China’s increasing presence in Latin America

Cristiane Gomes, head of sales & relationship management, South America, BNY Mellon Treasury Services, explores the intensification of economic ties between China and Latin America and what this means for local banks and corporates.

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Comments (1)

  • William Laraque
    William Laraque, US-International Trade Services 30 June 2015

    This is by far the most balanced, intelligent and comprehensive article I have read regarding Chinese influence in Latin America. Not to diminish the breadth, scholarship and import of this article in any way, I was particularly moved by the comments regarding Brazil. The economic development of Brazil hinges, as espoused by Hernando de Soto who transformed Peru, on applying capital at the bottom rung of the economic ladder. Amitai Etzioni provided the formula for the re-industrialization of the U.S. in "An Immodest Agenda," in 1981. In addition to investing in the six elements of infrastructure, investment of savings in capital goods is necessary to create a sustainable economic infrastructure. Export of capital goods sustains this capital goods portion of infrastructure, the seed corn of economic development and leads to an expansion of profit margins by exploiting international trade opportunities. Over-dependency on one market or buyer is as foolish as putting all one's eggs in one economic basket. The mittelstand of Germany exports to an average of 6 countries. The SME sector of the U.S. exports to an average of 2 countries, when it exports. The MSME and SME sectors of Brazil are underdeveloped. There are only 20,000 or so SME and entrepreneurial enterprises in all of Brazil. Trading with China does little to develop this sector of the Brazilian economy. Brazil is famous or should I say infamous for its red tape and corruption, both of which serve to destroy the entrepreneurial spirit and small enterprise. What catalyzes economic growth in Brazil is the same as what empowers it in the U.S. It is the application of capital where the entrepreneurs are. Supporting this encouragement are such ECAs as BNDES, export credit insurance agencies both private and governmental. The mitigation of foreign trade risk for financial institutions and enterprises is the raison d'etre of both ECAs and export credit insurance agencies. I actually prepared to deliver this message to Banco do Brasil when I taught at Baruch College but Baruch could not reach a contractual agreement with the bank. The bank's representatives did not believe that one person could teach this subject matter. They were wrong!

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