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The opening statement of Dr. Liu Youfa, former Vice President of the China Institute of International Studies (CIIS), was conducted as an interview with Dennis Small of EIR, and pre-recorded on May 19, 2015. The transcription follows:

DENNIS SMALL: Thank you, Dr. Liu Youfa, for participating with us in this discussion for the conference in Lima, Peru on The BRICS Process and the Development of Peru and South America. In terms of The Future of China-South America Economic Cooperation, I would like to ask you, first, about the tour that Chinese Prime Minister Li Keqiang has just completed of four South American countries: Colombia, Brazil, Chile and Peru, which included discussion of areas of economic cooperation between China and the nations of South America. Can you please fill us in on the background to this, including the historic BRICS and then BRICS-Unasur summits in Brazil in July 2014, and what the prospects are for future cooperation?

DR. LIU YOUFA: Well, Mr. Small, let me just thank you for giving me the opportunity for this interview. Let me also take the opportunity for me to thank the hosts for the invitation, and I want to wish you a great meeting.

With regard to your first question, let me just say this: China and Latin American countries have been natural partners in realizing economic and social development, and the relevant countries have established strategic partner relationships. For that matter, it is natural that leaders of both sides would exchange regular visits. But since lately, according to my observation, there have been more reasons for the relevant countries to exchange visits.

First, since the 2008 international financial crisis, the developed economies have been struggling to restore and maintain the momentum of economic growth, and still find it hard to expand their domestic consumption. Consequently, they have been losing steam to pull the world economy forward, which has resulted in the contraction of both the global trade and investment.

As China and Latin American countries have been dependent, to a large extent, on the developed markets for their economic growth, they are now caught in an uphill battle in maintaining the momentum of their economic growth. Against this background, leaders of the relevant countries have to search and find new ways and means to promote mutual trade and their investments. This is the first point I want to share with you.

Secondly, China and quite a few Latin American countries are emerging countries, which have built up natural capacity to carry out industrial cooperation, and for that matter, they have focused their attention on one another.

Thirdly, China and Latin American countries have built up comparative advantages in the relevant industries, which have provided steam for joint developments by pulling up the relevant competitive factors of production. The area of infrastructure has become the most appropriate area to start the practical cooperation. As you may expect, during the visit by Premier Li Keqian, relevant leaders will try to reach the consensus to carry out the feasibility study vis-a-vis the trans-Pacific railway, which will awaken the dream of the founding fathers of Latin America centuries ago.

With regard to the prospects of future cooperation between China and Latin America, let me share with you what I know, as follows.

First, through the regular exchange of high-level visits, leaders of both sides have fine-tuned the blueprint for the closer political, economic and cultural cooperation from ten years down the road. They have ironed out specific industrial cooperation programs; they have signed many economic agreements to solidify mutually beneficial cooperation in the areas of the manufacturing sector, the services sector, the agricultural sector, conventional energy and renewable energy production, processing and marketing. They have also signed agreements on science and technology, human resource development, and environment protection, as I recall. Now it is up to the relevant governments to effectively implement those lucrative economic deals in order to generate new steam for the healthy development of their economic group, which would in turn cement the foundation of the bilateral relations.

QUESTION: Thank you. This is indeed an optimistic scenario. But I’m also interested in hearing your personal thoughts and in your view what obstacles there are that need to be overcome, to make the potential for this kind of economic cooperation a reality? What are some of the pending issues, from Chinas standpoint?

DR. LIU YOUFA: So, you are right, Dennis. China and Latin American countries have become major partners, both in terms of trade and investment. Both sides are moving into industrial cooperation. However, there are some pending issues which need to be jointly addressed properly, and in time, in order to further release the steam for the growth of economic and trade cooperation in the future.

There are many issues, but let me just give you a few examples.

From the political perspective, there is a lack of proper understanding of the political systems and cultural values of each other, etc. From the economic perspective, let me see, there are the lack of tradable goods and services that are marketable at the Chinese market. There is the lack of industries for trade from the Latin American side. There have been visible and invisible barriers for trade and investment from both sides. And there has been a lack of trade and investment information for the entrepreneurs, exporters and importers to take stock, on both sides.

These are a few of the issues that I think we need to take competent efforts to address. Back to you.

QUESTION: Well with this perspective, I would like you, with your extensive experience in foreign affairs, and issues in economics in particular, to share with us your personal thoughts, looking forward, about how to consolidate a sustainable relationship of economic cooperation between China and South America.

DR. LIU YOUFA: Well, as a diplomat I used to travel to quite a few Latin American countries for conferences and personal trips. But now, as an economist, let me say this:

First, China and Latin American countries should join hands in order to cement the consensus on common development by expanding the two-way trade. I think more free trade agreements would be very much desirable. Latin American countries should manage to produce more tradable goods and services that are marketable in China here. And they should identify more industries to produce goods bound for China. Now, I should add, both sides should join hands to promote the Latin American products, facilitate conditions for Chinese customers to understand, accept and like the fair products. Latin American manufacturers should also observe international standards. I don’t want to hide the fact that my fellow countrymen have been spoiled by the western products and services; they only look for the brands and quality goods.

Secondly, both sides should take stock from the friendly political relations, to promote two-way investment, which I think would be the immediate measures to reduce the trade deficit from the Latin American side. For that matter, governments from both sides should encourage the establishment of industrial parks, so that industrialists from both sides can find it easier to set up production lines and service chains at the markets of the other side.

Back to you, Dennis.

And I think I have one more point to share. Thirdly, both sides should identify more areas for cooperation. I think that continental mutual connectivity would be the best thing to start with.

As a diplomat, as I said earlier, I traveled to about ten Latin American countries, and I know some countries are still very much in want of the maintenance and the construction of national transportation networks, and there is a clear lack of the continental networks, which have become the real bottleneck for the realization of the dream of the continental rejuvenation.

For that matter, both sides should take stock from the existing bilateral and regional dialogue and cooperation mechanisms between China and Latin American countries. Last but not least, both sides should work together to facilitate conditions for peoples of both sides to visit each other, to see each other, understand each other. It is simply because they are the real steam for the closer cooperation between our two sides.

Back to you, Dennis.

QUESTION: Yes, thank you. I think that your reference to the continental mutual connectivity finds great receptivity in many counties in South America, because the issue of infrastructure, and in particular the idea of a trans-continental railroad that China would help build, is something that is of great interest to many countries and people that I have spoken to.

Now, let me proceed to ask you a blunt question, if I may, which I’m sure you hear all the time (although perhaps only in whispers). The question is: What are Chinas real motives? The western media has worked overtime to try to convince its readers that China has ulterior motives, and that they are dark! So, could you please elaborate on this for our listeners?

DR. LIU YOUFA: Sure, Dennis. As an economist, let me also be blunt on this. First, China has been searching for the ways and means for a peaceful development. China says it, and it does it, its doing it. For that matter, China has been conducting its relations with Latin American countries in accordance with international norms, and also consultation with the relevant countries on equal footing, and with the consent of the relevant partners. Now, China has become a WTO member; therefore China has been signing trade deals with Latin American countries on the basis of the win-win outcome, which is nothing dark by any sense!

Currently China is outreaching to Latin American countries in terms of industrial cooperation, through which China wishes to offer financial, technological support to the relevant partners, in order to help the others to expedite the infrastructure network construction, especially as we discussed a minute ago, the trans-Pacific railway, to connect the industrial markets of the countries on the continent, to enlarge their economic scale, and to improve their productivity and competitiveness, and to increase their exports to China. But what is wrong with that?

Secondly, China and most American countries are at the post-take-off stage, in terms of economic and social development, which warrant them to expand their economic frontiers across their traditional borders. However, we have been doing that on the commercial basis, let me stress, and in accordance with the principles of mutual benefit, China has never attached any unilateral conditions on anything between China and Latin American countries. You can go and check the track record on this.

So, I would like to suggest to my media friends from the west, this time, using your platform, I want to say this: mass media is also to observe the principles of professional integrity. Relevant correspondents and political affairs commentators, as well as the media institutions, are yet to learn to seek truth from the facts. They all did it. Cold War mentality, as I call it, will do nothing to promote the healthy relations between China and Latin America. Back to you.

QUESTION: Thank you for your very frank and useful answer on that question. And you did refer to Chinas approach of having a win-win outlook, and my question is, if you would be so kind as to explain some of the deeper thinking behind President Xi Jinpings win-win approach, as opposed to the doctrine of geopolitics which has dominated, really, much of the world for centuries. As you know, many countries in South America have also been victims of such geopolitics, including wars sponsored by foreign powers, and they are trying to deal with that legacy even as they move forward into the 21st century. So if you could give us a better sense of the win-win concept, I would very much appreciate that.

LIU YOUFA: Well, Dennis, this is a huge topic which would take probably take three hours to respond. Let me just do it in two minutes, if you allow.

I am sure you are referring to the One Belt, One Road strategy that is proposed by my President, Mr. Xi Jinping. Let me just say this very briefly:

The sheer essence of this strategy of One Belt, One Road is to represent Chinas latest efforts to embark on a peaceful road of development, for its efforts to mingle with the necessary world economy, in line with the international game rules, to seek common development with closer cooperation in terms of trade, investment, industrial cooperation, technology transfers, as well as the closer cooperation in terms of the human resource development. For that matter, China has made headway via China-ASEAN pre-trade agreements, as you know; the Shanghai Cooperation Organization; the BRICS; the strategic partnership with Russia and those central Europe, central Asia, the Middle East and South Asia, as well as those in Latin America. These bilateral, regional and multilateral cooperation mechanisms, Im sure, will eventually transform China and the relevant countries into the interest community of common development, as well as the destiny community of governments which will help the relevant countries to safeguard their common interests, and to expand the international state for their common development.

And secondly, President Xi Jinpings vision for the One Belt, One Road, will allow the countries involved to create a three-dimensional and ultimately a transport network that would help to connect themselves via land, air and sea. This would facilitate conditions for the mutual connectivity of the factors of production, help to speed up free flow of goods and services, and help to promote two-way investment, and help to promote industrial cooperation.

Thirdly, President Xi has allowed several financial platforms to materialize. You might hear, such as the AIIB, the Silk Road Fund, the Shanghai Cooperation Organization Development Fund, and the Shanghai Cooperation Organization Development Bank. These financial institutions would help developing countries to go ahead and expedite the construction of the possible projects, which would be based on the mutual agreements and mutual benefits.

Fourthly, different logistic parts are being built across the region to support the One Belt, One Road initiative. We have, China has proposed quite a few free trade zones, industrial parks, along the One Belt, One Road, and those industrial parks and free trade zones would eventually produce the economic dividends which would be shared by all the countries that are to participate in the construction. And this will help to promote social progress, political stability, and overall security in the region.

Before I conclude my response to your question, Dennis, let me stress that the One Belt, One Road vision is not only a strategic concept for the great rejuvenation of the Chinese dream; but also a beneficial platform for the common prosperity of the countries along the proposed route, and an organic combination of the Chinese dream with the dreams of all those partners. Back to you, Dennis.

QUESTION: Thank you for your summary of, as you said, an extensive three hour discussion into just a few short minutes. It is very appreciated. And finally, in conclusion, as my last question, do you have anything else that you would like to add, either for our immediate audience in Lima today or for those in other countries who will be watching a recorded version of this conference.

DR. LIU YOUFA: Yes. I agree to your question. But considering the time limitation, let me be short.

There is a saying in English: It takes two to tango. As One Belt, One Road will involve more than just two countries along the way, it is going to be group tap-dancing, which will take contributions and coordinated policies and the coordinated efforts of all the participants along the One Belt, One Road. And that includes relevant governments, relevant industries and development enterprises and all the civilian societies, as well as the people across the board. Well, China has taken the lead, and stepped onto the stage; and now I think it is up for the Latin American governments, industrialists and all peoples to come and respond to the invitation, in order to have a nice group tap dancing, in order to realize our common dream of sustainable bilateral relations, and the realization of our common dream of a good economy, a good life for the people, and a good dream of our national rejuvenation. Thank you, Dennis.

SMALL: Thank you very much, Dr. Liu Youfa, for your thoughtful comments, and they are very much appreciated. We hope to be able to discuss these matters further with you. Thank you.

DR. LIU YOUFA: Definitely. Okay, bye.