July 28, 2014, by editor
China in Latin America: A Deepening Friendship
Written by Ariel Armony.
What did Beijing hope to gain from President Xi Jinping’s visit to Latin America? As we know, the Chinese leader had an intense agenda planned for the region: the BRICS summit in Brazil (and corresponding talks with leaders from UNASUR – the Union of South American Nations), a meeting with the “Quartet” of the Community of Latin American and Caribbean States (CELAC), and visits to Argentina, Venezuela, and Cuba.
If we examine President Xi’s trip from a long-term perspective, we can hypothesize that the Asian power sought four principal objectives:
- First, to reinforce political ties with the region.
- Second, to further a regional agenda.
- Third, to make progress in the fields of energy and food security, as well as in investments into infrastructure and transportation.
- Fourth, to improve the articulation of policy towards Latin America, and to align it with Beijing’s global strategy.
This is not a small feat. Because of these goals, Xi’s visit marks an important turning point in China’s relations with the region.
The first objective is to secure political ties with Latin America. Although we are used to focusing on economics, it is very clear to Beijing that the global expansion of businesses and Chinese investments requires a solid political platform. Diplomacy is the base of commercial growth. Beijing is concerned with the political stability of some of its strategic partners (Venezuela and Argentina are good examples). It also recognizes where to place added focus: Brazil is a hard nut to crack, which China needs as facilitator for its plans in the region. If Brazil sees China as competition, this will hinder the agenda, complicating Beijing’s overall regional strategy.
The second outcome deals with moving from a policy based on bilateral relations to one with a more regional character. Since he took office, President Xi has furthered a policy that seeks to create or strengthen multilateral spaces where the influence of the United States is weak or absent, but always taking care not to irritate Washington. In this sense, Beijing’s agenda is moving intelligently and simultaneously on different fronts. Announcing the creation of an investment bank for development (New Development Bank) has been a main action item for the BRICS meeting in Fortaleza. This aligns with Chinese aspirations to rely on international institutions in order to assume a global leadership role, which will also serve as a platform to promote its own interests. At the same time, the initiative to create a China-CELAC summit kills two birds with one stone: it responds to the absence of a forum for interaction with the region (which has been a constant critique of Latin American countries), and it achieves said objective without the United States.
It is possible that the BRICS bank will act as a counterweight to the International Monetary Fund (IMF), the World Bank, and for Latin America, the Interamerican Development Bank (IDB). In the context of Argentina’s external debt, the creation of such a bank and a Contingency Reserve Arrangement (CRA) generates considerable attention, but it is difficult at this moment to determine concrete benefits without knowing more details about these institutions. Some think that the new bank will contest Japanese influence in spaces like the Asian Development Bank, and the United States with the IDB. What is clear is that it will, for this group of countries, function as a concrete tool of political and economic impact.
The third desired result is strengthening Chinese policy on energy and food security. Concerning energy, Venezuela is an important partner, sharing a close and carefully diversified relationship with Beijing. China wants to explore new ventures in oil and gas, like the “Vaca Muerta” formation in the south of Argentina, where Chevron has already begun operations. President Xi is also expected to place increased emphasis on iron ore imports from Brazil.
As we know, soy exports from Argentina and Brazil are key in commercial relations between China and Latin America. The Asian dragon would like to achieve self-sufficiency in food production, but serious limits in the domestic sector and insecurities with price volatility have pushed Chinese businesses to look for foreign investment opportunities. As such, they can control the production and processing of agricultural goods, as well as logistics of transportation. At the moment, Chinese agricultural investment in Latin America is limited, but there is significant interest in expansion. Nonetheless, there are many obstacles, mainly of a political nature. Because of this, Chinese diplomacy will play an important role in the future.
Besides energy and food, other relevant parts of the agenda are investments in Argentine railway cargo, and various infrastructure projects.
Fourth, as diplomacy towards Latin America is becoming more complex, it is necessary to adjust regional relations to align with Beijing’s global policy. The four countries that President Xi included in his Latin American tour are normal destinations for the Chinese leadership. Nonetheless, as was mentioned before, this trip should be understood as something more than just a bilateral gesture: Beijing is making an overall turn towards regional and multilateral policy. This evolution means that Chinese strides in Latin America can be read more and more in relation to its actions in other regions. Because of this, Beijing is concerned with explaining to Washington that its Latin American policy should not be seen as contentious, that Latin America is only a secondary region in the grander scheme of Chinese foreign policy. But they also realize that there are reasons to read this policy in a completely different way.
If President Xi’s visit achieves these four objectives, we can start to talk about a new stage in Chinese-Latin American relations. This new stage will bring new opportunities, but also challenges for both parties. And it will spawn some significant questions: how will Washington evaluate the visit of the Chinese leader? Will it, in any way, affect U.S. policy towards Latin America?
Ariel Armony is the Director of the Center for Latin American Studies at the University of Miami.
This piece has originally appeared in Spanish in El Pais.
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