China/Latin America: China invests in Argentina ahead of default deadline


China invests in Argentina ahead of default deadline; Mexico benefits from rising wages in China; Japan’s Abe follows China’s Xi to Latin Americachina21

China invests in Argentina ahead of default deadline

Argentina’s looming 30 July default deadline has not deterred China from announcing new commitments to Argentine trade and development. China’s President Xi Jinping visited Argentina during his South America tour last week. While there, Xi agreed to an $11bn currency swap with Argentina, providing that country with much-needed capital.

Xi signed off on a loan of $4.7bn from the China Development Bank for the construction of two hydroelectric dams in Patagonia. The Chinese bank also agreed to a $2.1bn loan to help finance improvements to Argentina’s railways.

While visiting the South American nation, Xi stopped at an Argentinian farm and expressed hope for increased agricultural cooperation and trade between Argentina and China. He said he hopes that more Chinese people will soon be able to buy and enjoy products imported from Argentina.

Mexico benefits from rising wages in China

A recent report published by HSBC predicts that Mexico will be the world’s eighth-largest economy by 2050, rising five places in the global ranking. What is behind Mexico’s impressive growth prospects? Analysts say that one factor could be rising wages in China, which have shifted comparative advantage in the manufacturing sector back to Mexico.

Rising labor costs in China are causing companies to move their factories to Mexico, the New York Times reports. It’s an ‘in with the old’ trend that recalls the heady days just after NAFTA opened Mexico to US companies.

Although Mexico and China compete for prominence in the manufacturing sector, the two nations enjoy a robust trade and investment relationship. The South China Morning Post reports that several multimillion-dollar deals are currently in the works between China and Mexico. Gerardo Salazar, chief executive of Banco Interacciones, the largest Mexican infrastructure bank, is planning a trip to Shanghai, Hong Kong, and Seoul for September. Salazar hopes to attract more Asian capital to the Mexican market.

Japan’s Abe follows China’s Xi to Latin America

The Japan-China rivalry has moved to a different stage: Latin America. Just two days after China’s President Xi Jinping returned from his Latin American tour, Japan’s President Shinzo Abe embarked on a Latin American journey of his own.

Abe met Mexican president Enrique Peña Nieto at the Mexican presidential palace for a meeting that concluded with the signing of a series of energy deals. Japan’s efforts to diversify the country’s energy sources took on new urgency after the 2011 Fukushima disaster caused the country to turn away from nuclear power. While in Mexico, Abe expressed particular interest in Mexico’s oil resources.

Japan still lags far behind China in terms of the value of its trade with Latin America. Like Taiwan, which has a Central American base of supporters in its dispute with China, Japan may appeal to the shared values of democracy and human rights in its attempts to provide Latin American governments with an alternative to China.

Abe’s nine-day trip around Latin America will see him make stops in Trinidad and Tobago, Colombia, Chile and Brazil. He’ll be seeking new markets for Japanese exports, which have been lackluster since 2011.