China Seen Striking Mutually Beneficial Pact

As China becomes the most important trade partner for many LatAm nations and looks to lend and acquire more in the region, both sides appear positive that the relationship is a win-win long-term, despite concerns to the contrary. “The relationship is mutually beneficial. Even as China shifts from an export-driven economy to one more focused on consumption, that doesn’t imply a decrease in the need for Latin raw materials,” Steven Puig, vice president at the IDB tells a panel at a LatinFinance forum in Beijing. However, the concern is that LatAm is parting with commodities at the bottom of the value chain, only to buy them back as finished goods. “They are complimentary economies,” says Gerardo Mato, co-head of global banking for the Americas at HSBC, noting the opportunity for infrastructure projects in LatAm to obtain long-term financing. He says the 2 sides are getting closer, but a greater and better flow of information will be the key to bridging what is still a large gap. Zhu Hongjie, vice president at China Eximbank says Chinese investment in LatAm should grow faster and come easier than it did in, for example, Africa, due to LatAm’s more rapid development. The panel was also optimistic that Chinese investment could move beyond commodities. “There is a misperception in China that overseas investments offer lower returns [than Chinese equities]. This is not true,” says Cynthia Zhang, who helps manage $4bn in overseas assets at China AMC. She notes the medium to long-term attractiveness of not only infrastructure, but of banks and consumer staples sectors. All spoke at this week’s LatinFinance Latin America China Investors Forum in Beijing.