The relationship that many Latin American countries have with China is a “pact with the devil,” according to Paolo Rocca, CEO and president of the Techint Group, in his closing remarks at the Alacero conference held this week in Buenos Aires, Argentina.
“Obviously, not only Latin America, but also other emerging countries have benefited from the flow of imports from China, and from the dynamics printed into the global economy as a result of this,” he said, while mentioning the different cycles the steel industry has faced and still faces.
“Latin American countries have benefited [from such a relationship with China], but they’ve also adopted a growth model, which I define as a ‘pact with the devil’,” the top executive said to audience laughter.
Rocca said such a “devil’s deal” increases the weight of the state; at the same time it reduces the importance of both the private initiative and the industry.
According to the provocative leader, the only Latin American country that didn’t surrender to the “devil’s deal” was Mexico.
“Despite not having much natural resources, it needed to articulate, after its integration in the NAFTA trade bloc, all its economy upon an integrated industrial development, which includes a strict relationship with the US,” he said.
“In my point of view, that was a very important decision, which helped the country to have a higher domestic steel consumption when compared to Brazil. It wasn’t always like that, and now we see this happening and it will still last for a while.”
While mentioning the different cycles the global economy has been facing, the Techint executive gave room for some optimism, despite the concerns over China and its growing steel exports to Latin America.
“I see a great opportunity for us in recovering our leadership,” he said.
“We see that this ‘pact with the devil’ is based in elements related to the exports of primary products, in the imports of industrial goods, in the strengthening of the role of the state, and by China’s financial support, when one’s situation is more critical,” he said, while referring to the growing support of China to Latin America.
“China has a very important role. But we’ll see how some of the elements of this strength start to weaken,” he noted.
“I can say there are places in the world in which we’re taking the place of China for steel exports. So, there’s a possibility. We can make it. We have the chance to take a leadership, but we need to do that as a company, and as a value chain, in a broader sense,” he said.