Asian and especially Chinese interest in Latin American economies has been growing. Closer ties are looking ever more attractive to both parties, Hisham El-Naggar writes from Buenos Aires While the world's eyes were riveted on Santiago de Chile and a meeting of Asia Pacific Economic Cooperation Forum (APEC), not many were aware that equally significant steps in Latin American history were being taken all over the continent. APEC -- an economic and trade grouping of the Pacific Rim states -- provides a link between Asian and American economic heavyweights. The colourful adventures of United States President George W Bush's security guard may have been newsworthy, but no less significant was the joint visit of several Asian leaders, notably from China, South Korea and Vietnam, to Brazil, Argentina and Chile. As Chinese President Jin Tao's arrival to the region was preceded by rather fantastic accounts of the Asian giant's interest in regional investment, speculation reached fever pitch about the Celestial Empire's ambition in the southernmost half of the New World. In Argentina the press went wild with stories -- apparently encouraged by some in the government -- that the Chinese were planning to invest $20 billion over the next few years. If this were true, some imaginative journalists fantasised, then default-ridden Argentina can simply forget about its irate creditors, including the International Monetary Fund. The Chinese, somewhat taken aback by the extremes to which press accounts have gone, preferred to talk down at least the fiscal amounts such potential investments involved. But in Argentina, as well as in Brazil, it became clear that Jin Tao's visit was intended to put commercial ties with the two largest economies of the region onto a new footing. It seems that the Chinese are actively seeking something of a partnership with both countries. The question many are asking -- not all of them from Latin America -- is why East Asian economies have suddenly taken an interest in Brazil's and Argentina's Atlantic Coast. There have been few signals until now of Asian interest in a strategic relationship with either country, both of whom have traditionally maintained relatively closed economies. But, as Confucius would doubtless have said and Mao is known to have echoed, a thousand-mile journey begins with a step. If one has a long-term perspective -- as China most certainly does -- both countries, and Latin America in general, offer interesting prospects. The two countries are, in fact, quite different -- a point not lost on the Chinese for all the jokes about the difficulty they have "telling foreigners apart". Brazil is the region's traditional dynamo, an economic giant whose economy is reputed to be the world's eighth largest. While it has had disappointing growth in the past two years, no one doubts that it can sustain a growth rate of about five per cent over the next decade or more, assuming a modicum of economic savoir-faire. Argentina, on the other hand, has not yet emerged from its spectacular foreign debt default -- the world's biggest. It is somewhat impressive how rapidly it has recovered without even reaching a preliminary settlement with its creditors. But no one -- yet -- is betting on Argentina's industrial potential. It is mostly because of robust agricultural -- especially soybean -- prices that the country has climbed so swiftly out of the doldrums. Yet agricultural trade may be just what the Chinese are after. Sceptics may wish to consider that China is Argentina's primary buyer of soybean exports. Nor is the appetite of China's huge -- one billion plus -- population likely to abate any time soon. Food products -- in both Argentina and Brazil -- are probably what interests China and indeed Asia most if investment projects are ever to materialise. For the presidents of both countries, Asian interest in their economy -- however preliminary and however narrowly focussed -- is not to be scoffed at. Both countries are anxious to attract "quality" capital flows, not the destabilising, speculative kind that has flown in regularly from "the world" -- read, the United States and Europe -- during "good times", but job-creating, export-fostering investments. Add to that the fruitless trade talks with the US and the EU, and the Latin American presidents' warm welcome to their Asian counterparts begins to make sense. Neither the US nor the EU, for all their talk of promoting free trade, have been willing to liberalise their own agricultural trade. Their all-powerful farmer lobbies, as many have noted, have no counterpart in China. To China and other Asian countries, a certain amount of capital flow directed at Latin America may make sense. Remember that most of the Asian countries in question are accumulating colossal trade surpluses and as such are sitting on hundreds of billions of dollars in inactive reserves. What better way to put them to use than to consolidate commercial ties with a hitherto -- for them -- barely accessible region? However, capital flows come at a price. Not political, but economic. China, for one, has insisted -- successfully -- that both Brazil and Argentina grant it "market economy" status. This opens their markets to Chinese goods without the threat of "anti-dumping" measures to keep cheap Chinese manufactures out. Understandably, local businessmen in both countries have not been very amused. The press, especially publications close to business interests, have been moaning that local industry could be wiped out by cheap Chinese imports. Critical to their argument is that China's success is due to its reliance on "slave labour" -- legions of Chinese workers who strive for long hours and settle for low wages.
