Latin Finance - November/December 2011 - 26

china investment

A New Phase
by Paul Kilby ong seen exclusively as buyers of resource assets in Latin America, Chinese state-owned enterprises and companies are starting to broaden their focus and invest in the region’s infrastructure and manufacturing sectors. Banks are following in their wake and hoping to help them with the necessary financing to grow. “One of the reasons we are operating as a bank in Brazil is because we have been seeing customer demand from China to do business in Brazil and to sell in the local markets,” says David Mann, regional head of research, Americas, at Standard Chartered. Chinese investments in Latin America have been on a steady upward trajectory over the last few years, reaching some $43.88 billion at the end of 2010, according Kong Linglong, directorgeneral, foreign investment department at China’s National Development Reform Commission. But such flows are now becoming more nuanced and going beyond the resource-based purchases that have characterized Chinese investment in the region up until now. In an effort to ease tax burdens and get closer to their clients, many Chinese businesses are moving to the second stage and setting up shop locally, while also participating in the construction of vital infrastructure needs. This comes at a time when Chinese exports to countries like Brazil have also soared in recent years, possibly sowing the seeds for political tensions going forward. Setting up local manufacturing is one way to ease this potential trade imbalance, though according to Standard Chartered China now receives more than 17% of Brazil’s exports “The Chinese want to help build up infrastructure,” says Mann. “It is not purely about getting stuff out of the ground, but building a balanced

L

Chinese companies are looking beyond resource-based investments and setting up shop on the ground to play a greater role in LatAm’s infrastructure and manufacturing.

Chinese car manufacturers make inroads in Brazil partnership. They don’t want to end up running a trade surplus with Brazil.” Efforts to invest more in LatAm infrastructure is the next logical step for China which wants to improve its capacity to move the natural resources it seeks to extract from a region where ports and railways still need modernizing. And state entities are more than keen to provide their support. “We would be happy to provide capital to support infrastructure, ports, agricultural projects and rail,” said Zhu Xinqiang, vice-governor at the ExportImport Bank of China, at LatinFinance’s Latin America China Investors Forum in Beijing this September. On the infrastructure side, perhaps the splashiest acquisition has been State Grid’s $1.8 billion purchase late last year of seven Brazilian power companies and 30-year transmission operating concessions. Chinese technology to transport energy over long-distances was seen as a natural fit in Brazil, where the population lives far from where energy is generated. But it is not just state-owned companies that are taking the lead. Several private companies such as crane manufacturers ZMPC and Sany, are also already active in Brazil. This year the former supplied cranes to Santos Brasil, which handles container traffic at the Port of Imbituba and has been upgrading the port in part to handle increased trade

26 LatinFinance

November/December 2011



Latin Finance - November/December 2011

Table of Contents for the Digital Edition of Latin Finance - November/December 2011

Latin Finance - November/December 2011
Contents
Contagion Risk
Mexican Credit
China Investment
Loan Markets
Mexico Banks
Sub-Sovereign Debt
Banks of the Year 2011
Argentina Investor Report
Reversal of Fortunes
Latin Finance - November/December 2011 - Latin Finance - November/December 2011
Latin Finance - November/December 2011 - Cover2
Latin Finance - November/December 2011 - Contents
Latin Finance - November/December 2011 - 2
Latin Finance - November/December 2011 - 3
Latin Finance - November/December 2011 - 4
Latin Finance - November/December 2011 - 5
Latin Finance - November/December 2011 - 6
Latin Finance - November/December 2011 - 7
Latin Finance - November/December 2011 - 8
Latin Finance - November/December 2011 - 9
Latin Finance - November/December 2011 - 10
Latin Finance - November/December 2011 - 11
Latin Finance - November/December 2011 - Contagion Risk
Latin Finance - November/December 2011 - 13
Latin Finance - November/December 2011 - 14
Latin Finance - November/December 2011 - 15
Latin Finance - November/December 2011 - 16
Latin Finance - November/December 2011 - 17
Latin Finance - November/December 2011 - 18
Latin Finance - November/December 2011 - 19
Latin Finance - November/December 2011 - 20
Latin Finance - November/December 2011 - 21
Latin Finance - November/December 2011 - Mexican Credit
Latin Finance - November/December 2011 - 23
Latin Finance - November/December 2011 - 24
Latin Finance - November/December 2011 - 25
Latin Finance - November/December 2011 - China Investment
Latin Finance - November/December 2011 - 27
Latin Finance - November/December 2011 - 28
Latin Finance - November/December 2011 - 29
Latin Finance - November/December 2011 - Loan Markets
Latin Finance - November/December 2011 - 31
Latin Finance - November/December 2011 - 32
Latin Finance - November/December 2011 - 33
Latin Finance - November/December 2011 - Mexico Banks
Latin Finance - November/December 2011 - 35
Latin Finance - November/December 2011 - Sub-Sovereign Debt
Latin Finance - November/December 2011 - 37
Latin Finance - November/December 2011 - Banks of the Year 2011
Latin Finance - November/December 2011 - 39
Latin Finance - November/December 2011 - 40
Latin Finance - November/December 2011 - 41
Latin Finance - November/December 2011 - 42
Latin Finance - November/December 2011 - 43
Latin Finance - November/December 2011 - 44
Latin Finance - November/December 2011 - 45
Latin Finance - November/December 2011 - 46
Latin Finance - November/December 2011 - 47
Latin Finance - November/December 2011 - 48
Latin Finance - November/December 2011 - 49
Latin Finance - November/December 2011 - 50
Latin Finance - November/December 2011 - 51
Latin Finance - November/December 2011 - 52
Latin Finance - November/December 2011 - 53
Latin Finance - November/December 2011 - 54
Latin Finance - November/December 2011 - 55
Latin Finance - November/December 2011 - 56
Latin Finance - November/December 2011 - 57
Latin Finance - November/December 2011 - 58
Latin Finance - November/December 2011 - 59
Latin Finance - November/December 2011 - 60
Latin Finance - November/December 2011 - Argentina Investor Report
Latin Finance - November/December 2011 - 62
Latin Finance - November/December 2011 - 63
Latin Finance - November/December 2011 - Reversal of Fortunes
Latin Finance - November/December 2011 - Cover3
Latin Finance - November/December 2011 - Cover4
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