The US-China trade war has reached new heights, with US president Joe Biden announcing plans for unprecedented tariffs on Chinese imports, including a possible 100% on electric vehicles and 50% on solar cells – two of China’s top export items.
To counter this particular cycle of protectionist policies by the US, begun in 2018 under then president Donald Trump, Chinese companies began moving final assembly steps to southeast Asian countries, enabling products to be labelled as made in Vietnam or Indonesia. Now, there is increasing focus on Latin America.
"We’ve seen tangible and visible growth in the Asia-to-Asia corridor, particularly into Vietnam, Indonesia, and Malaysia to some extent," says Gunjan Kalra, Asia Pacific head of Citi's commercial bank. "Now, we're witnessing a similar trend unfolding between Asia and Latin America."
Kalra has observed high double-digit annual growth in the Asia-Latin America corridor over the past year, particularly from China and Korea. She attributes this to supply-chain reactions after Covid-19, geopolitical tensions, tariff considerations, cost factors and the 'China plus one' strategy of diversifying international investment.
Citi's robust onshore presence in countries like Argentina, Brazil, and Mexico… positions us favourably to capitalize on opportunities
Chinese companies expanding into Latin America are pursuing a two-pronged approach: tapping into local markets and using the region as a bridge to export to the US.
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