Sat, Nov 20, 2004 - Page 10 News List

China set to extend its grip on Latin America

TRADING PARTNERS With Beijing and Santiago planning talks on an FTA, economists suggested that Taiwan shift its focus to economic persuasion


China is beefing up efforts to extend its economic and political tentacles to Latin America and is set to start talks on a free trade agreement (FTA) with Chile during the weekend's leadership summit.

The two nations announced on Thursday night that they will formally start negotiations on a free trade pact. The talks were precipitated by Chinese President Hu Jintao's (胡錦濤) recent visit to Beijing's diplomatic allies Brazil and Argentina.

According to statistics released by Beijing, bilateral trade between China and Latin America grew by 50.4 percent to US$26.8 billion last year from 2002. China's exports increased 40 percent last year, while its imports from Latin America soared by 79.1 percent.

Trade between China and Brazil has increased 800 percent over the past 10 years, and last year China became Brazil's third-largest trading partner, behind the US and Argentina. Beijing hopes to double its annual trade with Brazil to US$20 billion within three years.

China has become Argentina's fourth largest trading partner, with two-way trade reaching US$3.176 billion last year, up 122 percent from the year before, according to figures released by Beijing.

Chile in 1970 became the first South American nation to establish full diplomatic relations with China. Two-way trade between Chile and China reached US$3.529 billion last year, up 37.6 percent from the previous year.

In the wake of China's ambitious move to tap into Latin American economies, Taiwan hopes to engage in more FTA talks and thus secure firmer relations with its diplomatic allies in the region.

Central America is of significant diplomatic importance to Taiwan. Of the 33 countries in Latin America, 14 have diplomatic relations with Taiwan.

Taiwan signed its first FTA with Panama last August and expects to sign a second one with Guatemala, although the timetable for negotiations was disrupted when the Guatemalan government was reshuffled at the end of last year.

Negotiations with Paraguay to sign an FTA are on the horizon after Paraguay and Taiwan signed a joint communique in Taipei in May, promising to hold a bilateral economic cooperation conference in the Paraguayan capital of Asuncion to further boost trade and economic exchanges.

Wu Rong-i (吳榮義), president of the Taiwan Institute of Economic Research and a member of the nation's APEC delegation, said he was not really worried about China's aggressive ambition to expand its economic and political influence in Latin America.

While China is trying to gain broader economic control of the Latin American market, the US will continue to dominate the region, Wu said.

"The Chinese market looks big, but its GDP contributes only 3 percent of the world's total, while the US accounts for 20 percent. I don't see China becoming the dominant economic power in the region in the foreseeable future, because it has a lot of domestic problems to worry about and the communist regime might collapse one day if it doesn't handle its own problems well," Wu said.

Instead of battling with the political aspect, Taiwan might want to switch its focus to purely economic matters, Choong Yong Ahn (安忠榮), chairman of the APEC Economic Committee, told the Taipei Times on Thursday.

"I can see the political barrier created by China. If Taiwan seeks to excel in trade-oriented economies, it's very important to separate business from politics," he said.

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