The China Signal - December 3
Argentina negotiates new swap agreement with PBOC, Sinovac to produce vaccines in Colombia, Tencent Cloud launches in Brazil, China Railway to construct section of metro in Santiago
G’day, and welcome to The China Signal. This week, Argentina enters negotiations with Beijing to extend their $19 billion swap facility; the Colombian government inks an agreement with Sinovac to develop and produce their Covid-19 vaccine in country, alongside a range of other vaccines; Tencent’s cloud service enters the region, launching their first data center in Brazil; China General Nuclear Power Group’s 82,800 kW wind power project begins operations in north eastern Brazil; China Railway Group wins bid to construct the first section of Santiago’s metro line no. 7 in Chile; plus much more. Read on.
Finance
Argentina 🇦🇷
“Salvage plan: Argentina negotiates financial aid with China in swaps”
~Paraphrased translation~
As El Cronista learned from official sources, the Argentine government is in discussions with the Chinese administration and with the the People's Bank of China to evaluate the expansion of a swap for 19 billion dollars that was granted to the country in 2020. The amount being discussed was not disclosed.
The Central Bank of Argentina’s idea is that China's swaps are computed as reserves to provide more sustainability. However according to government sources, this would not be cheap, as Beijing charges a rate similar to Libor, known as Sibor.
The other option would be to allow a percentage of the swap to be used by the PBOC without having to pay that rate.
Según pudo saber El Cronista de fuentes oficiales, el gobierno argentino dialoga con la administración china de Xi Jinping y con las autoridades del Banco Popular de China para evaluar la ampliación del swap por 19.000 millones de dólares que ya se le había otorgado al país en 2020. No está definido aún el monto o al menos no trascendió ese detalle.
No obstante, se pudo saber que la idea del BCRA es que los swaps de China se computen como reservas para dar más sustentabilidad. El tema es que al usarlo de esa manera, explicaron en el gobierno, no sería nada barato porque China cobra una tasa similar a la Libor pero que se denomina Sibor.
La otra opción que se maneja es que dejen usar un porcentaje del Swap que gire el Banco Popular de China sin tener que pagar esa tasa.
Tourism
Brazil 🇧🇷
China.org is a state-sponsored media outlet.
During an interview with foreign correspondents earlier this week, [Brazil’s Tourism Minister Gilson] Machado said that the Brazilian government is working to boost foreign visits once the COVID-19 pandemic situation is stabilized, and that the presence of Chinese tourists is fundamental to that goal.
Brazil plans to open a tourism office in China and is going to formalize visa exemption for Chinese tourists, according to the minister.
Vaccine Diplomacy
Colombia 🇨🇴
The fifth China-Colombia Dialogue was held last week, hosted by the Colombia China Chamber of Commerce “Cámara Colombo China de Inversión y Comercio”, with the support of the Chinese Embassy in Colombia.
“Relations between Colombia and China are going through their best moment”
~Paraphrased translation~
[Colombia’s Minister for Commerce, Industry and Tourism Ximena] Lombana ratified the agreement between the pharmaceutical company Sinovac and Colombia that had been in the making since 2020, which had already approved as an MOU. The agreement aims to produce and develop the Covid-19 vaccine, alongside other vaccines that are part of the national vaccination scheme such as hepatitis, chickenpox, polio, influenza and pneumococcus.
Por otro lado, la ministra de Comercio, Industria y Turismo, Ximena Lombana sostiene que esta relación China-Colombia favorece sobre todo a las Pymes y MiPymes colombianas, ya que les permite tener la oportunidad de crear acuerdos comerciales de exportación y ampliar su mercado.
Lombana ratifica el acuerdo entre la farmacéutica Sinovac y Colombia que se venía gestando desde el 2020 y que ya ha sido aprobado a través de un memorando de entendimiento entre el Ministerio de Salud de Colombia y la farmacéutica china, con el objetivo de producir y desarrollar la vacuna contra el Covid-19 y otras vacunas que se encuentran dentro del esquema de vacunación nacional como la vacuna contra la hepatitis, la varicela, el polio, la influenza y neumococo.
Weining Meng, Sinovac's global vice president, assured that the company wants to work together with Colombians to establish a production plant in the country. "A vaccine Made in Colombia will not only benefit the local population, but will also allow us to cover other countries in Latin America," said the executive.
Por su parte, durante las intervenciones del primer panel, Weining Meng, vicepresidente global de Sinovac aseguró que la empresa quiere trabajar junto a los colombianos para establecer una planta de producción en el país. “Una vacuna Made in Colombia no solo beneficiará a la población local, sino que también nos permitirá abarcar a otros países en Latinoamérica” aseguró el ejecutivo.
There was also a friendly interview with Sinovac’s Weining Meng in Colombia’s business magazine “Portafolio”, where he reiterated plans to establish local vaccine production in Colombia for their covid-19 vaccine, alongside vaccines for a range of other diseases.
Note that I specifically mentioned Beijing’s interest in establishing local vaccine production facilities in Latin America as one of their primary vaccine diplomacy objectives in my testimony to the U.S.-China Economic and Security Review Commission in May:
The evolving objectives of Beijing’s COVID-19 diplomacy in the region can be characterised as follows:
Generate favourable views of China’s leadership in fighting the pandemic, both to Latin American governments and their citizens
Leverage the health emergency of the pandemic to cement commercial relationships between Chinese pharmaceutical companies and local pharmaceutical firms, manufacturers, and distributors that can evolve to broader commercial activities
Increase scientific collaboration amongst the region’s academic and scientific communities for ongoing research and development
Normalise China’s presence in Latin American society beyond trade and investment
Note supply chain dependencies between China and their Latin American partners for vaccine inputs, using it as a punitive “sharp power” tool if necessary
Opportunistically advance Beijing’s broader foreign policy objectives, such as fostering domestic political pressure on Taiwan’s regional allies to form a closer relationship with Beijing
Electric Vehicles
Colombia 🇨🇴
At the same event, BYD also shared their intention to deepen their footprint in Colombia. As I noted in TCS January 15, BYD supplies over 96% of the country’s electric buses. The company leads China’s presence as the top supplier of electric buses to the region.
“Relations between Colombia and China are going through their best moment”
Lara Zhang, legal representative of BYD Colombia, announced that "We are reviewing the possibility of having an assembly plant in Colombia with different lines of business."
Por su parte Lara Zhang representante legal de BYD Colombia, anunció que “Estamos revisando la posibilidad de tener una planta de ensamble en Colombia con diferentes líneas de negocio”
Tech
Brazil 🇧🇷
Tencent Cloud launches first data centre in Latin America - Verdict - November 26, 2021
The cloud unit of Chinese tech giant Tencent says that it will open its first data centre in South America, located in São Paulo, Brazil. With the Latin American addition, Tencent Cloud’s network now covers 27 regions and 68 availability zones, highlighting the company’s ambitions to become an international digital infrastructure provider.
Tencent added that it would provide flexible computing, storage, big data, artificial intelligence, security and other cloud services to Brazil and other Latin American countries, a region with growing demand for digital infrastructure.
Despite Chinese infrastructure dominance in LatAm, the US based global cloud giants have been present for some years: Tencent is late to the party. Amazon Web Services started spreading beyond Brazil (the usual arrival nation) in 2019 and Microsoft’s Azure came to the continent back in 2013. Google Cloud Services launched in São Paulo in 2017.
Via bnamericas:
Huawei is another Chinese company with cloud data centres in the region, but with a much larger presence. Two years after its regional launch, Huawei reports having nine availability zones in the region: two in Brazil, two in Chile, two in Peru, two in Mexico and one in Argentina.
Renewable Energy
Brazil 🇧🇷
Note that ECNS is a Chinese state sponsored media outlet.
China-Brazil wind power project enters operation - ECNS - November 26, 2021
CGN Brazil Energy Holding Co., a branch of China General Nuclear Power Group, announced its LDB wind power expansion project was completed and put into operation Thursday.
The LDB wind power expansion project is located in Lagoa do Barro in northeast Brazil, with a total installed capacity of 82,800 kW. It is the first Greenland wind power project independently constructed and managed by CGN Brazil Energy, with its annual power generation expected to reach 366 million kWh.
In addition, the TN wind power project located in northeast Brazil has also commenced construction, with a total installed capacity of 180,000 kW. It is scheduled to be completed by June of 2023, with its annual power generation expected to hit 720 million kWh.
Infrastructure
Chile 🇨🇱
Chinese firm wins contract for Santiago’s metro line No.7 - BNamericas - November 29, 2021
China Railway 16th Bureau Group will begin construction of the first of six stretches of Santiago’s US$2.5bn metro line No. 7 during the first quarter of 2022.
The firm was just awarded the contract for 6.6km stretch, according to a press release.
This first stretch will serve seven stations. It will link the districts of Renca, Cerro Navia and Quinta Normal.
The other five stretches are still being tendered, with construction expected to start on all of them during the first half of next year.
The 25.8km line will run between Renca and Vitacura districts.
Automotive
Ecuador 🇪🇨
As I’ve mentioned previously, not only is Latin America seen as a vital source of critical minerals for China’s electric vehicle industry, but as a market for Chinese vehicles - electric or traditional, whose price point is attractive for the region’s middle class.
“Chinese automotive sector grows rapidly in Ecuador”
Sector automotriz chino crece aceleradamente en Ecuador - November 24, 2021
~Paraphrased translation~
The share of Chinese auto sales grew from 15% to 22% with the sale of 22,000 units in 2021. “It is competitive prices, first-rate equipment and technology that have marked the preference of clients in the Ecuadorian market. Chinese vehicles do not ask any brand from another country for favor ”, says Gustavo Cáceres, president of the CCECH [the Ecuador China Chamber of Commerce].
In this context, the CCECH is promoting the expansion of China’s presence in Ecuador’s automotive sector, launching the China Motor Expo, this Wednesday, November 24...
Representatives of the sector and the Chinese Embassy will participate in the meeting, where details of the growth strategy will be revealed through price and quality policies. Cáceres adds that China’s growth in this sector will stimulate the local economy, create jobs and invite people to think about accelerated growth.
“Currently, China is the first automobile producer in the world with more than 25 million in 2020; and in Ecuador, three Chinese brands are already in the top ten of the best sellers ”.
Representatives of the Chamber announced that the China Motor Expo will have two editions in 2022, in Guayaquil and Quito, during April and May. In 2019, this event brought together more than 30 thousand visitors to the Main Port.
La comercialización de vehículos del gigante asiático pasó del 15% de participación al 22%, reflejan los informes del gremio que detallan además una venta de 22.000 unidades en el transcurso del 2021. “Son losprecios competitivos, el equipamiento de primera y tecnología lo que ha marcado la preferencia de clientesen el mercado ecuatoriano. Los vehículos chinos no le piden favor a ninguna marca de otro país”, refiere Gustavo Cáceres, presidente de la CCECH.
En este contexto, la Cámara China impulsa la expansión en el sector automotriz y para esto hará ellanzamiento de la denominada Expo China Motor, este miércoles 24 de noviembre…
En la cita participarán representantes del sector productivo y la Embajada China, allí se revelarán detalles de la estrategia decrecimiento a través de políticas de precio y calidad. Cáceres agrega que este incremento dinamiza la economía local, genera puestos de trabajo e invita a pensaren un acelerado crecimiento.
“Actualmente, China es el primer productor de automóviles a nivel mundial conmás de 25 millones en el 2020; y en Ecuador, tres marcas chinas ya están en el top ten de las más vendidas”, resalta el directivo.
Los representantes de la Cámara adelantaron que la Expo China Motor tendrá dos ediciones en el 2022, en Guayaquil y Quito, durante abril y mayo. En el 2019, este evento congregó a más de 30 mil visitantes en elPuerto Principal.
Critical Minerals
Argentina 🇦🇷
Argentina's state energy company YPF (YPFD.BA), making a push into the country's burgeoning lithium sector, met with officials from major Chinese battery maker CATL on Thursday, with both sides talking up plans to become "strategic partners" in the sector.
The South American country, part of the region's so-called lithium triangle, is trying to ramp up production of the ultra-light metal that is key to the electric vehicle (EV) revolution, with the state eager to play a more central role via YPF.
China's Contemporary Amperex Technology Co Ltd (CATL) (300750.SZ) is the world's largest EV battery manufacturer, but does not produce any lithium. It recently was outbid in a deal for Argentina-focused miner Millennial Lithium Corp (ML.V)
"YPF can be a strategic partner with CATL at the local level in this new stage dedicated to lithium of our flagship company," Argentina Mining Secretary Alberto Hensel said in a statement after a meeting between the two companies.
CATL Vice President Chen Junwei said in the statement that the firm was "focusing more on resources such as lithium" and that it had visited the salt flats in Argentina, where the metal is extracted using saltwater brine.
YPF mainly focuses on oil and gas in the country's massive Vaca Muerta shale formation, though it has created a new lithium unit.
Scientific Collaboration
Argentina 🇦🇷
Argentina and China strengthen cooperation on several issues — MercoPress - December 2, 2021
After a meeting between Argentina's Ambassador to Beijing Sabino Vaca with China's Vice Minister of Industry and Information Technology, Zhang Kejian, who is also the highest authority of the National Space Administration of China (CNSA), the two countries agreed to promote negotiations of the “2021-2025 Space Cooperation Plan”, which encompasses different areas of collaboration, such as space science, deep space exploration and Earth observation, among others.
Zhang also offered “scholarships for studies in the space, nuclear and defense industry areas” for Argentine students, Chinese sources said. Space cooperation between Argentina and China dates back to the presidencies of Cristina Fernández de Kirchner, when a Chinese base was set in the Argentine province of Neuquén.
After the meeting, the Chinese vice minister was “open” to deepen collaboration in the field of nuclear energy, through the development of multipurpose research reactors and the construction of a “Hualong 1 nuclear power plant” in Argentina.
Regarding the defense industry, Vaca stressed the importance of all productive projects “having the transfer of technology and capabilities to defense companies” in Argentina.
Deep Dive
Guyana 🇬🇾
Evan Ellis’ latest bilateral deep dive is on the China-Guyana relationship:
The current Guyanese PPP government of Irfaan Ali has made significant efforts to build a relationship of friendship and goodwill with the United States, yet China’s business and other footholds in the country are deep-rooted and poised to expand through a series of major projects in a business and institutional context with many vulnerabilities to predatory Chinese behaviors, even as the country is transformed through the arrival of new oil wealth.
Chinese Engagement in Guyana: An Update - The Global Americans - November 30, 2021