Brazil and LatAm Should Get Ready to Sell China Added-Value Products

A Chinese-Brazilian satellite, the CBERS The trade honeymoon between China and Latin America cannot last forever, experts warn: sooner or later, the Asian giant will reduce its need for raw materials, and countries across the Americas will then have to offer value-added, higher-tech goods.

Experts taking part in the World Economic Forum (WEF) on Latin America that wrapped up Thursday in Santiago agreed on this scenario.

And though no one was in a hurry to predict when the Chinese economic boom might ease, they all stressed that Latin American countries need to start developing and targeting their niches in China's massive market.

For Chilean banker-businessman Andronico Luksic, the time is ripe for the region's countries to start taking long-term decisions and adopt a common strategy to strengthen trade with China and attract foreign investment.

Luksic, head of the economic team that manages Banco de Chile, the second-biggest financial services group on the Chilean stock market, Latin American companies should be encouraged to invest in China and add value to their products.

"Latin America must try to add value to its raw materials," he said. "We have to be bold and take risks, travel and not be afraid of a 'big dragon.' China needs us now."

So Luksic proposed the creation of a Chinese-Latin American Business Council to advance bilateral relations and set up a platform for information that would facilitate trade and financial decisions.

The head of China's mining company Minmetals, Zhang Shoulian, also appealed for broader relations.

"The way in which China and Latin America work together is very limited," he said. "Trade is the only one – but there can be many other ways of cooperating such as direct investment, technology transfers and cultural exchanges."

Exports to China have been a top engine of economic growth for Latin America, which advanced last year at a 5.6 percent clip. The region's rich raw resources, such as copper, help feed China's industrial boom.

The head of the UN Economic Commission for Latin America, Jose Luis Machinea, said the symbiotic relationship between China and Latin America has a future.

"The romance is not going to burn out as long as China is growing, and China is going to keep growing for some time," he told AFP. But, Machinea warned, "at some time, the biggest phase of its industrialization process has to come to a close."

At that point, China will move on to another level of development at which it will have less need for raw materials and an expanding services sector.

So "we have to take advantage of the opportunity we have now to add greater value and intellectual content to exports."

"This is the region's great challenge, beyond the short-run benefits," he said.

Brazil's Development, Industry and Trade Minister Luis Fernando Furlan said that when China moves into a new, higher level of development, with a larger middle class, that will present a host of huge new opportunities for producers.

"We have to improve infrastructure in our countries to reduce export costs," he added.

Trade between Latin America and China, worth US$ 200 million in 1975, surged to US$ 70.2 billion in 2006 and is forecast to hit US$ 80 billion this year.

Chinese President Hu Jintao has predicted the two-way trade total will top US$ 100 billion in 2010.

Mercopress

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