Cooperation on environment just a goodwill gesture for China and Latin America

Despite being mired in a corruption scandal, Brazil’s state-run oil company Petrobras received around US$ 10bn in new investment from China on Li Keqiang’s Latin America tour (image: Tânia Rego/ Agência Brazl).

Cooperation on environment just a goodwill gesture for China and Latin America

Premier Li’s visit to South America has benefited China in two ways. Firstly, it has served to provide political and financial support for the Brazilian government, which, despite finding itself in a tight spot amid accusations of corruption, is still very rich in terms of the natural resources China requires. Secondly, it has helped build trust and improve conditions for long-term cooperation with Colombia, Peru and Chile, three countries whose economies remain very much independent from Beijing.

When it came to environmental matters, however, there were fewer advances. Aside from a number of declarations of intent, no progress was made in defining clear environmental and social policies and rules to underpin Chinese funding and investment in the region.

The most significant progress in this area during the visit was the Joint Declaration by Brazil and China on Climate Change in advance of the COP21 climate negotiations in Paris, together with the promotion of renewable energy, forest carbon sinks, conservation and energy efficiency, and low-carbon adaptation and urbanisation. Only one of the 35 agreements signed by China and Brazil was directly related to the environment – providing support for wind power projects that aim to generate a total of 321 MW. Meanwhile, US$ 10bn was offered to state-owned oil company Petrobras by Chinese banks.

The visit provided a platform for China and Latin American countries to advance their economic agenda, although the critical agreement for South-South cooperation has yet to be reached. There remains the task of reaching a binding agreement to bring together the best national and international social and environmental standards (similar to China’s Green Credit Guidelines), setting out ambitious and measurable targets for a genuine transition to clean energy economies (not just mega-dams), ensuring transparency and access to information, and including mechanisms for public scrutiny.  Such an agreement should form the basis of genuine South-South cooperation.

Premier Li’s tour began in Brazil on 18 May, with the announcement of a US$ 30bn fund for Latin America to stimulate production and manufacturing. A total of 70 agreements were signed with the four countries, half of them with Brazil. The most significant of these was an agreement between China’s National Development and Reform Commission and the transport ministries of Brazil and Peru to carry out feasibility studies for the proposed Brazil–Peru transcontinental railway.  Given its risks and potential impacts, the ambitious and controversial project could come to define China’s environmental and social credentials in Latin America.

The most important agreements in Brazil include signing the Joint Action Plan for 2012–21, the agreement between Caixa Económica and the Industrial and Commercial Bank of China (ICBC) to create a US$ 50bn fund for transport infrastructure and agriculture, a US$ 10bn loan to Petrobras from the China Development Bank, ICBC and China Eximbank, and six agreements that will benefit the mining company Vale.

Premier Li fared much better in Peru and Chile than in Colombia. Both Peru and Chile had devised portfolios of projects that allowed them to present China with an appetising menu of funding opportunities, making full use of the flagship Strategic Dialogue Mechanisms each has recently established with China.

In meetings with the Chinese delegation, the Peruvian government proposed projects for the construction of transport infrastructure and public works, as well as signing 10 agreements related to transport, energy, space exploration, research and humanitarian aid. These agreements also include a study for the evaluation, planning and integrated management of water resources in the south of the country. Chinese backing for mapping natural resources is nothing new: just last year, Yangtze, a Chinese institute, helped draw up Ecuador’s National Plan for the Management of Hydrographic Basins, and various other deals have also been struck with Chinese state institutions to map mining resources in Brazil, Venezuela, Ecuador and Peru.

In Chile, while the Chinese Premier’s visit may not have captured the attention of the country’s population, progress was made in strengthening the Free Trade Agreement and drawing up a political framework for the Joint Action Plan.  However, the biggest achievement was an agreement for the China Construction Bank to act as an RMB clearing bank in Chile, helping promote the Chinese currency in the region. Chile also signed 10 agreements with China related to taxes, extradition, tourism, metal exports and the construction of infrastructure.

The Chinese delegation received a cooler reception in Colombia, in spite of an open letter penned by Premier Li, which was published in numerous newspapers as part of a charm offensive to gain the trust of the Colombian people, mentioning everything from Gabriel García Marquéz’ magical realism to potential areas for cooperation and exchange.

In spite of this invitation, the Colombian government did not greet Premier Li with a series of projects but with a list of products Colombia is seeking to position in Chinese markets and a request for admission processes to be expedited. The visit culminated in around 10 modest agreements related to education, tourism, agriculture, security and infrastructure planning. No progress was made in the implementation of a free trade agreement.

No Comments

Sorry, the comment form is closed at this time.