China’s ambitions of becoming a global power stretch as far as Latin America, where countries like India and the US are also competing for economic clout.
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In January, China’s ambassador to Mexico announced a $600 million investment in the state-owned Dos Bocas refinery in Tabasco. The announcement was made on the occasion of the ‘China Day’ Seminar where the ambassador explained Beijing’s plans to invest in Mexico.
Mexico’s Secretary of Economy Graciela Márquez Colín welcomed the move saying that even with the ratification of the Treaty between Mexico, the United States and Canada (TMEC) and the importance of the North American market, Mexico must “redouble efforts” to that show investment opportunities to other markets as important as China. TMEC is a free trade agreement concluded between the US, Canada and Mexico.
China has also demonstrated the importance of its market in Latin American countries. According to a report by Statista, the trade volume in 2019 stood at 32% percent of exports from Chile that went to China, 29% of Peru’s, 28% of Brazil’s, 27% of Uruguay’s, and 10% of Argentina’s,
Beijing’s ability to create inroads through heavy trade investment and loans in different regions around the world have now gained popularity.
Latin American countries have accepted these investments with open arms even if that meant breaking ties with others. One example Brazilian President Jair Bolsonaro’s shifting of allegiance from Taiwan, which Beijing considers a renegade province, to China.
Before winning the Brazilian Presidency, Bolsonaro’s visit to Taipei to establish ties irked Beijing. Chinese state media, Global Times, warned: “If he [Bolsonaro] continues despite the basic principle about Taiwan after he takes office, it will apparently cost Brazil a big deal”.
Two years later, representative of the Taipei Economic and Cultural Office in Brazil, Tsung-Che Chang, said that he doesn’t expect Bolsonaro’s administration to maintain relations with Taiwan, owing to China’s geopolitical and commercial strength.
“There are many barriers, there is a lot of embarrassment that comes from the threat from China. The reality in Brazil is that the government thinks more about China than Taiwan. We don’t feel much like the Brazilian government talking to Taiwan,” said Chang.
On the other hand, there is little push in India to reach out to Latin American countries. While India maintains friendly ties with Latin American countries, New Delhi’s focus remains on West Asian countries, East Asian countries, and Africa. Although the efforts made have faced heavy competition from China.
Brazil and Mexico have maintained close ties with India. Bolsonaro’s visit to India in 2020 as the nation’s chief guest of 71st Republic Day celebrations marked a strengthening relationship between the two countries.
Several Memorandums of Understanding (MoU) were signed in “diverse sectors that include Investment, Assistance in Criminal Matters, Cyber Security, Oil & Gas, Bio-energy, S&T, Culture, Animal Husbandry, Health and Traditional Medicines”.
India and Brazil’s bilateral trade stands at $8.2 billion with India exporting $3.8 billion and importing $4.4 billion, as per the Ministry of External Affairs (MEA).
In 2019, Mexico was the top trading partner with India with a trade volume of $10 billion. India’s relationship with Mexico is enhanced due to increasing participation from Indian businesses in sectors including crude oil, pharmaceuticals, software and IT, engineering goods.
According to Global Americans, a non-profit organization specializing in research on Latin American issues, although analysts believe that “India is a more responsible economic partner that has more to offer than resource extraction, but Indian imports from their largest trading partners in Latin America are even less diverse than those of their Chinese counterparts.”
India comes close to China in terms of trade in one Latin American country, Venezuela. China’s share stands at 18% of total exports of Venezuela and India stands close at 17%.
“And while both countries’ imports from Venezuela are understandably dominated by petroleum products, India imports more raw materials than does China from all of its largest trading partners in the region,” Global Americans noted.
Recently, India and Chile have been negotiating the Preferential Trade Agreement (PTA) and are on course to ink the Bilateral Investment Protection Treaty. Both nations are also looking to enhance ties in defense, space and other key sectors as well.
India and the South American nation already has a Double Taxation Avoidance Agreement which was signed in March 2020 and the two sides are already in the process of finalizing a date for the next round of talks for the expansion of the PTA.