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The export model of Latin American countries to China is similar to Turkey. Turkey’s exports to China accounted for 58% of the mining sector. Latin American nations mostly sell China raw materials and natural sources.
China’s development of relations with Latin American countries disturbs the United States because the US began to lose its ability to become the largest trading partner of Latin American countries in some sectors. China’s trade volume with Latin American nations is increasing. Especially agriculture and mineral-rich Brazil is now exporting more than the United States in these industries to China. The case is same in copper-rich Chile.
Brazil is particularly successful in exports to China. Brazil conducts 44% of exports from Latin American countries to China.
China’s presence in Latin America has shown a significant increase in recent years. The reason for China’s need to Latin America is the natural wealth of the region. China is mainly importing commodities from Latin American countries. The ranges in which Latin American nations need China are money and its investments. Many Latin American countries are suffering from capital shortages. As a result, the amount of loan they have obtained from China since 2009 amounted to 140 billion dollars. Venezuela took 62.2 billion dollars credit alone. The country, which owns the world’s most abundant oil sources, has difficulties in extracting it, and Venezuela pays its debts with oil. Brazil is the most debt-consuming country from China after Venezuela. Brazil, which has fallen in GDP since 2011, has now provided $ 36.8 billion in loans from China. Latin American countries are using the money they get from China mostly for energy, infrastructure, and mining.
Another area where Latin American countries need China is investments. China’s investments in Latin American countries have begun to rise again since 2014.Xi said in 2015 that China’s investments in Latin American nations would amount to $ 250 billion. China has invested $ 29.8 billion in the region in 2016. Investments are mostly made in the sector related to natural resources.
In order to invest in sustainable investments, China needs to invest in the service sector in Latin America. The Latin American economy will benefit more if investments are made to the service sector. The most prominent impasse of Latin American countries is that they mostly sell unprocessed products like mining and oil to China. With the slowdown in the Chinese economy, demand for commodities falls, so prices also fall. Countries that rely on commodity exports, such as Latin American countries, have significantly influenced by this situation. The output path is to develop the service sector, produce high value-added products, but the Latin American countries do not seem to be able to do that right now.
The export model of Latin American countries to China is similar to Turkey. Turkey’s exports to China accounted for 58% of the mining sector.
From a Chinese point of view, they think it will force Latin American countries out of their comfort zone. This can enable the agricultural rich Latin American countries to develop more rational agrarian policies. It is not sustainable to rely on commodity exports with falling prices. Moreover, as China’s economic strength increases, its foreign policy becomes more rigid and inflexible. The lender gives orders. Especially for Venezuela, the situation is quite painful.
Latin American countries are having difficulty finding loans in the western world because the economies, in general, are not very good and they are thought to be unsuccessful in paying their debts, but China is very audacious about lending and investing. It could be a kind of penetration policy.
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