China and the World

Lambada Li

Chinese premier signs deals in South America

Chile's President Bachelet talks to Chinese Premier Li Keqiang during a signing ceremony at the government palace

Let’s swap: Li with Chile’s president

At home Chinese Premier Li Keqiang is known as the super salesman who brokers railway and telecoms deals wherever he goes.

But as he set off on his nine-day trip to South America last week it was a different image he wanted to present – that of a concerned trade partner and trusted friend.

“The trip by Li, which will take him to Brazil, Colombia, Peru and Chile, is another example of Beijing’s sincerity in forging closer cooperation with Latin American countries… Goods and investment from China are making everyday life a better experience in many Latin American countries,” Xinhua said.

If that sounds a touch defensive, it’s largely because of criticism China’s faced that it’s only interested in the South American continent for its natural resources. Moreover China-bashers have charged that Beijing’s involvement in nations such as Brazil and Venezuela has led to trade imbalances, environmental degradation and more corruption.

An editorial published by Bloomberg, for example, last week pointed out: “Venezuela is all but addicted to Chinese loans-for-oil, which have not only enabled its political repression but economic mismanagement.”

Similarly UK newspaper The Guardian quoted several Latin and Central Americans as saying they were worried for their environment and communities as a result of Chinese projects such as the opaque plan to build a canal across Nicaragua from the Atlantic to the Pacific Ocean. The canal would cut through Lake Cocibolca – an important reserve for drinking water.

“The canal will generate profits, but will cause irreversible humanitarian damage. What will be lost forever is the only source of fresh water for everyone in our region. What will prudent Chinese leaders think when, in less than three decades, whole generations in this part of the planet, amid chaos and desperation, die of thirst because of the so-called Chinese Canal?” the newspaper quoted Lopez Baltodano, from the Popol Na Foundation as asking.

Li sidestepped the environmental criticisms but at every stop he stressed the Chinese wish to help Latin American nations increase their industrial capacity and move up the value chain.

“We need to promote change in the economic and trade growth models, and create an updated model of Sino-Latin American cooperation,” Li said on his first stop, Brazil.

While there he promised $53 billion in investment. Scandal-stricken oil firm Petrobas was the recipient of $7 billion under a financing agreement. China’s Bank of Communications will also acquire an 80% stake in the Brazilian bank BBM for $173 million.

The highlight of Li’s tour was an agreement to carry out a feasibility study for a transoceanic railroad from Brazil to Peru. The 5,000km link would passes through the Amazon and over the Andes, enabling minerals and agricultural products to be shipped from Latin America to China without passing through the Panama Canal. The Peruvian government also endorsed the study after Li arrived in Lima, on the third leg of his tour.

On the trip’s second leg in Colombia, Li promised to “deepen ties” and again expressed China’s eargerness to help advance the country’s infrastructure construction.

The Nikkei Asian Review noted that Beijing has been expanding its soft power in the region, capitalising on Washington’s waning influence in its own backyard. Beijing “wants its own distribution network, free of US influence, that can circle the globe,” a top official at a Chinese state-owned logistics company told Nikkei.

Building infrastructure projects overseas could promote the global use of the Chinese currency. That’s why in Chile, Li’s fourth and final stop, he signed a currency swap deal worth Rmb22 billion ($3.5 billion).

In Santiago the mood lightened a little. When the loudspeakers conked out at the official welcoming reception for Li he sang the Chinese national anthem himself. He even scored points with Chinese netizens when he confessed to President Michelle Bachelet that one important piece of China’s own infrastructure – internet speeds – still lags Chile’s. “Li must feel like a peasant coming to a modern city for the first time: fast and furious!” was the wry observation of one netizen on the broadband topic.

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