SinoLatin Capital Explains How China’s Slowdown Will Affect Latin America

BEIJING--(BUSINESS WIRE)--Erik Bethel, Managing Partner of SinoLatin Capital an investment firm focused on natural resource transactions between China and Latin America, addressed the 4^th Annual Latin America China Investors Forum (LA-CIF) held in Shanghai on September 11-12, 2012.

“The majority of the China analysts in the western media are focused on the short-term”

Amidst much speculation regarding the slowdown of China’s GDP, with 2012 estimates likely to fall below 8%, SinoLatin Capital dispelled fears of a “China Meltdown” to an audience of 500 delegates from Latin America and China.

“The majority of the China analysts in the western media are focused on the short-term,” noted Bethel. “Will China’s GDP growth decline by one percent or by two percent this year? I think people are missing the more important medium and long-term picture. The China story is about demographics and urbanization. Despite the short-term expected drop in China’s GDP growth rate, the Chinese government has been facilitating the largest wave of human migration in the history of the world. For the last twenty years, hundreds of millions of people have moved from rural to urban areas. And there is still a long way to go. China is 50% urbanized, therefore there are still 700 million people living in the Chinese countryside!”

China is not only urbanizing, but the country is creating a massive urban middle class. This middle class requires commodities such as copper, oil, and soybeans to keep up with urbanization. “Take the refrigerator as one proxy – of many – for commodity consumption. Urban citizens buy refrigerators, and in less than 20 years, one billion more refrigerators will be needed,” Bethel illustrated. “These refrigerators are made out of stainless steel, copper, plastics, and aluminum. They run on electricity using copper and aluminum cables, and of course an electric power plant, which in the case of China is coal-fired. Meanwhile, everything inside the refrigerator is a commodity. A piece of meat requires animal feed. And animal feed comes from corn, soybeans, and other agro-commodities.” Bethel further remarked that refrigerators, cars, apartment buildings, and urban transportation, among others, are going to continue to drive commodity prices. “China will continue to grow, albeit more slowly than in the past, but it is still going to consume commodities because of urbanization, and this doesn’t seem to be slowing down,” explained Mr. Bethel.

Mr. Bethel went on to explain the link between China and Latin America, “Latin America will continue to be an indispensable commodities supplier for China. More specifically, countries such as Brazil, Peru, Chile and Colombia present some of the best opportunities for Chinese investors due to relatively low inflation, stable governments and a strong growth rate.”

This is the fourth consecutive year SinoLatin Capital has sponsored the Latin America China Investors Forum in continued support of investment relations between China and Latin America.

About SinoLatin Capital

SinoLatin Capital is the premier investment platform between China and Latin America. It is a financial advisory and private equity firm focused on natural resource transactions in three sectors: agribusiness, mining, and energy. Headquartered in Shanghai's financial district and with offices in Beijing, China and Lima, Peru, SinoLatin Capital is the first merchant-banking firm focused exclusively on cross border transactions between China and Latin America.