China’s growth as the factory of the world requires ever increasing amounts of raw materials. Latin America has become a strategic source of raw materials for China’s manufacturing process. It is also a supplier of agricultural goods to feed China’s 1 billion people.

Consequently the Chinese government and its oil company, CNOOC, have invested US$400 million in gas exploration in Venezuela. China Minmetals Nonferrous Metals Co. has invested US$2 billion in a joint venture with Chile 's state copper giant Codelco. Baoshan Iron and Steel has invested US$1.4 billion in a joint venture with Brazilian iron-ore giant CVRD for the construction of a new steel plant in Brazil. Yanguang Group has created a new coal company in Brazil in a joint venture with CVRD and Japan’s Itocho Corp. Chinese petrochemical corporation Sinopec has an alliance with Brazil’s state oil company Petrobras. These strategic investments are only the tip of the iceberg of Chinese involvement in Latin America. The Chinese also are beginning to move higher into the supply chain itself. This is the next natural move.