The first major meeting of Chinese and Latin American leaders agreed closer co-operation on trade, investment and industry, but is more likely to usher in deals on oil and gas rather than renewable energy, analysts said in response to a summit that was big on rhetoric but short on firm detail.
China’s declaration that investments in Latin America will more than double in the next 10 years was the most tangible outcome of a summit meeting between the president of China, Xi Xinping, and Latin American leaders in Beijing this week, although a more formal relationship is expected to evolve later this year.
The growth in trade between China and Latin America in the first 11 months of 2014
"One plus one is bigger than two," Xi was reported as saying at the meeting.
The summit was held through the first ministerial forum of China and the Community of Latin American and Caribbean Nations (CELAC) in Beijing on January 8-9.
Xi said that the volume of trade between the two markets would increase to around US$500bn as China continues to tap into Latin America’s resources of oil, gas, minerals and agricultural products and extend its political influence into a region the US has long regarded as its backyard.
China’s trade with Latin America grew only 1.3% in the first 11 months of 2014 compared to the corresponding period the previous year, reaching a total of almost US$25bn. But on either side of the Pacific, leaders want to ramp up trade and develop stronger economic - as well as diplomatic – ties.
The two-day forum was attended by four Latin American heads of state and 20 foreign ministers from the 33 CELAC member countries, along with representatives from international organisations.
One of the main documents emerging from the summit was a five-year cooperation plan between China and CELAC in areas such as security, trade, investment, infrastructure, energy, industry, agriculture, science, technology and cultural and educational exchanges.
But having made a historic pledge to peak carbon emissions at the APEC Summit in November last year, some commentators were expecting the forum to provide opportunities to develop low-carbon technologies in Latin America.
While such a deal could emerge in the coming years, the signs from this week’s summit is that China remains primarily focused on Latin America’s resources of oil and gas, most of which is extracted from countries including Brazil, Colombia, Ecuador, Mexico, Peru and Venezuela.
Chinese influence in Latin America
For Rhys Jenkins, an international economist at the University of East Anglia in the UK, this week’s summit won’t change the relationship very much.
"It seems to me that the figure of US$500 billion in the next decade was quite conservative given that China-Latin America trade has increased tenfold over the last decade."
Diversifying oil supplies will remain a major objective for China, while a deal also create opportunities for Chinese construction companies in the region, Jenkins adds.
From a Chinese perspective, closer ties with Latin America have long made sense, particularly as the region’s increased economic power and left-leaning foreign policy have diluted US influence, points out Wu Guoping, Latin American expert from the Institute of Latin American affairs at the Chinese Academy of Social Sciences.
The forum also demonstrated how the nature of Chinese finance is helping to forge more intimate relationships between China and some of its Latin American counterparts.
“China is a lender with deep pockets and few conditions. Latin American and Caribbean nations occasionally favour Chinese finance over finance from other IFI’s (International Financial Institutions) because of its relative lack of conditions.” said Margaret Myers, Director of the China and Latin America Program at the inter-American Dialogue.
With few other places to turn for credit, Venezuela’s president Nicolás Maduro secured a US$ 20bn oil-backed loan whilst in Beijing, just one leg of a trip which included a stop-off in Russia and will follow on to Iran and other OPEC nations.
China is a lender with deep pockets and few conditions. Latin American and Caribbean nations occasionally favour Chinese finance
And while Rafael Correa, president of Ecuador, also sought more loans, he expressed the need to "drive real commitments towards mitigating the climate crisis," something Myers is sceptical about.
“It is difficult to take these announcements especially seriously as Chinese national oil companies and Ecuador collaborate to exploit some of the most biodiverse land on the planet,” she said.
For Guy Edwards, Co-Director of the Climate and Development Lab at Brown University, the timing of the conference – following soon after the UN-led climate negotiations in Lima – was ideal.
“It appears that climate, environmental and low-carbon development issues didn't feature very strongly in Beijing and we can see how disconnected the climate change debate is from the decision makers in Latin America & China responsible for advancing this relationship,” he said.
“Although we are yet to see the new China-Latin American Cooperation Plan 2015-2019, the Forum appears to have been a missed opportunity to promote a low carbon agenda.”