China’s Long March into Latin America
A $16 billion oil deal between China and Venezuela signed this week illustrates Beijing’s growing economic might and political influence in Latin America.
Trade between the region and China has swelled from $10 billion in 2000 to more than $102 billion in 2008.
Latin American leaders — not just leftists like Venezuela’s Hugo Chavez but also moderates such as Brazil’s Luiz Inacio Lula da Silva — have beaten a path to Beijing and Chinese officials are frequent visitors in return.
China is gobbling up Latin American commodities from soy to iron ore and at the same time eyeing a market of 500 million people while growth in its traditional trade partners remains flat.
And increasingly, China is a source of financing and investment in a continent that the United States has traditionally considered its backyard.
“It is important to recognise the Chinese engagement is significant and is having a significant effect,” R. Evan Ellis of the Center for Hemispheric Defense Studies in Washington said at a presentation at London’s Canning House. “Latin American politics and economics are coming of age and the region is looking to a number of players, not just the United States.”
Former U.S. President George W. Bush’s government is widely seen as having paid too little attention to Latin America during its eight years in power. Some U.S. politicians have raised the alarm about communist China’s intentions, warning that it poses a security threat. So should the United States be afraid?
Ellis believes there is no direct security challenge from China.
Beijing’s main intention is to secure supplies of resources, increase its clout in international politics, and to isolate Taiwan. It does not appear to be interested in a military presence or cultivating client states, he said. China also needs to stay on good terms with West so their economic relationship can continue to prosper. “There is no need for China to antagonise the West for little benefit,” he said.
Although China supplies some non-lethal military gear to Latin American countries and has discussed selling a radar system to Venezuela and Argentina, Russian is the favourite weapons source for the populist governments.
There is an indirect threat however, Ellis said. China’s close business and economic ties with countries hostile to the United States such as Venezuela, Ecuador and Nicaragua means it act as “enabler” for them. “It does not want to get dragged into a fight but it is useful,” he said. “It is does not have a nefarious interest but it has strategic interests.”
A second threat is the spread of Chinese organised crime in Latin America, especially in money-laundering and human trafficking. Chinese and Taiwanese mafia are already active in the tri-border area of Paraguay, Brazil and Argentina.
Thirdly, there is the question of how China would react if its business interests are threatened, either by a change of a government’s policy or by other players.
Meanwhile, China is growing even stronger in Latin America. As well as its ties to anti-U.S. states, it is an important partner for U.S. allies Chile, Peru and Colombia. It is also helping fellow BRIC Brazil in its rise as an emerging power. It is transforming infrastructure with projects to develop ports from Mexico and Panama to Chile and to open up transport corridors between the Pacific coast and the continent’s interior.
In the future, we can expect to see more Chinese exports of value-added goods such as motorbikes and computers, Ellis said. Chinese companies are buying into the commodity sector while assets are low, especially in Peru and Brazil. There will be more investment and financial deals at preferential prices, for example using its currency reserves to pay in advance for commodities. China is creating a world that is safe for its remergence as a global power,” he said.
Ellis’s book “China and Latin America: The Whats and Wherefores” has just been published.
(Reuters photos: Venezuelan President Chavez arrives in Beijing and Chinese Vice-President in Caracas)