B&R can build links to South America

By Jorge Heine Source:Global Times Published: 2017/5/10 16:23:39

As Beijing gears up for the Belt and Road Forum for International Cooperation on May 14 and 15, many people ask me why Chile's President, Michelle Bachelet, will be taking part in it. What does Chile have to do with the New Silk Road, given that Marco Polo never made it to South America? Yes, Chile and Argentina, who will be represented by President Mauricio Macri, are the only two Latin American countries that will be at the Belt and Road forum (others, of course, will do so at the High Level Dialogue that will take place those days), in the company of 26 other foreign heads of state and government.

Although the Belt and Road was originally conceived as an initiative to reinvigorate Eurasia, by linking up the world's most dynamic and rapidly growing region, such as East Asia, with the world's largest market, such as Europe, it has morphed into something far more ambitious and wide-ranging since it was initially proposed by Chinese President Xi Jinping in 2013.

Far from being limited to Eurasia, it is now part and parcel of a much broader Chinese foreign policy strategy, one that puts international connectivity and infrastructure development at its core.

According to at least one estimate, Asia alone will need $8 trillion worth of investment in infrastructure in the course of the next decade. This investment will be critical to maintaining Asia's growth momentum, which, according to projections, will represent half of the world's production by 2050.

What does this have to do with South America?

As it happens, South America has become more and more interlinked with Asia in general and with China, in particular. For Brazil, Chile and Peru, China is already their No.1 trading partner. For many others, including Argentina, China is the No.2 trading partner. And these trade flows are growing day by day. Argentina, Brazil and Chile's combined exports already provide around a quarter of all of China's food imports. Given the comparative advantages South America has in food production, including arable land and extensive fresh water reserves, the trade can only expand in the years to come, as China's and Asia's demand for higher quality food products rises.

In this context, logistics and transport facilities have become paramount. Given the overall decline in tariffs and import duties worldwide, international trade has become a competition in how quickly and efficiently the products can reach the ports, and, from there, to foreign markets.

South America's roads, railways, tunnels, and bridges still leave much to be desired. If Southern Cone nations want to increase their share in the Chinese market, they will need to bite the bullet and invest heavily in bi-oceanic corridors, trans-Andean tunnels, mega-ports and other such facilities.

Chinese construction companies are especially well-positioned to build them, while financing from entities such as the Asian Infrastructure Investment Bank, the Chinese policy banks or the special funds established in the aftermath of the First China-Latin America Ministerial Forum in January 2015 should be available for such projects.

Chile, China's third largest trading partner in Latin America, and the second largest in South America, is especially well-positioned to continue enhancing its role as a bridge across the Pacific, an ideal springboard for the Southern Cone countries to channel their products to the Asia-Pacific region.

The fact that in 2016, Chile was the largest exporter of fresh fruits to China, despite the considerable geographic distance - there is no country farther away from China than Chile - speaks volumes about how the dynamics of a globalized economy and the miracles of container technology have changed the world, mostly for the better.

At the same time, we are fully aware that in today's world, digital connectivity is as significant as the physical one. Chile has proposed to China the building of a trans-Pacific, fiber optic, Internet cable linking China and Chile, the first one between Asia and South America, which is now in the pre-feasibility studies stage.

At a time when the dark clouds of populism and protectionism gather over the horizon, the Belt and Road forum will provide an excellent opportunity for the nations committed to free trade and to globalization to continue to push for keeping the latter on course.

For South American countries, poised to make the big leap toward being fully developed nations, but not quite there yet, their association with Asia represents the best hope to make that happen. As the Belt and Road is a key link in trans-Pacific connectivity, they should make the most of it.

The author is ambassador of Chile to China. opinion@globaltimes.com.cn


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