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The China Signal - December 4

China's State Grid International Development consolidates its control of the Chilean power market with the purchase of CGE; Venezuela restarts direct oil shipments to China; the Brazilian Congressman Eduardo Bolsonaro - the president's son - provokes another Twitter skirmish with the Chinese embassy over Huawei; and Peru-China relations and the Chinese military's regional presence are analysed.

This is a hand-picked selection of the most important stories between China and Latin America over the past week. All text are direct excerpts from the articles, with my comments in italics.


China says Brazil president's son hurts relationship with comments critical of Huawei | Reuters - November 24, 2020

Congressman Eduardo Bolsonaro, the president’s son, has made statements that “darken the friendly atmosphere between the two countries and hurt the image of Brazil,” the Chinese embassy wrote on Twitter.

...Brazil’s right-wing government in early November joined the U.S.-led Clean Network, a digital alliance among more than 30 countries and big telecom companies that excludes technology that Washington views as manipulated by China such as Huawei’s.

...Eduardo Bolsonaro on Monday referred in a tweet to Huawei technology as “Chinese espionage” before deleting the post.

After COVID-19 outbreak, BRF plant in southern Brazil cleared to resume exports to China | Reuters - November 30, 2020

Brazil-based food processor BRF SA said on Monday its Lajeado pork unit has been authorized to resume exports to China, according to a statement sent to Reuters, as the Asian nation continues to rely on meat imports.

The plant, which faced an outbreak of the novel coronavirus among workers in May, employs about 3,000 people.

...At least three other Brazilian meat factories remain blocked by China over coronavirus concerns, according to the Agriculture Ministry’s website,. All are located in Brazil’s southernmost state of Rio Grande do Sul.

...The Lajeado unit had been suspended by China since July, the company’s statement said.


CORRECTED-Naturgy sells Chilean utility CGE to China's SGID for $3 bln | Reuters - November 13, 2020

Spanish power company Naturgy said on Friday it had agreed to sell 96% of its Chilean electricity utility Compania General de Electricidad to China’s State Grid International Development for 2.57 billion euros ($3.04 billion) in cash.

Photo credit: REUTERS/Sergio Perez

State Grid’s acquisition of Chile’s CGE unlikely to be rejected - BNamericas - November 24, 2020

Chile’s national economic prosecutor’s office will review the US$3bn deal, with which the Chinese state-owned electric power giant would significantly increase its footprint in the local distribution market.

“The national economic prosecutor’s office is not legally allowed to take into account or resolve issues based on considerations of national interest or public interest that are different from the promotion and protection of free competition,” said national economic prosecutor Ricardo Riesco during a session of the lower chamber’s economy committee.

His office will only analyze the deal from the perspective of whether free competition principles could be affected, Riesco said.

...Riesco said that, while it may be desirable for Chile to have other instances where the deal could be analyzed from a national interest point of view, as is standard in other countries, the country does not currently have an agency with the faculties to do so.

If the deal is completed, State Grid will own two of Chile’s four biggest power distributors, and serve 57% of regulated consumers, totaling some 3.74mn clients. It will control all of Chile’s northern distribution network, as well as those in center-south Biobío, Maule and O’Higgins regions.

State Grid also bought local power distributor Chilquinta from Sempra earlier this year for US$2.23bn.


Peru’s Multidimensional Challenge - Part 3: engagement with China - Global Americans - November 20, 2020

In 2008, against the backdrop of the global recession, China became Peru’s largest commercial partner, surpassing both the US and the sum of the eurozone countries, and in 2018, became its largest investor, dominating its mining and oil sectors as well as having a significant presence in electricity production and transmission, logistics and other infrastructure construction, and information technology. Former President Martín Vizcarra, just removed from the presidency by Peru’s congress over unrelated corruption allegations, presided over one of the most significant periods of advance in the PRC-Peru commercial and strategic relationship including signing Peru up to China’s Belt and Road Initiative in April 2019, and supporting an array of new Chinese infrastructure projects in the country. The Vizcarra government further embraced a response to the current COVID-19 pandemic centered around problematic Chinese tests, donated medical supplies, and the development of a Chinese vaccine. In October 2020, when the Chinese fishing fleet moved toward Peruvian waters after substantial indications that it had violated maritime protected areas around the Galapagos Islands of neighboring Ecuador, Vizcarra’s government was quick to tweet—contrary to all appearances—that the Chinese fleet was not violating the country’s Exclusive Economic Zone.

...Peru-China bilateral trade has grown from $850 million in 2002, the year after the PRC was accepted into the World Trade Organization, to over $24 billion in 2019, compared to only $14.8 billion in Peruvian trade with the United States. Moreover, due to Peru’s significant commodity exports to the PRC, its balance of trade with the PRC is slightly favorable, exporting $12.9 billion to the PRC in 2019, and importing $11.1 billion from it.


Exclusive: Venezuela resumes direct oil shipments to China despite U.S. sanctions | Reuters - November 26, 2020

Venezuela has resumed direct shipments of oil to China after U.S. sanctions sent the trade underground for more than a year, according to Refinitiv Eikon vessel-tracking data and internal documents from state company Petroleos de Venezuela (PDVSA).

...The first tanker to resume transport of Venezuelan crude directly to China was the Kyoto, identified by shipping monitoring service while loading 1.8 million barrels of heavy crude at Venezuela’s Jose port in late August.

At least one other tanker, the Warrior King, is discharging Venezuelan crude at China’s Bayuquan port, while two PetroChina-owned vessels loaded oil in Venezuela this month, according to PDVSA’s loading schedules and shipping documents, and Refinitiv Eikon data.

...Maduro’s Socialist government held a meeting with a delegation of Chinese officials and businessmen this month to tout a new law to promote investment despite what Caracas has called a “blockade” by Washington. The law allows the government to sign new oil deals confidentially.

Maduro said during the meeting he would send a letter to China’s President Xi Jinping encouraging more robust commercial relations between the two countries.

US hits Chinese firm CEIEC with sanctions over Venezuela | South China Morning Post - December 1, 2020

The United States on Monday imposed sanctions on Chinese firm China National Electronics Import & Export Corporation (CEIEC), accusing it of supporting Venezuelan President Nicolas Maduro’s efforts to undermine democracy.

The US Treasury Department in a statement said the Chinese company supported the leftist government of Maduro in its “efforts to restrict internet service and conduct digital surveillance and cyber operations against political opponents”.

...Venezuelans have for years said that their computers and phones cannot access certain websites linked to the opposition or some local news agencies that openly criticise the government.

Those using broadband services provided by state-run telecommunications provider Venezuelan National Telephone Company (CANTV) are generally the most affected, but users of private services also face restrictions.

General Latin America

China Poised to Be First to Distribute Virus Vaccine in Latin America, U.S. Official Says - The New York Times - December 2, 2020

Adm. Craig S. Faller, who leads the military’s Southern Command, acknowledged on Wednesday that China is actively making “deals to try to get the vaccine deployed and employed” around the globe to stop the coronavirus, as the United States, through the governmentwide Operation Warp Speed program, is “looking at taking care of the U.S. first.”

While neither country has an approved vaccine, China has begun inoculating citizens under what appears to be an emergency use strategy. Its Sinovac Biotech developer has collaborated with Brazil on late-stage trials. Another Chinese developer, CanSino Biologics, has a clinical trial underway in Mexico and signed an advance purchase agreement with the government there to supply 35 million doses of a single-dose immunization.

It has become a major trading partner in the region through its Belt and Road Initiative — but the admiral also asserted on Wednesday that China had been trying to “undermine local elections, pay off mayors” and offer deals that undercut private U.S. industry through unfair competition.

Chinese Security Engagement in Latin America | Center for Strategic and International Studies - November 19, 2020

While the PLA has engaged militarily with virtually all of Latin America and the Caribbean, it has cautiously shown interest in the Caribbean basin—which is strategically proximate to the United States—to a degree disproportionate to the size of its market potential or ability to pay. As noted previously, the first PRC sale of a major capital ship in the region was to Trinidad and Tobago in 2014, and China has made regular donations of equipment to both military and police forces in the region.

Defense sales of the PLA and Chinese military vendors has followed the trend of strategically-valued commercial sectors, in that they have generally competed on a price basis for relatively unsophisticated goods—such as military clothing and protective gear—in order to establish experience and relationships in the sector, which are then used to improve their product and expand their offerings to include more sophisticated items. China has often used donations of equipment, including dual-use vehicles such as buses and trucks, to strengthen relationships in the region and to move into new product areas. Such donations have played a particularly important role among militaries with limited resources, such as that of Bolivia, and among security forces in the Caribbean. Donations have also provided a useful way to introduce military products and defense officials from the PRC to pro-U.S. governments who would not otherwise buy Chinese equipment, such as Colombia. Such Chinese donations have gone not only to traditional military forces, but also to police and other security forces.

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