Although China’s relations with Africa are deeper than those that it has thus far developed with Latin America, Beijing looks to Latin America with more interest than it does Africa. Governance in Africa is weaker and this makes the exploitation of natural resources easier than in Latin America, which explains the greater economic presence of China on the African continent. However, despite the fact that Latin America has somewhat stronger governments, enjoys a greater degree of rule of law, and is geographically more distant from China, Latin America has both abundant natural resources and a strong growing middle class. This means that China can extract and export raw materials from Latin America while simultaneously importing and selling manufactured goods into the large market of consumers with purchasing power that lives in the region.
Growing Synergies between Asia and Latin America
To further develop and contextualize the growing political and economic relationship with the region, the Ministry of Foreign Affairs of the People’s Republic published China’s Policy Paper towards Latin America and the Caribbean in 2016. This paper states that, in 2014, Latin America and Chinese leaders held a meeting in Brasilia and jointly announced the establishment of the comprehensive and cooperative partnership of equality, mutual benefit and common development. Since this 2014 meeting, the multilateral relations have entered into a new stage of comprehensive cooperation. China and Latin American governments have witnessed frequent high-level exchanges and political dialogues, all-round and rapid development in trade, investment, finance and other areas, and increasingly close cultural and people-to-people exchanges. The two sides have also supported and closely coordinated with each other in international affairs. This cooperation includes the establishment of the Forum of China and the Community of Latin American and Caribbean States (China-CELAC Forum), which provides a new platform for cooperation between the two sides. Thus, setting the course for simultaneous and complementary development of multilateral and collective cooperation between China and Latin America and the Caribbean.
In this sense, it is evident that the economic and trade relationship between Latin America and China has multiplied and intensified substantially during the last two decades. For instance, data demonstrates that current foreign direct investment (FDI) into Colombia comes mostly from European and North American capitals and interests, sometimes through the fiscal paradise and regional financial center that is Panama. However, just as European countries have been displaced by China in terms of trade and commerce throughout the last decade, a Chinese surge could be replicated in the FDI realm, particularly considering the growing synergies between both regions.
Colombia and China established formal diplomatic relations in 1980 and, almost forty years later, an important bilateral relationship has flourished, particularly on the commercial front. Currently, 29% of the imports that arrive in Colombia come from the United States, while 28% of Colombian exports are destined for the US market. In second place, some 19% of imports entering Colombia are of Chinese origin and China is the third most important destination for Colombian exports, accounting for about 6% of all Colombian products sold internationally.