Growing Trade Ties China to Latin America Hungry for trade with resource-rich Latin America, the Chinese are binding themselves closer to the continent, snapping up commodities such as Brazilian soy in record amounts. However, some in Brazil see China as posing a threat as well as an opportunity.
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Growing Trade Ties China to Latin America

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Growing Trade Ties China to Latin America

Growing Trade Ties China to Latin America

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From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.


And I'm Robert Siegel.

The rise of China as a worldwide force stems from its economic power. China needs commodities such as copper, and soybeans, and it's found a market in South America. All this week, we're bringing you stories about China's expanding influence throughout the world.

And as NPR's Julie McCarthy reports, the relationship between China and South America is helping to transform the global economic order.

JULIE McCARTHY: In the steamy state of Mato Grosso, straddling Brazil's midsection, 13 million acres of red earth wear a quilt of green that turns golden as soybeans mature for harvest.

If soy is king here, farmer Erai Maggi is the kingmaker. The combined farms owned by this 48-year-old soy tycoon who started out with one tractor totals some half a million acres.

A battalion of harvesters rumbles across this 100,000 acre farm of his; gargantuan metal creatures that evoke scenes from Star Wars with their relentless advance. Above the din of the harvest, a ranch hand gives Erai some good news.

Unidentified Man: (Speaking in foreign language)

McCARTHY: Well, the yield is up, he says. It's 1.4 tons per acre. The state average is 1.1 tons, says a nephew. Relatives in this lucrative family business surround Erai, offering facts he says he can't be bothered with, like how much he's worth, or whether he produces more than the governor of Mato Grosso who happens to be his cousin.

Erai Maggi credits China for his expanding empire, touring his farm he tells me sales to China revived the fortunes of his company, spurring 20 percent growth.

Mr. MAGGI: (Through translator) Two years ago, we thought of scaling back our planting, but then China started buying our soy. It was our salvation. Otherwise, we've been a mess. So, we have to thank China. They can buy as much as they want, and we'll deliver a cheap, healthy source of protein.

McCARTHY: Because of the growing demand for soy which is the key nutrient for poultries, swine, and cattle, the price has risen from a $150 a ton to $300 a ton. But China keeps buying because it has to provide nourishment for its increasingly prosperous middle class.

Raw materials like soy and iron ore form the basis of Brazil's skyrocketing exports to China which doubled in just three years.

Mr. WELBER BARRAL (Secretary of International Trade, Brazil): So, China became a very important partner to Brazil. In fact, China became the second partner to Brazil after the United States.

McCARTHY: Brazil's Secretary of International Trade Welber Barral. He notes that the trade goes both ways - for a total of $30 billion dollars last year. In fact, as commercial ties intensify, 6 percent of Brazilian exports went to China, while 10 percent of all imports came from China.

Secretary Barral says Brazil's new trade deficit is not all bad.

Mr. BARRAL: No, not at all. Not at all. First of all, because we have these sense that it reduces inflation, and it gives more opportunity for the poor population in Brazil that has cheaper goods. On the other hand, as a principle, we don't have to reduce the 10 percent imports from China. We have to increase our exports to 12 percent.

Ambassador CHEN DUQING (China's Ambassador to Brazil): Actually Chinese economy and the Brazil economy are complimentary, mutually. This is very good for Brazil.

McCARTHY: That's China's ambassador to Brazil Chen Duqing. He says with China, Brazil can reduce its dependence on the U.S. market. He's also optimistic about prospects for Chinese trade throughout the Latin America.

Amb. DUQING: The potentiality is very big because the population maybe more than 500 million. Their purchasing power is quite considerable, much bigger than Africa, maybe.

McCARTHY: Ambassador Duqing has also had to address apprehensions among some business circles here that a lopsided commercial relationship may be developing.

Amb. DUQING: They are claiming before my arriving here that China is invading with products, but I told them that, you know, we understand globalization. Commercial exchange is inevitable. You must buy, we must sell.

McCARTHY: The Chinese have been outselling Brazilians in sectors such as shoes. Small factories like this one in Sao Paolo producing high-end shoes survived. Many more factories manufacturing inexpensive models have failed. By one estimate, Chinese competition is responsible for Brazil losing more than 90 percent of its shoe sector in the U.S. market.

Mr. SERGIO AMARAL (Former Brazilian Ambassador to France): China is an important partner. It's also big threat.

McCARTHY: Former Brazilian ambassador to France Sergio Amaral says China's competitive drive makes it a threat. Especially, he says, when it engages in dumping or other unfair competition. He cites textiles as an example.

Mr. AMARAL: You have suits coming to Brazil for $1.

McCARTHY: One dollar. Well, who can compete with that?

Mr. AMARAL: Nobody can.

McCARTHY: China is importing far more raw materials from Brazil than manufactured products. In addition, China has not kept President Hu Jintao's promise to make sizeable investments in South America. For both these reasons, attitudes towards China are beginning to harden here.

Soy farmer Erai Maggi says he'd love China to invest in the country's long-neglected roads and railways that make transport costs five times what they are in the U.S. But he says

Mr. MAGGI: (Through Translator) China investing in infrastructure here, I haven't seen a cent of that. Who from China is going to invest? All I hear is talk just like a parakeet.

McCARTHY: The China-driven soy boom has also alarmed environmentalists who say it has pushed farming northward into the Amazon rainforest and spoiled rivers with run off. Conservationist Adalberto Eberhard says, worst yet, it's all for foreign markets.

Mr. ADALBERTO EBERHARD (Conservationist): We are basically changing nature for money in Brazil. That is the point.

McCARTHY: But China's Ambassador Duqing says developing economies that try to industrialize pollute. Every country must find its own way, he says.

Amb. DUQING: China cannot adapt to some policy as Canadians. It's impossible. I think every country must define its policy according to its (unintelligible).

McCARTHY: In the broader frame, the U.S. market share in Brazil has declined for the past five years when China's has surged. Former Brazilian ambassador to Washington Rubens Barbosa says the U.S. near exclusive focus on the war in Iraq made it possible for newcomer China to begin to eclipse the United States in its traditional sphere of influence.

Mr. RUBENS BARBOSA (Former Brazilian Ambassador to Washington): Other countries are benefiting from this growing lack of presence, not to say interest, and other countries, Brazil and China, are taking over in Latin America.

McCARTHY: For all the trepidation about closer trade links to China, there is also an air of expectation here. Many Brazilians feel the rising economic prowess is putting them on the path to the developed world.

Meanwhile, Ambassador Sergio Amaral says, a partnership between such developing powerhouses as Brazil and China will change the world in unprecedented ways.

Amb. AMARAL: This superpower, the United States, is facing some checks and balances if I could say so, and that is positive. A different world is in the offing.

McCARTHY: A world that Amaral says is less unipolar and more democratic in its decision-making.

Julie McCarthy, NPR News Rio de Janeiro.

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