In the dawn of Donald Trump’s administration’s protectionist turn, many commentators have turned their eyes to China as the new champion of Globalization. One scenario in which China could surpass the US in commercial terms could take place in Latin America. Although, it is still too soon to assess the extend of Trump foreign policy promises, it is true that Trump’s campaign consisted of two key points regarding foreign policy: challenging the rise of China and the promise of limiting free trade with Asia and Latin America.
Reactions have been hasty. At the meeting of the Asia Pacific Economic Cooperation (APEC) 2016 held in Peru – just a few days after the elections – most Latin American leaders stated their willingness to approach China faced with the Trump presidency. However, China is not a newcomer in the region, and its growing influence in Latin America is not going to be a matter of political opportunity. It is due to a long term strategic plan.
During the last decade, China has been building strong ties with key Latin American countries, which is manifested in the involvement in important projects in the region. In the short term the most immediate interest of China in Latin America emerges from its own economic necessity of securing the provision of raw materials and opening new markets for its manufacturing products. Chinese relations in Latin America and the Caribbean have thus been based in general terms on economic interest and the recognition of the People’s Republic under the “One China” policy. In Latin America, China has played its well-known cards of not demanding internal political adjustments; an appealing anti-hegemonic discourse; the provision of technology; and the funding of underdeveloped infrastructure.
In this fashion, several similarities can be traced between Chinese strategies used in Latin America and those used in Central Asia or Africa. Although, China has opened relations to governments of all political ideologies, a preponderance of agreements with left wing nationalist governments under the wave of Bolivarian revolutions can be observed, most likely because of their opposition to the United States. While one should not establish any causal relation, it can be argued that the wave of the Bolivarian Revolution has been at least a convenient contextual factor for Chinese aims in the Americas.
A paradigmatic case is Venezuela. Caracas is one of the most important commercial partners of China in the region. Venezuela has been a provider of oil and minerals – coltan and gold – and has proven to be an interesting market for Chinese products. China has not only been a supplier of technology, but also an important financial partner and funder of infrastructure projects. However, Venezuela’s loans have been paid through oil, sometimes with unfavourable conditions for Caracas and some of the infrastructure projects have never been completed. Nonetheless, China has proven to be an important political asset for the Bolivarian government, opening the possibility to an independent foreign policy from the US. Also, through this relation China deprived the US of a reliable oil provider of close proximity. Other cases are Cuba, to which China is its second most important commercial partner and shares military intelligence; Brazil and Peru, with whom China is involved in the trans-Amazonian railway project; the uncertain project of the Grand Canal of Nicaragua; or the possibilities of a Chinese (supposedly) scientific base in Argentinian Patagonia, among others.
Regarding China’s internal geopolitical orientation, it should be noted that Chinese involvement in Latin America represents a slight change with traditional Chinese rejection of overseas expansion. The recent reinforcement of the Chinese navy in the volatile context of the South China Sea is commonly known. However, in order to secure its position in Latin America, China will need to strengthen the capabilities of its commercial fleet. To this end, China is involved in several infrastructure projects with the aim of increasing the maritime connections between the Caribbean Sea and the Pacific Ocean, which includes: the Nicaragua’s Grand Canal; Chinese funding of the extension of the Panama Canal; and a new project of a land connection through Costa Rica. Nevertheless, the impact of those projects goes beyond short-term security imperatives. Here we can see how China is willing to stay in the Americas long-term, focusing an important portion of its resources to gain a proficient position overseas.
Furthermore, those projects also have important synergies with the Maritime Silk Road (MSR), the sea dimension of the “One Belt One Road” project, the core long term geopolitical project of China, which attempts to build the world’s largest network of land infrastructure connections and will enhance its trade through Central Asia to Europe. Setting the Maritime Silk Road and China’s Latin America maritime infrastructure projects together, allows us to visualize how China pretends to build its role as the “new champion” of globalization. Indeed, the extension of the Maritime Silk Road through the Caribbean, would prompt to redefine the Geo-economical meaning of the label “Middle Kingdom”, as China would emerge as the nodal point of the global commerce.
Nevertheless, there are many obstacles in this path: firstly, the challenge that represents the significant distance of the Pacific Ocean; secondly, the Chinese economy will depend more on the maritime transport. Thus China would be weaker in the case of an US maritime blockage, which is indeed one of the problems that the “Silk Road Economic Belt” initiative seeks to resolve through its land dimension; and thirdly, the People’s Liberation Army Navy (PLAN) is not currently able to directly defend Chinese interests in Latin America. Despite these various challenges, if the “Maritime Silk Road” and the “Silk Road Economic Belt” projects are completed, we are likely to witness the growing of synergies between the MSR and Chinese projects in the region, especially in the Caribbean Sea.
This would result in significant geopolitical consequences. China becoming an alternative partner to Latin American countries has changed the traditional power configurations of the region, making an independent Latin America from the US a realistic option. While the countries in the region will benefit from Chinese activities, in the medium-term China would hardly be able to reach direct intervention capacities, which the US currently holds in the area – a power that Washington has not hesitated to use against governments that it deems to be opposite to its interests. Although, even if the wave of left wing nationalist Latin American governments appears to be in decline, one does not need to be a Bolivarian to appreciate the margin of manoeuvre which is opened having China in the region.
Nevertheless, incompatibilities between Latin America and China’s economies could arise in the long term. China is indeed a factor for the commodification of Latin America economies. It needs to be pointed out that growing domestic industries and achieving solvent national and regional markets is one of main Latin American economic goals. The development of new dependency ties with China can be as dangerous as the ones with the US. However, the US economy can offer a market for low quality manufactured goods, while Chinese markets are particularly interested in Latin American natural resources.
Probably, this is one of the main handicaps for the Chinese leadership of the free market and Globalization, both in Asia and America. For instance, the US withdrawal from the Trans-Pacific Partnership hardly can benefit China, because most of Asian economies which signed the agreement were already main competitors of China for the American market. In this way, China-Latin America relations could barely offer the possibility of developing domestic industries, which at the end is a core element for the achievement of the full sovereignty.
But why should China take the risk of expanding its influence in a region which is primarily Washington’s sphere of influence? The Chinese presence in Latin America would necessarily increase competitive dynamics with the US. But at present, China by no means could reach the capabilities of the US navy on its own maritime zone. This fact could be the answer to the question. In the case of the US-China competitive dynamic, we face a scenario in which the US, the first world military power, is confronting China, the rising power and first world economy. With the additional fact that Washington’s military power is overwhelmingly superior to Beijing’s economic advantage over the US. Thus, it is a crucial point for China to maintain the competition in the Geo-economic terrain.
In the South China Sea arena, the game is essentially played within military grounds. However, in Latin America, China is playing Geo-econimics in order to increase its influence. Furthermore, Washington’s safe position in the America’s has been the element that primarily facilitated its expansion to other continents. Hence, China with its Latin American strategy appears to be opening a new front in Latin America, which not only is a soft-balancing policy to the US and its deployment in the South China Sea, but also frames the dynamics of the conflict into an economic dimension, an area in which China can face up to the US. Nevertheless, the Trump administration appears not to be willing to play this game on China’s terms. As we could see last months, the US is ready to keep the tension at the military level in the South China Sea, where it has retained some advantages.
Furthermore, at first glance the victory of Donald Trump in the US presidential elections can help the Chinese strategy in Latin America. As we suggest, Donald Trump at the most is going to increase and accelerate some previous activities and plans. For a country like China, which needs to act in the long term, that does not necessarily mean a better scenario. For China’s interest indeed, it is preferable to locate competition with the US in Central and South America. However, a stronger Chinese position in the Americas could trigger a more aggressive US foreign policy in East Asia. The aftermath of this competition is probably going to be resolved by the one capable to set the margins of the grounds in which the game is played. After all, strategy is just a matter of the position, and the position is determined by the terrain.
Miquel Vila Moreno, Associate Analyst for China and the Geopolitics of East Asia
This analysis was previously published by Mapping China
Photo 1: Michelle Bachelet (L), President of Chile, Xi Jinping (C), President of China, and Alicia Bárcena (R), CEPAL executive secretary, in Santiago de Chile, 22/11/2016 (Photo: Carlos Vera / CEPAL).
Photo 2: Xi Jinping (L) and Nicolás Maduro (R), President of Venezuela, at the Palacio de Miraflores in Caracas (Venezuela), 20/07/2014 (Photo: Ministerio del Poder Popular para la Comunicación y la Información).
Photo 3: US President Donald Trump (L) and Xi Jinping (R) meeting in Palm Beach, Florida (US), 07/04/2017 (Photo: Doug Mills / The New York Times).