F REIGN TRADE - 中国国际贸易促进委员会

TRADE
China, Chile celebrate 40th anniversary of
diplomatic ties
China and Chile on December 8, 2010 celebrated the
40th anniversary of diplomatic ties at a reception in Beijing.
The Chinese People’s Association for Friendship
with Foreign Countries (CPAFFC) and the China-Latin
America and Caribbean Friendship Association jointly
held the reception.
Almost 60 guests attended the event, including
Abdul’ahat Abdulrixit, vice chairman of the National
Committee of the Chinese People’s Political Consultative
Conference, other Chinese officials, as well as
Chilean experts and overseas students in China.
Addressing the reception, Li Xiaolin, vice president
of the CPAFFC, said Chile was the first country
in South America to forge diplomatic relations with new
China and the first in that region to recognize China’s
market economy status and sign a bilateral free trade
agreement with China. China and Chile established diplomatic
ties in 1970.
In the years since 1970, China-Chile relations have
developed smoothly, with frequent high-level visits as well
as exchanges and cooperation in various areas, especially in
the cultural, education, economic and trade sectors, Li said.
Chile is China’s second biggest trade partner in Latin
America and China is Chile’s largest trade partner. Bilateral
trade volume rose 2.1 percent to US17.72 billion in
2010.
China and Chile forged a comprehensive cooperative
partnership in 2004. China-Chile non-governmental exchanges
have growth in strength over the years, Li added.
Chile’s ambassador to China Luis Schmidt Montes, spoke
highly of the development of Chile-China relations. He
said Chile would like to further expand its cooperation
with China as the two countries have much to share with
each other. (Xinhua)
Brazil ups rates and signals more
tightening
Brazil’s central bank raised interest rates by 50 basis
points and signalled further tightening in the weeks to
come as Latin America’s biggest economy seeks to rein in
a worrying surge in inflation.
In a hawkish statement, the central
bank increased the benchmark Selic rate to
11.25 per cent in a move that could lead
to further pressure on Brazil’s currency,
the real, to appreciate against the dollar.
The rate increase was the beginning
of “a process of adjustment
in the benchmark interest rates
whose effects, coupled with macroprudential
measures, will contribute
to a convergence of inflation to
the target trajectory”, the central bank
said.
The move will ratchet up pressure on the new government
of President Dilma Rousseff to make politically difficult
cuts in government spending, which is partly blamed
for recent rises in inflation.
Consumer prices in Brazil rose more than economists
expected in December, contributing to year-end inflation
of 5.91 per cent, the fastest increase for a calendar year in
six years.
The central bank’s target for inflation is 4.5 per cent,
plus or minus 2 per cent, leading to expectations among
traders in the futures market that rates could reach as
much as 13.25 per cent this year, according to Bloomberg
data. Brazil already has the highest real interest rates,
policy rates adjusted for inflation, of any large economy.
Ms Rousseff has made lowering rates one of her priorities
but must first reverse an increase in the government
budget during the past two years, when Brazil spent more
to counter the effects of the global financial crisis and then
entered an election year.
High interest rates and rapid economic growth also
have attracted hot-money flows from foreign investors,
driving an appreciation of the real against the dollar of almost
40 per cent in two years.
“By most metrics, Brazil’s economy closed 2010 overheating,”
wrote Tony Volpon, emerging markets economist
with Nomura Securities. Ms Rousseff’s first act on coming
to office has been to try to combat the appreciation of the
real with measures designed to damp speculation on the
currency.
Brazil’s strong exchange rate contributed to a 40 per
cent increase in imports last year, which domestic manufacturers
say is threatening to drive them out of business.
Ms Rousseff has also promised stringent budget cuts to be
implemented next month but analysts believe she needs to
act more quickly to convince markets.
Nomura’s Mr Volpon said he expected interest rates
to increase 150bp during this tightening cycle.
“The government’s incorrect emphasis of the ‘currency
war’ over the need to detail its fiscal constraints has once
again put the central bank in a tough spot,” Mr. Volpon
said. (Financial Times)
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