More suspicious interpretations stress that Beijing is not only crafting political alliances to create a multipolar world but is using some of the region’s countries as show-cases to underline its commitment with the developing world, as well as pressing some countries in LAC to halt their diplomatic relations with Taiwan.
But I argue rather, at least for the time being, that China doesn’t have fully fledged hegemonic intentions in Latin America. Unlike the USSR during the Cold War, the Chinese strategy for the LAC region is much more economic than either ideological or geopolitical. By stating this, I am not buying the Chinese mantra of a “peaceful rise”. As far as I can see, no great power behaves as Saint Francis of Assisi. I therefore subscribe to the neorealist idea that power politics is explained by states’ capabilities and interests. The subjective intentions of political leaders are usually constrained by systemic arrangements in the international arena.
If China isn’t an imperialist power, what risks arise from its recent engagement with LAC? From a Latin American perspective, I foresee two main areas of distress. One is economic and the other is political. In the economic realm, LAC should be concerned by the new trap of old commodities. The point being that China’s colossal demand for raw materials is reinforcing a long-lasting and precarious pattern in LAC’s insertion in the global economy. The concentration of Latin American exports and the ensuing vulnerability to external shocks are a potential threat to the Latin American region.
But this is far from a new problem. In the 1980s and 1990s most of Latin American countries switched to liberal economic policies, which meant the dismantling of Import Substitution Industrialisation (ISI) and the opening up to foreign trade. These measures unfortunately brought back a scheme of international insertion based on Ricardian comparative advantages. With a handful of exceptions such as countries like Mexico, Latin America and the Caribbean underwent swift processes of de-industrialisation and simultaneously “re-primarised” their exports. By 2010, 76% of Latin American exports were still composed of primary commodities. Even Brazil, widely heralded as a BRIC member and emerging power, has experienced a similar trend, with two-thirds of its exports constituted by raw materials. Despite decades of industrialising efforts, in the early 21st century the structure of Latin American foreign trade is not too different from what it was in the late 19th and early 20th centuries.
This historical fragility has not been provoked by Beijing’s foreign policy goals. However, China’s voracious demand for commodities in the 2000s and 2010s has spurred LAC’s dependency on the export of basic products. In 2011, for example, China consumed 53.2% of the world’s production of cement, 47.7% of iron ore, 46.9% of coal, 38.9% of copper, 24.6% of soy beans and 10.3% of oil. Insofar as they export most of these goods, South American countries were highly blessed by China’s demand.
As a result, Brazil acquired vast amounts of foreign exchange by selling iron ore, coal and soy beans to China; Argentina’s agriculture was revamped by exporting soy complex (beans and oil); Chile and Peru strengthened their international reserves thanks to their exports of copper and fish flour. The commodity boom explains, to a great extent, the resumption of economic growth in South American countries after two “lost decades”. It also accounts for their resilience to the global crisis started in 2008.
However auspicious this Chinese appetite for commodities might seem, three meaningful problems arise for LAC. The first problem concerns the question of what should be done with the rent from the commodities boom. As in the past, there is the possibility that this unexpected income reproduces social inequality and enriches short-sighted Latin American elites. Resources obtained via the commodity boom may defer structural reforms and inhibit the creation of competitive advantages based on increasing added value.
Secondly, although China’s GDP has grown at two-digit rates in the last three decades, this dynamism may diminish in the near future. If this scenario were to materialise, the demand for some Latin American commodities could drop significantly. This concern is not too far-fetched; indeed, cycles of booms and busts have been scattered through the entire history of Latin American economies.
Thirdly, even if China keeps on growing at two-digit rates, the centre-periphery scheme is reappearing. By the mid-2000s, many South American countries were experiencing trade surpluses with China. Nevertheless, in 2011 nine out of the 12 members of the Latin American Integration Association (ALADI by its acronym in Spanish) recorded a trade deficit with China. In stark contrast with LAC commodities, Chinese exports are undergoing a fast technological upgrade. China has become the first world exporter of high-tech products, surpassing the U.S. and the EU. The vertiginous evolution of the Chinese technologic power is not only a threat to Latin America’s trade balance, but may also hollow out complete industrial sectors in East Asia, North America and Europe.
The second major risk of Chinese engagement with Latin America is political in nature and has to do with world politics: it entails a not-so-remote reprise of the Cold War in LAC. This time, the sides of the triangle would be the U.S., China and Latin America. During the bipolar world order (1945-1990), LAC became one of the several theatres for the U.S. containment of the Soviet Union. Virtually every Latin American political force with an agenda of social transformation came to be seen as Soviet-supported and a consequent threat to U.S. national security. Washington intervened systematically in the region, overthrowing progressive governments in Guatemala (1954), the Dominican Republic (1966), Chile (1973) and Grenada (1983). The U.S. also intervened unsuccessfully to abort the Cuban revolution in 1961. In 1979, the Sandinista revolution triumphed in Nicaragua. Ronald Reagan’s administration (1981-1989) implemented an aggressive strategy to derail the Sandinista regime and the left-wing revolutions in Guatemala and El Salvador.
Once pacification in Central America was achieved, the emphasis of U.S. policy towards Latin America shifted from geopolitics to geo-economics. In the 1990s trade and investment issues prevailed over political and military involvement. The U.S. strategy for Latin America became focused on the defence of democracy, economic reforms and free trade agreements (FTAs). The idea that the market mechanism should be extensively used to revamp Latin American economies, themselves lashed by statism, inflation and protectionism, came to be known as the Washington Consensus.
Among Latin American policy-makers, the leading perception in the 1990s was that the emerging post-Cold War world was bluntly unipolar. Most of Latin American rulers thought that, both in the world and in the western hemisphere, no other power had the economic, political, diplomatic or military strength to be a real counterweight to the United States. This perception was coupled by the cautious attitude of extra-regional actors in the 1990s: while the USSR had collapsed, the European Union, Japan and China either stayed aloof or engaged Latin America with extreme repair. In the words of Peter H. Smith, during the 1990s the U.S. achieved “hegemony by default” in Latin America.
In the 2000s, however, new developments took place in LAC. The unipolar world, which seemed manifest a decade earlier, came into question after 9/11 and the ensuing U.S. military interventions in Afghanistan (2001) and Iraq (2003). Latin America resumed its economic growth, thanks to the aforementioned boom of commodities; a plethora of centre-left and leftist governments took office via democratic elections; neo-liberalism lost momentum; renewed economic growth made LAC attractive again for international powers and investors; the Free Trade Area of the Americas (FTAA), enthusiastically advocated by Washington since 1994, was aborted in the Mar del Plata Summit in 2006. All of those changes occurred while Washington was largely focusing its attention on the Middle East.
This is the context of the renewed Chinese activism in LAC. As a result of the “Chinese factor”, southern cone countries are increasingly moving away from the U.S. and European economic and political influence. EU countries are still the largest foreign investors in Latin America, and the U.S. is still the main import partner of most LAC countries. In terms of exports, however, China has become a major outlet for Latin America’s foreign trade, displacing the U.S. as main trade partner of countries like Brazil and Chile. In contrast to South America, U.S. hegemony in Mexico, Central America and the Caribbean Basin is less questioned.
How are the main political and economic actors in the U.S. interpreting Mao Zedong’s steps in James Monroe’s backyard? To what extent is it accurate to think that a new Cold War is streaming in the Americas? U.S. positions on Chinese engagement with Latin America range between a vigilant tolerance and a passionate appeal to contain “Chinese expansion” in the western hemisphere. The soft-liners are integrated by the Presidency, the Department of State (DOS), and liberal law-makers and scholars. Predictably, hard-liners include certain sectors of the Department of Defense and Congress, conservative scholars, and some far right, fear-mongering think tanks.
Let me begin with the positions of “doves”. Given the historic patterns of U.S. interventionism in LAC, the responses from George W. Bush (2001-2009) and Barack Obama’s (2009-) administrations have been surprisingly sanguine. Plenty of statements made by DOS top officials depict quite a tolerant stance on China’s relations with Latin America. Such positions are usually very careful and alien to the aggressive and anti-communist rhetoric of the past. Soft-liners argue that China’s interest in LAC is mostly a market-driven process and deny that Chinese political activities in the hemisphere are aimed at undermining U.S. hegemony. There is, however, a slight concern that Beijing could get too close to far-left leaders such as Hugo Chávez, Raúl Castro or Evo Morales.
Not everyone in the top echelons of the U.S. political system is as cool as diplomats in the DOS. Some speeches and documents written by hawkish law-makers and scholars evoke the McCarthyist discourse of the 1950s. During a Congressional hearing in 2005, Dan Burton, a senior member of the House Subcommittee on the western hemisphere, warned: “We should be cautious and view the rise of Chinese power as something to be counterbalanced or contained, and perhaps go so far as to consider China's actions in Latin America as the movement of a hegemonic power into our hemisphere”.
Perhaps in view of hard-liners’ increasing apprehensions, the George W. Bush administration decided to address its concerns on Latin America with China’s top diplomatic echelons. In April, 2006, Thomas Shannon, Assistant Secretary of State for Western Hemisphere Affairs, undertook a visit to China. That was the first time that a top official of the Department of State travelled to Beijing with the single goal of having a dialogue on LAC. After Shanon’s trip, there have been other rounds of Sino-U.S. dialogue on western hemisphere issues.
What about Obama’s democrats? While they mostly have maintained a conciliatory position, sometimes they seem anxious about China’s foothold in Latin America. In May 2009, in a meeting with U.S. Foreign Service officers, Secretary of State Hillary Clinton stated: “If you look at the gains, particularly in Latin America, that Iran is making and China is making, it’s quite disturbing. (…) they are building very strong economic and political connections with a lot of these (far leftist Latin American) leaders. I don’t think that’s in our interest.”
In spite of proto-hawkish statements, China and the U.S. share a prudent attitude towards each other. Thus far, China’s relations with LAC have not sparked the frantic reactions that the USSR ties with Cuba or Nicaragua used to drive among policy-makers in Washington. This restrained attitude may be explained by the continuity of the engagement policy towards China that has been an enduring feature of the U.S. diplomacy since the early 1990s. Therefore, it seems inaccurate to declare a new bipolarity or a second edition of the Cold War in the Western Hemisphere. To paraphrase Mao Zedong, there are contradictions between the U.S. and China, but they have not resulted in antagonisms. However, if bilateral tensions and hegemonic disputes grow in the next decades, Latin America and the Caribbean might become a theatre of global disputes between the two super-powers.
José Luis León-Manríquez is Professor of International and East Asian Studies at the Metropolitan Autonomous University in Mexico City. He is co-editor of “China Engages Latin America. Tracing the Trajectory”.