A Triangular Relationship
- Leuven Global Governance series
Edited by Jan Wouters, Jean-Christophe Defraigne and Matthieu Burnay
Chapter 16: Unbalanced triangle: trade and investment relations between the European Union, China and Latin America
With Chinese Premier Wen Jiabao announcing in June 2012 his willingness to start negotiations for a China-Mercosur Free Trade Agreement (BBC News, 2012), Latin America-China relations seem to have reached a crucial turning point. Nothing seems to impede China and Latin America’s giants from further developing relations, especially considering the crises affecting their other two main far-away partners, the US and the European Union (EU). Steadily growing, while mainly disregarded by other global players, trade relations between Beijing and the Latin American continent have blossomed, which is now raising concerns in the US. Negotiations are on track, investments and trade flows are increasing and, unlike the US and the EU, China and Latin America are sailing through the financial crisis relatively smoothly. China is already Chile’s first and Brazil’s and Mexico’s second trading partner (European Commission, DG Trade). In one of the largest investments by a Chinese company in South America, Chinese oil firm Sinopec injected US$7.1 billion into Repsol Brasil, the Brazilian subsidiary of Spanish energy group YPF in 2010 (Financial Times, 2010). Chinese penetration in Latin America raises several questions: why has China got so suddenly interested in a region it has neglected for several decades? What is the nature of China’s intentions in Latin America? What could be the effects of this trade intensification between Latin America and China? And what are the main trends and perspectives for the players concerned?
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