We have covered the trade relationships between China and various entities here on ChinaFund.com extensively, but Latin America has been for the most part ignored (other than the fact that Brazil was put under the microscope through our BRICS article). Through this article, it’s time to put an end to that and tackle one of China’s most complex goals: gaining influence in Latin America in a sustainable manner.
It is vital to point out that the People’s Republic of China, over the course of let’s say its first 50 years of existence… well, didn’t exactly care about Latin America and Latin America was just fine with that status quo, as Latin American nations didn’t make a priority out of establishing close ties with the distant (in terms of geographical position, culture, language, economic system in many cases and the list could go on and on) China.
A close economic and especially political friendship with China was relatively hard to fathom for most Latin American countries, especially in light of the fact that the United States considered being influential in Latin America a matter of national security (Monroe Doctrine). Yes, communist Cuba did indeed recognize the People’s Republic of China (rather than the Republic of China, Taiwan) as “China” in the sixties but that was pretty much it, with other Latin American nations only doing so after Richard Nixon’s 1972 Beijing visit (Mexico and Argentina in 1972, Brazil two years later, Bolivia 13 years later and so on).
Later on, yes, Deng Xiaoping’s China was far more open to international cooperation than Mao Zedong’s China but the pieces of the puzzle were not quite yet in place and the same principle is valid when it comes to Jiang Zemin’s China. It was only under the rule of Hu Jintao, at the beginning of the 21st century, when it became abundantly clear that closer ties between Latin America and China make perfect sense.
More specifically, an increasingly powerful and resource/commodity-hungry China became more and more interested in what Latin America had to offer. The result was an impressive trade increase of over 1,000% in less than ten years, which led to China dethroning the United States as the number one trading partner of Latin America in 2010.
The future seemed nothing if not promising, with China manifesting interest in all sorts of projects, such as including Latin American countries in its Belt and Road Initiative (BRI) vision, providing financing for all sorts of Latin American investments (especially, of course, infrastructure-related ones) and even establishing a media presence in Latin America. And, indeed, much has been done, with quite a few Latin American countries signing Belt and Road Initiative-related agreements but unfortunately, things tend to be trickier in the real world than on paper, in our case for two main reasons:
- The fact that China was more or less forced to tackle its own set of problems, whether we are referring to debt levels, the 2015-2016 stock market crash correlated with a generalized under-performance of this sector compared to the West and so on. As a result, many (overly-)ambitious Latin America-related projects were either put on hold or canceled altogether, for example the Nicaragua Canal
- The fact that the United States is anything but thrilled about the influence China has gained in the region and is using a wide range of tools to essentially make many of its trading partners decide between the two entities. The growing trade-related tensions between China and the United States which have been covered extensively through other articles only make matters worse, with the prevailing narrative in Washington revolving around the fact that many entities have been enjoying a multi-decade “free ride” in terms of their relationship with the United States and that needs to change
As can be seen, challenges abound.
Still, one cannot help but observe that the pros associated with maintaining and nurturing close relationships with China tend to outweigh the cons.
From the perspective of Latin American countries, the situation is relatively straightforward: on the one hand, you have the United States which is making more and more demands but is hardly interested in putting its foot on the pedal and making much-needed investments in Latin America, especially “tangible” infrastructure-related ones. On the contrary, the US seems to be in a mood to “collect” more so than buy its way to a higher degree of geopolitical influence.
On the other hand, we have China, which in many respects can be considered the polar opposite in this equation. Instead of more or less belligerent rhetoric, China prefers pragmatism and is no stranger to precisely the practice of buying its way to geopolitical influence, with Latin America having absolutely nothing against this. Yes, it has to deal with endogenous issues but on the other hand, a case can be made that they are nothing more than temporary road blocks on the path to sustainable long-term development.
Is the political tide in Latin America sometimes against China, whether we are referring to US-related reasons or the frequently anti-China rhetoric of politicians such as Brazil’s president? Yes.
Is China in a position to keep reaching for its proverbial wallet indefinitely and continuously throwing money at Latin America? No, “pragmatism” is once again the operative word.
Are there Chinese modus operandi concerns, for example related to pollution (such as the destruction of ecosystems to facilitate soy exports to China)? Indeed, there are.
The bottom line is this: China cannot be considered the “perfect” trading partner for Latin America but in the world of geopolitics, few players genuinely seek perfection. Instead, the name of the game is opting for an approach which is simply better than the alternatives (even if not perfect) and with that in mind, the position of China is nothing if not robust.