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China’s Long March into Latin America

September 18, 2009

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)

Comments

In this sentence, “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…”

That’s your opinion – that they are “anti-US”. They obviously have problems with certain policies, which, if Americans knew what they were, may also disagree with the policies. Would that make the US citizens who also disagree “anti-US”? I think not. You should tell us what the rejected policies are specifically. The way you write this only increases emotional tension without basis in argument or fact.

Posted by Ken | Report as abusive
 

Ken, The paragraph you quote from does not name any anti-US states.
I think there is two kinds of anti/pro US “states”,
and you have to separate popular sentiment from governmental relationships, because there are many nations whose citizens see the US as a country whose culture and/or unilateral policies they generally strongly disagree with yet the government of that country may promote friendly ties with the US for economic and/or political reasons. There are many examples of governments going against the will of their people to protect their economies and their parties.
Many countries that joined the so called ‘coalition of the willing’ were not willing at all, including my own (Australia) where public support for the invasion of Iraq was almost non-existent, yet our government committed us against our will.
Others governments were simply given money or debt relief, they were bribed..
It all depends how you define the US in anti-US, I don’t think many would be ignorant enough to generalize a whole population but for the most part it’s bad news for US citizens either way because in trying to understand why so much of the world may be “anti-US”, you’ll eventually have to stop hiding behind your politicians WHO REPRESENT THE WILL OF YOUR PEOPLE! or admit that your democracy doesn’t work…

Posted by brian | Report as abusive
 

The point gentleman, chinese firms are sprawling all over latin america, and it seems these think of themselves as little vaticans, where they have their own laws, separate of those of the host country, much as was american companies in the 20th century in latin america.
We are looking at 21st century cowboys.

Posted by Robert | Report as abusive
 

Ahh actually the point is about South America turning to a new trade partner in China and the US worrying as usual about losing contracts and its global supremacy.
The article seems to carry a negative connotation but in reality trade options with China are a great thing for South American nations, just not for the disgustingly corrupt US companies that have traditionally plundered the region, boo hoo…. so sad!

Posted by brian | Report as abusive
 

Brian — That’s hilarious. If US companies are “disgustingly corrupt”, then what are Chinese companies? Disgustingly disgustingly corrupt?

Posted by clazy | Report as abusive
 

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