The battle of trade for Latin America
Chinese President Xi Jinping outside the Great Hall of the People on May 6, 2013 in Beijing, China.
Chinese president Xi Jinping begins a tour of Latin America today. First stop, the Caribbean island of Trinidad. His visit comes on the heels of Vice President Biden’s tour of the region. Biden just signed a renewable energy agreement with Trinidad. So what can China offer?
Trinidad is one of the world’s leading producers of natural gas. The U.S. used to buy a lot of it from Trinidad, until we tapped our own reserves.
“Trinidad now needs to find global markets for its primary commodity,” says Eric Farnsworth, vice president of the Council of the Americas. “China’s hungry for energy and it makes a lot of sense to talk to the Trinidadians about perhaps developing that energy relationship.”
Leaders from the U.S. and China down-play their competition.
“I don’t think either of them see themselves in a head-to-head race for influence in the region necessarily,” Farnsworth says.
But the U.S. and China also compete in Latin America, as the continent becomes increasingly important to the world’s economy.
“Chinese national oil companies have a competitive advantage over U.S. oil companies,” says Jorge Piñón with the University of Texas in Austin. “They also play the role of a banker to the energy sector.”
Piñón says China loaned a total of $45 billion to Brazil and Venezuela to develop energy projects, with the loans to be repaid with oil.
That’s a deal it would be hard for Exxon or Chevron to match.