On 19 May, during his visit to Brazil, Premier Li Keqiang put forward for the first time the "3×3 model", an important initiative for industrial cooperation between China and Latin America and the Caribbean, at the closing of the China-Brazil Business Summit.
The first "3" refers to cooperation in building three arteries for Latin America in the fields of logistics, power and information.
A new round of infrastructure development is now in full swing in Latin America and the Caribbean as countries in the region as well as regional organizations have all formulated ambitious infrastructure development plans to realize connectivity. Given the rich experience and competitive production capacity of Chinese businesses in infrastructure development, China and countries in the region may work with each other and draw on their mutual complementarity. The two sides may seize the opportunity of the joint endeavor by China, Brazil and Peru to build the "Atlantic-Pacific Railway" to actively carry out cooperation in developing transportation infrastructure such as railways, roads, ports and airports, and build a railway-based logistic artery spanning Latin America and the Caribbean.
Latin American and Caribbean countries enjoy abundant oil and gas resources and enormous potential in solar, wind and nuclear powers, while Chinese businesses boast rich experience in the development and management of power grids as well as leading technologies in long-distance power transmission. Therefore, cooperation based on highly efficient power transmission technologies and smart grids between the two sides will help Latin American and Caribbean countries enhance their capacity in power generation and transmission and build an energy artery to connect countries and regions in Latin America and the Caribbean.
The Internet economy is booming in Latin America and the Caribbean. Chinese businesses, with their advanced telecommunications equipment, search engine technologies and e-commerce management systems, may take an active part in the information industry and network building in Latin American and Caribbean countries. Cooperation as such will facilitate IT progress in the region and build an information artery supported by Internet technologies and the new generation of telecommunications technologies, with big data and cloud computing integrated into the artery.
The second "3" refers to sound interaction among businesses, the society and the government. The two sides need to make sure that their cooperation is commercially viable, led by businesses with the participation of society and facilitated by the government. Working on that basis, they may carry out cooperation through various channels such as joint ventures, PPP and franchising. The Chinese government will give policy support to Chinese businesses engaging in industrial cooperation with Latin American and Caribbean countries. It will continue to encourage businesses to localize their operation as a long-term strategy, build solid partnership with their local counterparts, be open to suggestions of trade unions and local communities and fulfill their social responsibilities such as in environmental protection. Governments of the two sides also need to increase dialogue and communication through various bilateral and multilateral business cooperation mechanisms and work vigorously to conclude or renew agreements on investment protection and avoidance of double taxation. This will help foster a more enabling environment for businesses of the two sides.
The third "3" refers to expansion of the three financing channels of fund, credit and insurance. Finance supplies blood to the real economy, without the support of which major cooperation projects would be unattainable. During Premier Li's visit to Brazil, the two sides agreed to set up a joint fund to support China-Brazil industrial cooperation. Premier Li also announced that China would set up a US$30 billion special fund for industrial cooperation between China and Latin America and the Caribbean. Besides, a finance leasing company will be established to deal with equipment leases, such as oil tanks, natural gas transport vessels and oil rigs, to countries in the region. Medium- and long-term export credit insurance will also be improved to support Chinese businesses exporting to the region. Premier Li also proposed that the two sides expand cooperation on currency swap and local currency settlement to jointly facilitate growth of the real economy and uphold stability of the financial market in the region and beyond.
As yet another important initiative put forward by China in recent years for cooperation with Latin America and the Caribbean, the "3×3 model" identified the ways and steps to transform and upgrade practical cooperation between the two sides. Cooperation under such a model will be crucial to realizing the goals of bringing two-way trade to US$500 billion and China's investment stock in the region to US$250 billion respectively in the next decade.
Now that recovery of the world economy remains tumultuous, the growth of emerging economies, China and Latin America included, also faces downward pressure. Two-way trade between China and Latin America, having grown at high speed for more than a decade, is also experiencing a slow-down. Under the new circumstances and facing new challenges, China and Latin America may explore cooperation on production capacity and equipment manufacturing, and find synergy from their respective economic structural upgrading and development strategies. This will enable the two sides to enhance commercial cooperation and better meet their development needs. There is every reason to believe that the upgraded China-Latin America practical cooperation, built upon the "3×3 model", will give even stronger impetus to the development of China-Latin America relations, and boost the confidence of emerging economies and developing countries and contribute to global economic recovery.