Uruguay central bank governor takes positive view of China's Latam influence

Q: How will China’s growing influence over Latin America affect regional development?

A: China has been playing a major role in the global economy for a few years now. To a certain extent, it countered the setbacks from the global financial crisis in 2008/09. The impact on the global economy of the crisis in the US first, then in Europe, was somewhat limited by the fact that China was already such an important source of demand for agriculture, mining and energy products.

With regards to Latin America specifically, China is already the main trading partner of the region because, among other things, it [wants] what the region produces: agriculture products, minerals and energy.

At the same time, China’s [attempt to] become part of the global economy is still a learning process. The recent words by president Xi Jinping confirm China’s [intention] to increase its integration with global markets, and this is good news for the world. China’s global role is framed in the vision of the Belt and Road Initiative, which is a strategic way to join the world economy.

Q: Does this offer good prospects for Latin America?

A: I think it’s a positive [development] for our countries, which are small and need to open up to the world. The more market access we have, the more multilateralism, the more opportunities for us to place our products; but [it also gives us the opportunity] to lure Chinese investment in fields such as infrastructure, which is key for the competitiveness of our economies.

Q: In past few months, the US has endorsed a more protectionist attitude towards the global economy, whereas China is emerging as a champion of free trade. How do you view this?

A: China’s position suggests a clever understanding of the current situation. I believe that China’s answer to this [wave of protectionism] – its efforts to appear more open to free trade and multilateralism – is a clever one.

Q: Will there be a political price to pay for Latin America or China’s other trade partners?

A: I hope there will not be. The key to [our wellbeing is] free trade [with no strings attached].

Q: From a monetary policy perspective, will the rise of China prompt the Central Bank of Uruguay to increase its renminbi reserves?

A: As far as the renminbi is incorporated in the basket of Special Drawing Rights of the IMF and as far as business with China grows, it’s reasonable to believe that the percentage of renminbi reserves handled by countries around the globe will increase. In the case of Uruguay, that percentage is very small at the moment, but it’s likely that it will grow.