidiary of National Iranian Oil Co (NIOC). NIOC has a 60 per cent stake in Petropars, while Iran’s IDRO (Industrial Development and Renovation Organisation) pension fund has the remainder.
The gas block in South Pars field is situated beside the Yadevaran oilfield, in which Tehran has offered a 20 per cent stake to New Delhi in lieu of India buying 5 million tonnes per annum of LNG. The Yadevaran oilfield, recently renamed from Kush-Hossainieh, is said to have the potential to produce 300,000 barrels per day.
“The block awarded to IOC will take at least four years to begin production,” the official said.
IOC, which owns 10 of the 18 refineries in India and half of the petrol stations in the country, has drawn up an ambitious plan to become a $50-billion company by 2010 by diversifying into upstream oil and gas exploration and production and gas business.
South Pars, the largest offshore field in the world, is located on the Iran-Qatar border in the Persian Gulf and is shared by the two countries. Qatar refers to this field as North Dome.
The Iranian side accounts for 10 per cent of the world's and 60 per cent of Iran's total gas reserves. The field is planned to be developed in around 30 phases, each of which will require an initial investment of around $1 billion.
The first 12 phases of the development are under way and will have the capacity of one billion cubic feet and 40,000 barrels of condensate per day. Phase 13 and 14 are under bid from Shell and Repsol. The phase awarded to IOC has not yet been identified, the official added.
He said Iran will pay IOC a fixed rate of return on the capital it invests in developing the South Pars gas field.
“The gas produced from it will be NIOC’s property. We then have to negotiate a price with NIOC to buy that gas for export,” the official said.
According to Iranian law, no equity oil (ownership of oil) by foreign firms is allowed and only a fixed rate of return is given to companies investing in oil and gas exploration and production. With that money, the investing company may choose to buy oil or gas at the negotiated price.
Iran is seeking a market in energy-hungry India for its abundant supplies of natural gas. It is keen on supplying the gas through an onland pipeline via Pakistan.
However, India for the moment wants to confine itself to purchases of LNG that can be brought in special ships. Though this is an expensive way of importing the gas, it is considered safer and reliable than having a pipeline running through hostile territory.
However, the biggest issue for gas consumers in India is the price at which the gas will be sold. Power and fertiliser companies, which are the main buyers, have been complaining that the price of the gas should not be above $3 per million British thermal units (btu) as the price of electricity and fertiliser in the country is regulated.
These companies are currently using gas from the ONGC and Oil India fields, which is provided at around $2 per million Btu.
Petronet LNG, which struck a long term supply agreement with RasGas of Qatar, is offering gas at a higher price and has therefore found no takers. The price of the imported gas from Qatar is cited at around $4 per million Btu.
Under the initial contract with RasGas, signed when Vazapadhi Ramamurthy was the petroleum minister, the price of the gas from RasGas worked out to around $5 per million Btu. This had scared away potential buyers and RasGas had to be coaxed into scaling down the price.
Petronet LNG had also stated that it was ready to match the lowest price for natural gas offered by any private competitor. In other words, if any other company such as Shell offered gas at a price of $3.5 per million Btu, it would bring down its price further.
TEHRAN - Speaking of business as unusual. A mere two months ago, the news of a China-Kazakhstan pipeline agreement, worth US$3.5 billion, raised some eyebrows in the world press, some hinting that China's economic foreign policy may be on the verge of a new leap forward. A clue to the fact that such anticipation may have totally understated the case was last week's signing of a mega-gas deal between Beijing and Tehran worth $100 billion. Billed as the "deal of century" by various commentators, this agreement is likely to increase by another $50 billion to $100 billion, bringing the total close to $200 billion, when a similar oil agreement, currently being negotiated, is inked not too far from now.
The gas deal entails the annual export of some 10 million tons of Iranian liquefied natural gas (LNG) for a 25-year period, as well as the participation, by China's state oil company, in such projects as exploration and drilling, petrochemical and gas industries, pipelines, services and the like. The export of LNG requires special cargo ships, however, and Iran is currently investing several billion dollars adding to its small LNG-equipped fleet.
Still, per the admission of the head of the Iranian Tanker Co, Mohammad Souri, Iran needed to purchase another 87 vessels by 2010, in addition to the 10 already purchased, in order to fulfill the needs of its growing LNG market. Iran has an estimated 26.6-trillion-cubic-meter gas reservoir, the second-largest in the world, about half of which is in offshore zones and the other half onshore.
It is perhaps too early to digest fully the various economic, political and even geostrategic implications of this stunning development, widely considered a major blow to the Bush administration's economic sanctions on Iran and particularly on Iran's energy sector, notwithstanding the Iran-Libya Sanctions Act (ILSA) penalizing foreign companies daring to invest more than $20 million in Iran's oil and gas industry.
While it is unclear what the scope of China's direct investment in Iran's energy sector will turn out to be, it is fairly certain that China's participation in the Yad Avaran field alone will exceed the ILSA's ceiling; this field's oil reservoir is estimated to be 17 billion barrels and is capable of producing 300 to 400 barrels per day. And this is besides the giant South Pars field, which Iran shares with Qatar, alone possessing close to 8% of the world's gas reserves. To open a parenthesis here, until now Tehran has been complaining that Qatar has been outpacing Iran in exploiting its resource 6-1. In fact, Iran's unhappiness over Qatar's unbalanced access to the South Pars led to a discrete warning by Iran's deputy oil minister and, soon thereafter, Qatar complied with Iran's request for a joint "technical committee" that has yet to yield any result.
For a United States increasingly pointing at China as the next biggest challenge to its Pax Americana, the Iran-China energy cooperation cannot but be interpreted as an ominous sign of emerging new trends in an area considered vital to US national interests. But, then again, this cuts both ways, that is, the deal should, logically speaking, stimulate others who may still consider Iran untrustworthy or too radical to enter into big projects on a long term basis. Iran's biggest foreign agreement prior to this gas agreement with China was a long-term $25 billion gas deal with Turkey, which has encountered snags, principally over the price, recently, compared with Iran's various trade agreements with Spain, Italy and others, typically with a life-span of five to seven years.
Thus some Iranian officials are hopeful that the China deal can lead to a fundamental rethinking of the risks of doing business with Iran on the part of European countries, India, Japan, and even Russia. Concerning India, which signed a memorandum of understanding with Iran initially in 1993 for a 2,670-kilometer pipeline, with more than 700km traversing Pakistani territory, the Iran-China deal will undoubtedly give a greater push to New Delhi to follow Beijing's lead and thus make sure that the "peace pipeline" is finally implemented. The same applies, mutatis mutandis, to Russia, which has as of late been dragging its feet somewhat on Iran's nuclear reactor, bandwagoning with the US and Group of Eight (G8) countries on the thorny issue of Iran's uranium-enrichment program. The Russians must now factor in the possibility of being supplanted by China if they lose the confidence of Tehran and appear willing to trade favors with Washington over Iran. Russia's Gazprom may now finally set aside its stubborn resistance to the idea of entering major joint ventures with Iran.
Iran appears more and more interested to join the Shanghai Cooperation Organization (SCO) and form a powerful axis with its twin pillars, China and Russia, as a counterweight to a US power "unchained". The SCO comprises China, Russia, Tajikistan, Kazakhstan, Kyrgyzstan and Uzbekistan.
China, Russia and Iran share deep misgivings about the perception of the United States as a "benevolent hegemon" and tend to see a "rogue superpower" instead. Even short of joining forces formally, the main outlines of such an axis can be discerned from their convergence of threat perception due to, among other things, Russia's disquiet over the post-September 11, 2001, US incursions in its traditional Caucasus-Central Asian "turf", and China's continuing unease over the Korean Peninsula and Taiwan; this is not to mention China's fixed gaze at a "new Silk Road" allowing it unfettered access to the Middle East and Eurasia, this as part and parcel of what is often billed as "the new great game" in Eurasia. Indeed, what China's recent deals with both Kazakhstan (pertaining to Caspian energy) and Iran (pertaining to Persian Gulf resources) signifies is that the pundits had gotten it wrong until now: the purview of the new great game is not limited to the Central Asia-Caspian Sea basin, but rather has a broader, more integrated, purview increasingly enveloping even the Persian Gulf. Increasingly, the image of the Islamic Republic of Iran as a sort of frontline state in a post-Cold War global lineup against US hegemony is becoming prevalent among Chinese and Russian foreign-policy thinkers.
For the moment, however, the Iran-Russia-China axis is more a tissue of think-tanks than full-fledged policy, and the mere trade interdependence of the US and China, as well as Russia's growing energy ties to the US alone, not to mention its weariness over any perceived Chinese "overstretch", militate against a grand alliance pitted against the Western superpower. In fact, the Cold War-type alliances are highly unlikely to be replicated in the current milieu of globalization and complex interdependence; instead, what is likely to emerge in the future are issue-focused or, for the lack of a better word, issue-area alliances whereby, to give an example, the above-said axis may be inspired into existence along geostrategic considerations somewhat apart from purely economic considerations.
Hence what the SCO means on the security front and how significant it will be hinges on a complex, and complicated, set of factors that may eventually culminate in its expansion, from the current group of six, as well as greater, alliance-like, cooperation. It is noteworthy that in Central Asia-Caucasus, the trend is toward security diversification and even multipolarism, reflected in the US and Russian bases not too far from each other. In this multipolar sub-order, neither the US is capable of exerting hegemony, nor is Russia's semi-hegemonic sway without competition. In the Caspian Sea basin, for example, Kazakhstan has opted to take part in several distinct, and contrasting, security networks, including the North Atlantic Treaty Organization's Partnership for Peace program, the Commonwealth of Independent States' Collective Security Organization, the SCO, and membership in OSCE (Organization for Security and Cooperation in Europe).
Kazakhstan is not, however, an exception, but seemingly indicative of an expanding new rule of the (security and strategic) game played out throughout Central Asia-Caucasus. Economically, both Kazakhstan and Russia are members of the Central Asia Economic Cooperation Organization, and all the Central Asian states are also members of the Economic Cooperation Organization (ECO), which was founded by the trio of Iran, Turkey and Pakistan. Certain economic alliances are, henceforth, taking shape, alongside the budding security arrangements, which have their own tempo, rationale and security potential. Concerning the latter, in 1998, the ECO embarked on low security cooperation among its members on drug trafficking and this may soon be expanded to information-sharing on terrorism. Also, Iran has also entered into low security agreements with some of its Persian Gulf neighbors, including Saudi Arabia and Kuwait.
The SCO initially was established to deal with border disputes and is now well on its way to focusing on (Islamist) terrorism, drug trafficking and regional insecurity. Meanwhile, the US, not to be outdone, has been sowing its own bilateral military and security arrangements with various regional countries such as Azerbaijan, Tajikistan, Kyrgyzstan and Uzbekistan, as well as promoting the Guuam Group, which includes Azerbaijan and Georgia, formed alongside the BTC (Baku-Tiblisi-Ceyhan) pipeline as a counterweight to Russian influence. Consequently, the overall picture that emerges before us is, as stated above, a unique multi-trend of military and security multipolarism defying the logic of Pax Americana. In this picture, Iran represents one of the poles of attraction, seeking its own sphere of influence by, for instance, entering into a military agreement with Turkmenistan in 1994, and, simultaneously, exploring the larger option of how to coalesce with other powers in order to offset the debilitating consequences of (post-September 11) unbounded Americanization of regional politics.
A glance at Chinese security narratives, and it becomes patently obvious that Beijing shares Iran's deep worries about US unipolarism culminating in, as in Afghanistan and Iraq, unilateral militarism. Various advocates of US preeminence, such as William Kristol, openly write that the US should "work for the fall of the Communist Party oligarchy in China". Unhinged from the containment of Soviet power, the roots of US unilateralism, and its military manifestation of "preemption", must be located in the logic of unipolarism, thinly disguised by the "coalition of the willing" in Iraq; the latter is, in fact, as aptly put by various critics of US foreign policy, more like a coalition of the coerced and bribed than anything else.
But, realistically speaking, what are the prospects for any regional and or continental realignment leading to the erasure of US unipolarism, notwithstanding the US military and economic colossus bent on preventing, on a doctrinal level, the emergence of any challenger to its global domination now or in the future? The strategic debates in all three countries, Russia, China and Iran, feature similar concerns and question marks. For one thing, all three have to contend with the difficulty of sorting the disjunctions between the different sets of national interests, above all economic, ideological and strategic interests. This aside, a pertinent question is who will win over Russia, Washington, which pursues a coupling role with Moscow vis-a-vis Beijing, or Beijing, trying to wrest away Moscow from Washington? For now, Russia does not particularly feel compelled to choose between stark options, yet the situation may be altered in China's direction in case the present drift of US power incursions are heightened in the future. The answer to the above question should be delegated to the future. For now, however, the quantum leap of China into the Middle East and Caspian energy markets has become a fait accompli, no matter how disturbed its biggest trade partner, the US, over its geopolitical ramifications.
Kaveh L Afrasiabi, PhD, is the author of After Khomeini: New Directions in Iran's Foreign Policy (Westview Press) and "Iran's Foreign Policy Since 9/11", Brown's Journal of World Affairs, co-authored with former deputy foreign minister Abbas Maleki, No 2, 2003. He teaches political science at Tehran University.
(Copyright 2004 Asia Times Online Ltd. All rights reserved. Please contact content@atimes.com for information on our sales and syndication policies.)
Latin American countries welcome China's new found interest, not least because this gives them leverage in their dealings with the U.S.
This would be the same leverage or weakening of U.S. influence that Iran has begun to enjoy under China’s recent investments.
China and Iran have signed a 100 billion dollar gas deal that eventually could take the total value to as much as 200 billion dollars and that China is known to trade weapons for oil or gas, these showcased weapons could already be in Iran’s hands. #msg-4431516
What is in it for Iran? Iran could court China’s favour on the UN Security Council, where Beijing holds a potential veto over any action against the Islamic Republic’s nuclear programme.
It doesn’t take much imagination to see how this could pose potentially huge problems in seeking to secure any US-led pressure on Iran through the UN were China to use, or threaten to use, this veto. This could be a long way off, but looking at the security implications of such a stand-off for the whole of the Middle East, this has the makings of a China challenge that could come to dwarf the economic one.
HONG KONG -- Chinese President Hu Jintao's two-week foray into Latin America in November shows the extent to which China's economic development over the last quarter century has strengthened its foreign policy outreach.
Today, Beijing's friendship -- in particular its investment and trade -- are warmly welcomed in a corner of the world that has been traditionally recognized as America's backyard.
China has worked hard at courting Latin American countries in recent years, with then-President Jiang Zemin taking a swing through six countries in 2001. This time, Hu paid state visits to Brazil, Argentina, Chile and Cuba in conjunction with an Asia-Pacific Economic Cooperation meeting in Santiago. By contrast, U.S. President George W. Bush, who also attended the APEC meeting, visited only one Latin American country, Colombia, where he stayed for four hours.
In addition to state visits to four countries, Hu also held bilateral meetings with other leaders on the margins of APEC, including President Vincente Fox of Mexico and President Alejandro Toledo of Peru.
Beijing's growing economic ties to Latin America illustrate the extent to which the country has become an engine for growth in the world.
The Chinese economy and those of Latin American countries are highly complementary. While China is hungry for natural resources to fuel its economy, the Latin countries by and large are resource rich. And China, with more than $500 billion in foreign exchange reserves, is in a strong position to satisfy those countries' appetite for foreign investment.
Trade between China and Latin America doubled last year, to almost $27 billion. What is perhaps even more important is the amount of investment that China is pouring into the region. During Hu's swing in Latin America, the Chinese signed agreements amounting to more than $30 billion in new investments.
China is now Brazil's second-largest trading partner, buying large amounts of iron ore, bauxite and soybeans. Exports from Brazil nearly doubled last year, to $4.5 billion. The country is China's largest trading partner in Latin America, followed by Mexico and Chile.
A major component of China's investment and trade with Latin America is related to energy. China this year became the third-leading destination of Brazilian crude exports, with shipments of about 50,000 barrels a day. The Chinese state oil company Sinopec has invested $1 billion in a joint venture for the construction of a gas pipeline within Brazil.
In October, China displaced the United States to become the leading purchaser of Chilean copper. In fact, China has replaced the U.S. as the leading market for Chilean exports.
In Argentina, China's fourth-largest trading partner in Latin America, Hu unveiled nearly $20 billion in new investments, much of it in railways, oil and gas exploration, construction and communication satellites. Two-way trade reached more than $3 billion last year, up 122 percent from the year before.
In Cuba, Hu's last stop, Beijing signed an agreement for a $500 million investment in a new nickel plant, marking a tenfold increase of Chinese investment in that country.
With China, as with other countries, closer economic ties often lead to closer political ties. In addition to insisting on a "one China" policy, Beijing now also calls on its trade partners to accord it full market-economy status, which would strengthen its hands in antidumping disputes within the World Trade Organization. Brazil, Argentina, Chile and Peru have all signed on.
Latin American countries welcome China's new found interest, not least because this gives them leverage in their dealings with the U.S.
So far, however, the U.S. does not seem worried. Bush chuckled when a Chilean reporter cited China's growing reach in Latin America and asked whether he was going to do anything "so you don't lose your influence in this region." The American president replied that he thought China's "phenomenal growth rates" were positive, and that it was "helpful for there to be universal prosperity."
Frank Ching is a Hong Kong-based journalist and commentator.
The Japan Times: Dec. 3, 2004 (C) All rights reserved
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