Asia seduction: how the trading powerhouses of Asia are advancing in the region.

Author:Torrado, Santiago
Position:SPECIAL REPORT: ASIA
 
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The strategies differ: China takes advantage of its deep pockets to seduce governments with infrastructure projects and affordable loans, Japan seeks alliances, and South Korea and Singapore work to improve their trade balances.

The opportunities to be found in Latin America are piquing interest even further afield these days, as countries on the other side of the globe work to cement diplomatic and trade ties with an important supplier of natural resources, while also tapping into an attractive consumer market.

China has played a leading role in this expansion in recent years. The Asian giant s gargantuan spending has enabled it to displace the United States and Europe as the most important economic power in a large part of the developing world. In the last 10 years it has granted more than 80 loans in the region for more than $130 billion, according to the scorecard of the Inter-American Dialogue, an American studies center.

"I think for the better part of the commodity-boom decade from around 2003-2013, the China-Latin America relationship was on a kind of auto-pilot," says Matt Ferchen, who directs the program on China and the developing world at the Camegie-Tsinghua Center for Global Policy. "However, during the last few years the commodity boom has come to a dramatic end, most obviously represented in the dropping prices of oil, iron ore, copper and key agricultural products like soy beans."

Now China and its new Latin American partners are looking for a new basis on which to develop their relationship. "That is where increased Chinese investment, in particular for infrastructure, comes into play," Ferchen said. "Premier Li Kegiang emphasized on his June visit to the region that China would like to increasingly expand its exports of 'industrial capacity' to Latin America, and this clearly includes ideas for large-scale infrastructure and construction."

Despite a trade relationship that is gradually diversifying, raw materials are still very important. According to a 2014 report on the globalization of Chinese companies by the Center for China & Globalization (CCG), as it urbanizes, "China is in need of energy and mineral resources to construct infrastructure, stimulate domestic demand, and maintain a rapid economic growth." In this way, the report says, "Direct investment from China in Latin America, especially in energy and mineral resources, meets the demands of the Chinese economy."

The report notes the presence in Latin America of...

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