Reply #42: Economic, political realities driving China and Latin America closer [View All]

[RawMaterials]

GINOWAN, Japan (AFP) - The realities of global trade and politics are driving Asia's new economic powerhouse China and resources-rich Latin America closer, with Japan watching warily, according to researchers.

China is searching for energy sources to feed its fast-expanding economy and for new markets to sell its goods manufactured at low production costs.

For their part, Latin American countries are trying to diversify trading partners, shifting away from over-dependence on the United States which is aiming to create a huge Americas trading bloc to compete with Europe.

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"It is a logical step for China to seek its export markets in Latin America and investment in energy and minerals in the region," said Satoyuki Imai, dean of the Faculty of Modern Chinese Studies at Aichi University in central Japan.

China has to look for new frontiers in less developed countries in Latin America, Asia, the Middle East and Africa since the dominance of its low-priced goods has hit a saturation point in industrialized nations, he said.

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The leftist Venezuelan government of Hugo Chavez, who is opposed to Washington's dominance in the western hemisphere, has been increasing bilateral trade and investment with communist China.

China, which became a net oil importer in 1993 and ended long-term crude shipments to Japan last year, has signed a contract to buy Venezuela's heavy crude oil to meet its fast-growing needs.

The bilateral deal will also bring in Chinese investment in housing and train projects and agricultural equipment in Venezuela.

"China is exploring for mining rights to oil reserves around the world, from the Middle East to Canada" said Tsutomu Toichi, managing director of the Institute of Energy Economics, Japan.

"Venezuela has a political feud with the US, which makes it even more sense to seek closer ties with China."

Meanwhile, Japan is watching nervously as China becomes a major player on the international scene not only politically but also economically.

Tensions have soared between the two countries since Japan last week approved a nationalist history textbook, leading to violent anti-Japanese protests in China.



http://story.news.yahoo.com/news?tmpl=story&cid=1518&ncid=1518&e=3&u=/afp/20050413/bs_afp/asialatamidbchinajapan_050413064833