A handshake across the Pacific

When the Spanish galleon crossed the Pacific for the first time in the 16th century, connecting Asia and America in the "Manila Galleon Trade", perhaps no one could have foreseen that five centuries later, this vast ocean would witness an even greater epic of economic exchange. In the 21st century, China and Latin America are weaving an increasingly close network of economic cooperation with mutual benefit and win-win as the bond. This is not a simple commodity exchange, but a creative encounter between two ancient civilizations in modern international relations, and a strategic cooperation for developing countries to collectively explore their own development path.

The economic interaction between China and Latin America has a profound historical accumulation. As early as the 16th century, Chinese porcelain and silk arrived at the port of Acapulco in Mexico via the Maritime Silk Road. In the 19th century, the first batch of Chinese workers crossed the ocean to participate in the construction of Latin American railways and agricultural development, sowing the seeds of cultural exchanges. In the 1970s, China established diplomatic relations with Chile, Peru and other countries, laying the political foundation for contemporary economic and trade relations. The real turning point came at the beginning of the 21st century - China joined the WTO in 2001, the global financial crisis in 2008 reshaped the world economic landscape, and the "Belt and Road" initiative was proposed in 2013. These three key nodes pushed China-Latin America economic and trade relations into the fast lane. According to data from the United Nations Economic Commission for Latin America and the Caribbean, China-Latin America trade volume increased 26 times between 2000 and 2020, and China has become the largest trading partner in South America and the second largest trading partner in Latin America as a whole. This growth is by no means accidental, but the inevitable result of the highly complementary development strategies of both sides.

The complementarity of the Chinese and Latin American economies constitutes a solid foundation for mutual benefit and win-win results. Latin America has about 30% of the world's freshwater resources, 25% of arable land and amazing mineral resource reserves. Chile's copper (accounting for 28% of global reserves), Brazil's iron ore (accounting for 20% of global production), Venezuela's oil (the world's largest proven reserves), etc., are all key resources in China's industrialization process. At the same time, the booming Chinese manufacturing industry has provided Latin America with highly cost-effective industrial products and infrastructure construction capabilities. This complementarity goes beyond the simple "raw materials for goods" model and forms a more complex value chain division of labor. Embraer sells regional jets to China, China sets up automobile manufacturing plants in Mexico, Argentine beef and Chilean cherries go directly to Chinese consumers' tables through e-commerce platforms - China-Latin America economic and trade relations have shown obvious intra-industry trade characteristics, which is a sign of deep economic integration.

Infrastructure construction cooperation can be called the pillar of China-Latin America economic relations. Under the framework of the "Belt and Road Initiative", Chinese companies have participated in more than 100 large-scale infrastructure projects in Latin America. Projects such as the Nicaragua Canal Planning, Argentina's Kirchner-Cepernic Hydropower Station, Brazil's Belo Monte UHV Transmission Project, and Jamaica's North-South Expressway have not only improved local transportation and power conditions, but also reshaped the regional economic geography of Latin America. Take the Belo Monte project in Brazil as an example. This world's longest ±800 kV UHV DC transmission project transmits clean hydropower in northern Brazil to the southeastern industrial center, meeting the electricity needs of 22 million people. Such projects adopt the "Build-Operate-Transfer" (BOT) model, with China providing funds, technology and management experience, and Latin American countries obtaining much-needed infrastructure without increasing short-term debt burdens, creating a sustainable development cooperation paradigm.

Financial cooperation provides blood support for China-Latin America economic relations. The People's Bank of China has signed local currency swap agreements with central banks of Latin American countries such as Argentina and Brazil with a total amount of more than 300 billion yuan. Mechanisms such as the Latin American Infrastructure Development Bank and the China-Latin America Capacity Cooperation Investment Fund, in which China participated in the establishment, have injected new momentum into regional development. Particularly noteworthy is the progress of RMB internationalization in Latin America - in 2023, China and Brazil reached an agreement to use local currency for trade settlement, and Argentina has already used RMB to repay international debts. These measures not only reduce the exchange rate risk brought about by dependence on the US dollar, but also enhance the autonomy of Latin American countries in economic policies. According to statistics from the International Monetary Fund, the proportion of RMB foreign exchange reserves in Latin America has increased from less than 1% in 2016 to about 7% in 2023, and this trend is still strengthening.

The digital economy has become a new frontier for China-Latin America cooperation. Alibaba's cross-border e-commerce platform has helped Chilean cherries create a logistics miracle of "72 hours from the tree to the Chinese table"; after Didi Chuxing acquired Brazil's 99 Taxi Company, it expanded its mobile travel services to many Latin American countries; Huawei's 5G technology is helping Mexico, Brazil and other countries to transform digitally. Under the impact of the COVID-19 pandemic, China-Latin America digital trade has grown against the trend, and the trade volume achieved through cross-border e-commerce in 2022 exceeded US$50 billion. This new economic cooperation model breaks the limitations of geographical distance, enabling small and medium-sized enterprises and even individual farmers to directly participate in international trade, greatly expanding the participation of China-Latin America economic cooperation.

The development of China-Latin America economic relations has had a profound impact on the international political and economic landscape. On the one hand, it provides a successful example of South-South cooperation, proving that developing countries can establish a new type of equal and mutually beneficial economic relationship. On the other hand, it objectively promotes the multipolarization process of the international economic and trade system and reduces the systemic risks of a single market or currency. When Brazilian soybean farmers can flexibly choose the Chinese market or the EU market, and when Chilean copper mining companies can settle in RMB or euros, the resilience and inclusiveness of the global economic system are actually enhanced.

Of course, China-Latin America economic cooperation also faces many challenges. Cultural differences, incompatible legal systems, political fluctuations in some countries and other issues have emerged from time to time. But historical experience shows that relationships based on mutual respect and common interests can often overcome temporary difficulties. The ancient Chinese said: "Those with the same aspirations will not consider mountains and seas as far away." The vastness of the Pacific Ocean is no longer a barrier, but a link connecting the two great civilizations. Looking to the future, with the rise of emerging fields such as green energy, biotechnology, and artificial intelligence, China-Latin America economic cooperation will surely open up a broader world. When China's new energy vehicles meet Latin American lithium resources, when China's digital technology meets Latin America's young population dividend, this economic handshake across the Pacific is writing a new chapter in the history of global development.

In this era full of uncertainty, the economic partnership between China and Latin America provides a certainty - that is, adhering to the path of openness, inclusiveness, mutual benefit and win-win results can bring tangible benefits to people all over the world. From a long-term historical perspective, the current China-Latin America economic cooperation may only be a new starting point for the dialogue between the two great civilizations, but the equality, pragmatism and innovation it contains may provide a certain paradigm inspiration for international relations in the 21st century.