China in LAC since 2008: New transformative political, economic and geopolitical dynamics
Elena Aoun, Thierry Kellner and Sophie Wintgens
Over the past 15 years, China has considerably increased its presence in Latin America and the Caribbean (LAC) in a variety of ways. Beijing’s growing interest in the region was symbolized in 2008 by the publication of a first White Paper on LAC.1 At the bilateral political level, there has been an increase in high-level mutual visits since then. Xi Jinping has visited the region four times since taking office in 2013, compared to only one for Donald Trump. Bilateral relations have deepened through the establishment of “strategic partnerships” (zhanliie huoban guanxi) of various kinds with LAC countries, such as Brazil, Mexico, Argentina, Venezuela, Peru. Chile, Ecuador, Costa Rica, Uruguay and Bolivia. Under Xi Jinping’s presidency, the People’s Republic of China (PRC) has also increased its diplomatic presence in the LAC region by establishing diplomatic relations with countries that previously recognized Taiwan. This was the case of Panama in 2017, followed by the Dominican Republic in May 2018 and by El Salvador in August 2018.
China and LAC to USS500 billion by 2025 and to invest US$250 billion in the region over the next decade. An ambitious cooperation framework for the period 2015-2019, known as “1 + 3 + 6”, was adopted on this occasion.3 Beijing completed it with the publication of its second White Paper on relations with LAC in November 2016.4 In addition to this forum, the BRICS (Brazil, Russia, India, China and South Africa) summits are also used by China to cultivate “South- South” relations with LAC countries.
Finally, in 2017, the whole region was officially associated with the Belt and Road Initiative (BRI). In May, the Argentinian and Chilean Presidents participated alongside some 30 heads of state in the first Belt and Road Forum held in Beijing. On this occasion, Xi Jinping described LAC as a “natural extension” of the Maritime Silk Road.5 Wang Yi, China’s Minister of Foreign Affairs, made another trip to the region in January 2018 for a new summit between China and CELAC countries. At this occasion, Latin America was described as a BRI “major participant”. Beijing has officially invited the 33 CELAC member countries to join its initiative as part of an agreement to deepen economic and political cooperation. Nineteen LAC countries, including Panama, Uruguay, Ecuador, Venezuela, Chile, Uruguay, Bolivia, Costa Rica, Cuba and Peru, have already signed a Memorandum of Understanding (MoU) with China under the BRI.6
2 Small on security, big on trade and financial cooperation
Beijing has also developed traditional security ties with LAC countries. Between 2012 and 2015, China and the United States were running neck and neck in arms sales to LAC countries, as they averaged US$2.7 billion and US$2.6 billion per year, respectively.7 According to the Stockholm International Peace Research Institute (Sipri), Venezuela was PRC’s main partner in arms sales on the continent between 2008 and 2018.s Globally, this country was Beijing’s fifth-largest arms market during this period. While China’s military presence is marginal compared to the more traditional actors in this field (United States and European countries), its link with LAC states is far from non-existent. In addition to arms sales, Beijing maintains regular high-level exchanges with Latin American military officials and promotes technology transfers.9 A Multilateral Forum on Military Logistics Cooperation has been established. Its second meeting brought together in Beijing and Shanghai in July 2017, along with Chinese representatives, the heads of military and defence departments responsible for logistics affairs from nine Latin American countries (Bolivia, Brazil, Colombia, Cuba, Ecuador, Mexico, Peru, Uruguay and Venezuela).10 These activities were sufficient to attract the attention of observers in Washington.
Since the 2000s, however, Beijing has above all established itself as an essential commercial and financial partner for LAC, which has long been considered Washington’s backyard. In 2005, Chile was the first Latin American state to sign a Free Trade Agreement (FTA) with the PRC, soon followed by Peni (2009) and Costa Rica (2010). Negotiations are also underway with Colombia and Panama. According to International Monetaiy Fund database, the volume of trade (in goods) between China and LAC as a whole increased from negligible in 1990 to USS10 billion in 2000, before rising to nearly USS306 billion in 2018.11 This is more than China’s bilateral trade with Africa - US$204 billion, according to the Ministry of Trade of the People's Republic of China (MOFCOM)12 - but less than the merchandise trade between the United States and LAC countries - US$897 billion, according to IMF database.13 In 2019, according to IMF statistics, China was the largest trading partner (in goods) of the Mercosur countries (Argentina, Brazil, Paraguay, Uruguay) with 25% of their trade; the third of the Central American countries (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama) with 9.4% of their total trade, and also the third of the Caribbean countries (Antigua and Barbuda, Bahamas, Barbados, Belize, Cuba, Dominica, Dominican Republic, Grenada, Guyana, Haiti, Jamaica, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Suriname, Trinidad and Tobago) with 9.1% of their trade.14 In the same year, China was the leading trading partner of Chile and Peru, and the second largest of Venezuela, Columbia, Ecuador, Bolivia and Mexico.15 Thanks to the trade links established with its Latin American partners, Beijing has secured strategic resources (hydrocarbons, mineral resources, food production, etc.) as well as raw materials to supply its domestic consumption and has opened new markets for its companies.
China has also become in recent years an important investor (through direct investments in greenfield sites, mainly in the form of mergers and acquisitions) and a provider of capital in the form of loans and financial sendees for a growing number of LAC countries. In 2018, China’s total outflow of FDI to LAC (US$129.8 billion) accounted for about 15% of LAC’s total FDI inflows.16 In terms of mergers and acquisitions, it was 2017’s largest investor in the region. These investments amounted to USS18 billion and represented 42% of this year's total, according to the Economic Commission for Latin America and the Caribbean (ECLAC).17 In addition, Beijing almost doubled its lending to LAC countries at a time when Western development banks’ financing to the sub-continent was gradually decreasing: in 2010 and 2015, when it reached US$36 billion and USS29.1 billion, respectively, China’s lending exceeded that of the World Bank, the IDB and the Andean Development Corporation combined.
Since 2005, according to figures from the American think tank Inter-American Dialogue, China’s lending commitments to LAC governments have amounted to more than US$141 billion. China Development Bank and China Export-Import Bank provided almost all of these funds. The largest beneficiaries are Venezuela (USS67.2 billion), Brazil (US$28.9 billion), Ecuador (US$18.4 billion) and Argentina (US$ 16.9 billion). Together, they have attracted more than 90% of these Chinese loans for projects that are mainly concentrated in the fields of energy, mining and infrastructure.18 Currency swap is another financing instrument used by China in LAC since 2009. Beijing has concluded agreements with four central banks (Argentina, Brazil, Chile and Suriname) for a total amount of nearly USS49 billion. These agreements are intended to facilitate trade and investment in Yuan. They were also introduced to improve financial conditions by using loans as a relief measure against the weakening of foreign exchange reserves (as in the case of Argentina).19 These figures clearly demonstrate the intensity of Chinese economic and financial engagement in LAC.
3 Soft power projection and power challenges
Finally, China has expanded its soft power in the sub-continent using different tools: Confucius Institutes and classes established in LAC countries,20 development of cultural and educational cooperation, “people-to-people diplomacy”, expansion of media aimed at a Spanish-speaking audience. In the last category, for example, Xinhua and People’s Daily produce daily news in Spanish and Portuguese (also available online), as does China Radio International. China Central Television has a channel - CGTN - that broadcasts 24 hours a day in Spanish and is available online. China Today maintains two sites in Spanish.21 In addition, in some countries, Beijing is seeking to build on the potential relay of a relatively old Chinese diaspora to reinforce its influence. LAC is home to more than 1.8 million overseas Chinese, with the largest communities living in Pent, Brazil, Panama and Argentina.22
According to an opinion survey published by Pew Research Center in the summer of 2017, thanks to its political, economic, financial relations and the expansion of its soft power, China has succeeded in disseminating a favourable image of its activities and its growing multifaceted presence among LAC public opinion. This is the case for 61% of respondents in Peru, 52% of those in Brazil and Venezuela and 51% of those in Chile. Elsewhere, its score is more mixed (43% of people favourable to China in Colombia and Mexico and 41% in Argentina).23 In some countries, Beijing scores more favourably than Washington. A survey conducted in April 2019 by the Chilean polling firm Plaza Publica Cadem showed that 77% of Chileans have a positive image of China compared to 61% for the United States. The same is true in Mexico according to Latinobardmetro 2018 with 57% of respondents compared to 43% for the United States. In Argentina, 51% see China positively compared to 45% in the United States. In Peru, Beijing also won the race for public opinion with 59% compared to 56% for Washington. In Venezuela, the PRC also leads (63% versus 62%) according to the same survey. Several other countries in the region, including Brazil, Colombia and most Central American countries, still prefer Washington, but support for it among regional public opinion is declining.24
All these developments since Beijing published its first White Paper on LAC in 2008 are obviously not without consequences. China's multifaceted presence has initiated important and varied transformations in the entire region and in multiple domains - political, economic, social, environmental, etc. - including in terms of power relationship with the global hegemon, that is, the United States. A traditional American “backyard”, LAC is perceived as a crucial factor in the ability of Washington to project power globally.25 Therefore, China's increasing presence in this region not only makes the regional environment more complex, prompting reactions by Washington to reassert its own dominance in its vicinity, but it might also bear consequences at the international and global levels.
These evolutions feed theoretical debates about possible changes in power distribution and hegemonic competition in global politics, and about the challenge China’s densifying web of relations and exchanges with LAC poses to Washington in its own backyard and beyond. Among the many questions being asked is whether China and the United States are engaged in that region in a zero-sum game and if so, whether it is positive or negative (and from whose perspective). Empirically rich, most of the contributions in this edited book rather suggest mixed observations and perceptions. While some authors bring fresh arguments about each of the losses and gains of China and the United States as the former makes headways in the LAC region, some others highlight “synchronization” processes (cf. Soliz de Stange, infra) and avenues for synergies between the contesting powers, even opportunities when it comes to the European Union and China in LAC (cf. Nolte, infra). While it is probably much too early to assess the impact of China’s greater role in LAC on Beijing’s own emergence, on the global power competition and the regional and national dynamics, constructivist approaches focused on the role of perceptions would open interesting avenues into how China’s role is construed by its leadership, by the United States and other powerhouses such as the European Union, and of course by local actors.
From perspectives less focused on power competition and more on the overall evolutionary trends of our contemporary international system, China's increased presence in LAC can be viewed as participating in the emergence of a “multiplex world” as Amitav Acharya26 termed it. Some of the dynamics it has initiated could indeed contribute to the establishment of a "parallel” international order, to use Oliver Stuenkel’s formula,27 or in any case of a more multipolar and less Western-centred international order.
Another line of theoretical inquiry that is suggested more or less explicitly by the wealth of data and analyses offered in the various chapters revolves around the development models entailed by China’s increased economic dealings with LAC and counter-reactions such as the “America Crece (or Growth)” Initiative pressed by Washington on its South American neighbours. China approaches the latter horizontally, discursively emphasizing notions of South-South cooperation and win-win partnership. In addition, it abides closely by the core principle of non-interference in its partners’ internal affairs and does not seek to press them towards any specific foreign policy orientations (with the exception of the Taiwanese issue). However, this more horizontal route to cooperation does not level out development perspectives for all. At the country level, the trade balance tilts very heavily in favour of China. In addition, while Beijing exports towards the region mostly manufactured goods, many LAC countries find themselves trapped - again - in the position of raw material exporters. Chinese investments, notably in infrastructure, seem in many cases liable to lead to insurmountable debt. Besides, the promises of horizontal development also fail to materialize for the populations of many LAC countries, as the positive benefits from the South-South co-development dynamics have hardly trickled down towards the poorest and more vulnerable populations of the various LAC countries.
All such observations lend renewed relevance to the World-System analysis offered decades ago by Immanuel Wallerstein,2S at a time the Cold War lenses used to blur the extent to which the international trade rested on a worldwide division of labour between core and peripheral countries, with the former (mostly previous colonizers) producing and exporting manufactured goods and the latter (mostly previously colonized) exporting essentially raw goods. The fact that China’s trade and economic relations with LAC seem to reproduce - or at least fails to suppress - such imbalances is quite challenging. Indeed, China does not fit the "usual profile” of a core country: an emerging power, it has strongly suffered from colonial dynamics itself, has not fully achieved development for significant segments of its population, and its economy is an idiosyncratic brand of mixed socialist market. Yet, as already emphasized, a decade of intensifying relations with LAC countries shows that horizontal partnership, win-win strategies and South-South co-development leave much of the economic and social challenges unaddressed. This begs renewed theoretical investigations notably into the kind of power and imbalances massive trade and investments-geared diplomacies produce and their impact on developing countries. This is all the more relevant at a time when both Beijing's strategy in the LAC region and Washington’s reaction to it equate with “invest[ing] overwhelmingly in fossil fuel infrastructure, locking Latin America into a high-carbon development pathway” at a time the region would need massive “investment to rebuild after Covid” but through “low-carbon, climate-resilient development if it’s to generate sustained, long-term benefits” as put by Rob Soutar, managing editor of Dialogo Chino.29
All such issues remain open for theoretical debate and need as thick empirical insights as possible. It is precisely the objective that this volume aims modestly to contribute to, by trying to draw up a multidimensional evaluation after a decade of uninterrupted growth of the Chinese presence in LAC.
5 The book’s outline
This book is the result of an international colloquium organized at the Univer- site fibre de Bruxelles (ULB) in November 2018 by several ULB's research centres: ULB Center for East Asian Studies (EASt), Recherche et etudes en relations internationales (REPI), Centre d'etude de la vie politique (CEVIPOL) and Centre interdisciplinaire d’etude des Ameriques (Americas). The book is composed of 14 chapters written by 18 contributors from Latin American, European and Chinese universities. The chapters are organized into three parts according to a geographical distribution covering almost all the countries of the Central and South American continent: I. Dynamics and trends relevant to the LAC as a whole; II. Case studies from South America; and III. Case studies from Central America and the Caribbean.
The first part of the book deals with issues affecting the whole LAC region or important sub-areas of this space. Liu Jianhua opens this part by looking at the opportunities and challenges faced by the BRI in Latin America from a Chinese perspective. Enrique Dussel Peters then examines Latin America’s current socioeconomic relations with the PRC, arguing in favour of Chinese foreign direct investment (FDI) in the region. Lincoln Bizzozero Revelez critically explores the namre of the “South-South” cooperation that Beijing is promoting in its relations with Mercosur countries. Jean-Christophe Defraigne and David Villalobos, for their part, raise the controversial question of whether Chinese economic expansion in the LAC countries is really responsible for the “deindustrialization” and the “primarization” of their economy. Finally, Detlef Nolte looks at the challenge posed to the European Union by the Chinese multifaced penetration in this zone.
The second part of the book is devoted to case studies from South America. Danielly Ramos Becard and Antonio Carlos Lessa look at Brazil’s foreign policy towards China from 2003 to 2019. Raul Bernal-Meza analyses the structure of Sino-Argentinean relations based on an approach of international political economy. Ana Soliz de Stange analyses the triangular relationship between China, the United States and Venezuela. Valeria Marina Valle questions whether China’s economic relations with Bolivia represented South-South or dependency relations during Evo Morales administrations (2006-2019). Finally, Gabriel Arrieta discusses - from a Peruvian perspective - the present and future opportunities and challenges, at the micro and macro level, of the bilateral relationship between China and Peru in economic terms.
The last part of the book is devoted to case studies from Central America and the Caribbean. Carlos Murillo Zamora looks at relations between Beijing and Central America in the context of tensions between China, Russia and the United States. Sophie Wintgens and Thierry Kellner examine the evolution of Sino- Panamanian relations under the Varela administration (2014-2019), which chose to break with Taiwan in 2017 to favour Beijing. Alvaro Mendez, for his part, analyses China’s relations with El Salvador in the 21st century. In the context of the establishment of diplomatic relations between the two countries in 2018, he pays particular attention to the geopolitical consequences of this development. Eric Dubesset finally focuses on the intensification of China’s presence in the insular Caribbean with the case of Cuba.
- 1 Xinhua (2008).
- 2 See China-CELAC Cooperation Forum website: www.chinacelacforum.org/eng/.
- 3 PRC MFA (2014).
- 4 PRC State Council (2016).
- 5 Hsiang (2018).
- 6 Wise (2020:12).
- 7 Idem, p. 16.
- 8 SIPRI (2019).
- 9 China is one of the main satellite development platforms for LCA. In particular, it collaborates with countries, such as Argentina, Bolivia, Venezuela, Ecuador, Nicaragua and Brazil since the late 1980s, with which it has been cooperating within the framework of the CBERS (China-Brazil Earth Resources Satellite Programme) for the operation of remote sensing satellites.
- 10 China Military Online (2017).
- 11 IMF database (https://data.inf.org/).
- 12 PRC MOFCOM (2019).
- 13 IMF database (https://data.imf.org/). To be complete, however, it should be noted that if merchandise trade between the United States and Mexico is subtracted from this figure, then the total US trade with all other LAC countries amounts to only about USS286 billion according to IMF statistics.
- 14 Authors’ calculations based on IMF database (https://data.imf.org/).
- 15 Idem.
- 16 Wise (2020:ix).
- 17 ECLAC (2018b:40).
- 18 Details by country in Gallagher and Myers (2020).
- 19 ECLAC (2018a:23).
- 20 China had established 43 Confucius Institutes in LAC by 2018. In August 2019 the joint meeting of the Confucius Institutes of Latin America was held in Buenos Aires, sponsored by the headquarters of the Confucius Institute. It was attended by more than 100 representatives from 36 Confucius Institutes (classrooms) from 14 Latin American countries and various other Latin American academic institutions. See Hanban News (2019).
- 21 See Barrios (2018).
- 22 Poston and Wong (2016).
- 23 See Vice (2017).
- 24 Oppenheimer (2019).
- 25 Wise (2020:18).
- 26 Acharya (2017).
- 27 Stuenkel (2016).
- 28 Wallerstein (1979).
- 29 Quoted in Youkee (2020).
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