Strategic Implications of China's Evolving Relationship with Latin America
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18 Nov 2009

Brookings Institution SpeakerOn November 6, 2009, the Center for Hemispheric Defense Studies, in partnership with The Brookings Institution, conducted a day-long conference on the “Strategic Implications of China’s Evolving Relationship with Latin America.” The conference was attended by more than 220 persons, representing a diverse range of audiences, from US government agencies, to diplomatic, business and academic communities and interested think-tanks.

The tone of the conference was cautiously positive. Engagement by the People’s Republic of China (PRC) with Latin America was accepted as a given and recognized as transforming the region in a myriad of ways. The focus of the conference was primarily on recognizing and managing the challenges that could arise from that relationship, rather than a forum for debating whether China was either a threat that should be countered, or a panacea for regional development.

Dr. Frank Mora, Deputy Assistant Secretary of Defense for the Western Hemisphere, used the event to present a policy statement regarding China’s relationship with the Western Hemisphere, one of the first sallies by the Obama administration on the topic. In his remarks, Mora emphasized that the administration’s interest in PRC activities in the hemisphere is tied to the fundamental importance that regional security and prosperity has for US national security.

Mora emphasized the strong US ties to the region and the ways that this relationship benefits the region, to include the flow of remittances to Latin America, US investment in the region (far greater than PRC investment there), and bilateral trade flows (which are far larger than PRC trade with the region, and in which the US, by contrast to the PRC, is a strong net importer from the region).

Rather than characterizing PRC activities in Latin America as a threat, Mora focused on opportunities for collaborating with the PRC, in an international context. These included: 1) contributing to economic opportunity in the region through trade and investment, thus lessening poverty, promoting economic diversity (which supports democratic rule), and promoting development, which can ameliorate security challenges such as under-governed and ungoverned territories by providing incentives and resources for more robust government institutions or directly supporting infrastructure projects that better connect remote areas; 2) cooperation to fight against narcotics, arms, and human trafficking and other forms of transnational crime.

Mora acknowledged that under the right circumstances, PRC military sales to the region could help states more effectively manage their territory and combat threats such narcotics, arms, and human trafficking, but that greater transparency from the PRC about its intentions and objectives is necessary.

Luncheon speaker General (ret.) Bernard Loeffke argued that collaboration on medical assistance and other philanthropic activities could serve as a basis for US-PRC collaboration in Latin America, and that this collaboration could serve as a basis for improving the US-PRC relationship in general.

The first conference panel recognized that Chinese engagement with Latin America extends beyond trade and investment to interest in military, technology, political, and social-cultural cooperation, an observation confirmed in China’s first white paper on its relations with Latin America, released in conjunction with PRC President Hu Jintao’s visit to Latin American in November 2008, and reiterated at the conference by Dr. Jiang Shixue, the person who led in presenting that white paper to the world. However, despite a blossoming of new initiatives, and interest on both sides in developing relationships, it was recognized that China’s engagement with Latin America is relatively limited by a lack of understanding of Latin America among Chinese, as well as linguistic and cultural barriers.

Panels Two and Three raised a number of challenges stemming from PRC economic engagement with the region:

As Chinese trade and investment with the region increases, it will have an increasing stake in the policies of the governments which provide it access to regions and markets. In some cases, such as Venezuela, the PRC may find itself being pulled into confrontations with Caracas’ neighbors, which would not support its broader interests. The PRC will face tough choices, and needs to decide on whether to cut off financial and other support from regimes that threaten its broader goals by destabilizing the region, but which provide the PRC important commodities and/or markets.

Similarly, the PRC may be tempted to pressure, or event act against a regime, if that regime acts to expropriate important PRC holdings, or cut off key PRC resource flows.

In local politics, as the PRC becomes more involved in operations in extractive sectors of countries, it will be challenged by environmentalists, unions, indigenous peoples, and other forces. Chinese companies may find that they are more vulnerable than Western multinationals to managing those relations in a manner that escalates into crisis.

In the economic realm, trade with the PRC may have the effect of re-enforcing Latin American concentration on relatively low-value industries, such as agriculture and mining, subject to the vagaries of commodity price variations, although it was pointed out that Latin America will also be to blame if it does not leverage commodity windfalls to invest in more sustainable development.

Panel Three emphasized that military ties between Latin America are at a relatively low level, although in some cases, China has sold more sophisticated items, including the sale of air surveillance radars to Venezuela and Ecuador, and fighter aircraft to Venezuela and Bolivia. An important limiting factor for such transactions is that the type and quality of Chinese equipment often does not match the needs of Latin American militaries, nor can it be supported by existing maintenance infrastructures.

CHDS Defense Ministry Chair Dr. Oswaldo Jarrin noted that China’s commercial expansion, east across the Pacific, intersects Brazil’s commercial expansion, west across the continent, creating opportunities and strategically important interactions where the two meet, such as Ecuador.

A first-hand analysis by former Costa Rican Vice President Kevin Casas-Zamora of Costa Rica’s switch in diplomatic recognition from the Republic of China to the PRC shows how anticipation of real trade benefits, plus a perception of China’s emergence as a world power, can shape the political actions of leaders in the region.

Dr. Lianxin Xiang argued that even without ill intent, strategic misunderstanding between China and the United States is not impossible as China expands its relationship with the region.

While panelists differed on whether there was, or should be a “Chinese development model,” that could be tailored to Latin America, regional countries are looking hard at the examples offered by China, and there was general agreement that this has strategic implications.