China–Latin America relations

The relations between China and Latin America have become increasingly important.

Trade

Trade between China and Latin America increased by 1,200% or from $10 to $130 billion between 2000 and 2009.[1] The value of trade increased to $241.5 billion in 2011 according to Chinese Trade Ministry Counselor Yu Zhong. Only the United States was a larger trading partner. The top five nations in the trade were Brazil, Mexico, Chile, Venezuela and Argentina.[2]

In 2009 7% of Latin America's exports was to China. It consisted largely of raw material and commodities such as copper, iron ore, oil, and soybeans. China was the largest export market for Brazil, Chile, and Peru and the second largest for Argentina, Costa Rica, and Cuba. Four nations contributed 90% of the exports: Brazil (41%), Chile (23.1%), Argentina (15.9%), and Peru (9.3%). Increased Chinese demand has also been argued to increase the commodity prices of Latin American exports.[1] In the case of Brazil the rise of a new middle class has even been seen as due to Chinese commodity demand.[3] On the other hand, a large part of the exports of Costa Rica (which has a Free Trade Agreement with China), El Salvador, and Mexico to China were high-tech manufactured goods.[4]

5% of China's exports went to Latin America in 2009 and consisted mainly of industrial and manufactured goods. Chinese goods are popular in part due to their low costs. Chinese manufacturers are also making substantial efforts to establish themselves as brand names for the new middle class.[1]

According to a 2012 Fitch ratings report in 2010 92% of Latin American exports to China were commodities. 85% of Chinese foreign direct investment went to extractive industries as did 60% of Chinese loans. The report stated that the effects are mixed but overall Latin America has benefited from the relationship with China by higher commodity prices, increased growth, increased investment, and improved governmental financials.[5] There are of course many concerning environmental impacts related to the huge increase in extractive industries and agriculture by Chinese companies in Latin America, including pollution, deforestation, habitat destruction and rising fossil-fuel emissions.[6]

There have been concerns regarding the relationship due to Latin American dependency on exports of low-value added, highly price volatile commodities that employ relatively few people. Latin American manufacturers have faced increasing competition from China on both domestic and international markets. In some countries there have protests against the raising inflow of Chinese manufactured goods, local Chinese businesses, and perceived loss of manufacturing jobs to China.[1][5] The book The Dragon in the Room: China and the Future of Latin America found that 92% manufacturing exports from Latin American where in sectors where China was increasing its market share while Latin America was decreasing its share, or where both China and Latin America where increasing their shares but Latin America at a slower rate.[7] Several experts have even argued that the long-term outlooks for Latin American manufacturing are poor and other sources for growth and trade such as services should be sought.[3]

After the Chinese economy peaked in mid 2015 many Chinese investment projects in Latin America were canceled or slowed.[8]

Political

China has been seen as an alternative to the United States and Europe by Latin American nations for support in the international community, for funding of infrastructure and humanitarian aid, and for creating economic growth. The number high-level meetings between Chinese and Latin American officials have rapidly increased. These have been accompanied by number of bilateral agreements.[1] The creation of the BRICS group also helped to increase relations between China and Brazil. In 2014, the 6th BRICS summit held in Fortaleza, Brazil, had the presence of the UNASUR leaders, which includes all South American countries.

Wikileaks diplomatic cables describe a divided Latin American opinion regarding China. Neil Dávila, head of Mexico's federal agency for promoting foreign commerce and investments, stated "We do not want to be China’s next Africa," reflecting a common concern regarding the effects of Chinese involvement in Africa. Colombia, Brazil, and Chile also expressed concerns while Venezuela and Argentina were convinced that dependency on the United States must end and saw China as the greatest opportunity for their exports. Chinese officials in response has accused US diplomats of spreading mistrust and Chinese Vice-President Xi Jinping in 2009 in Mexico stated that "China does not export revolution. China exports neither hunger nor poverty. We do not cause problems. What more can be said of us?"[9]

Many of nations that continue to have official diplomatic relations with Taiwan are in Central America and the Caribbean. Taiwan has previously offered military exchanges and training as well as economic aid in return but has more recently had difficulty competing with China's economic incentives and in 2008 officially abandoned this "checkbook diplomacy". The remaining pro-Taiwan nations have been seen as waiting for better Chinese offers.[1]

Military

Military relationships have been mainly through military-to-military contacts. In particular Venezuela, Chile, Bolivia, and Cuba have had frequent official military visits, exchange of military officers, and navy port calls. There have been limited arms sales to Venezuela and Bolivia while other nations have bought nonlethal military equipment. In 2011 China and Bolivia signed a military-to-military cooperation agreement.[1] Chile, Ecuador and Peru were visited by a Chinese flotilla in 2009.[10]

In King George Island, Antarctica, China and Chile have military facilities next to each other in.[10]

Regional organizations

China in 2004 as permanent observer joined the Organization of American States. In 2008 China joined the Inter-American Development Bank as a donor. China has also increased its relationships with the Group of Rio, the Andean Community, and the Caribbean Community.[1]

See also

References

  1. 1 2 3 4 5 6 7 8 Katherine Koleski. Backgrounder: China in Latin America. May 27, 2011. U.S.-China Economic & Security Review Commission. http://www.uscc.gov/Backgrounder_China_in_Latin_America.pdf
  2. ↑ China's trade with Latin America grew in 2011, Indo Asian News Service, Wed 18 Apr, 2012, http://in.news.yahoo.com/chinas-trade-latin-america-grew-2011-050334275.html
  3. 1 2 Jordi Zamora. China's double-edged trade with Latin America. Sep 3, 2011. AFP. http://www.google.com/hostednews/afp/article/ALeqM5ggNqQ5G8UFErmAEw71Y-u51P8_Eg?docId=CNG.e829052752a5436e909ab280ad561af6.671
  4. ↑ Ryan Berger. The Fast Ramp-Up. Quarterly Americas. http://www.americasquarterly.org/charticle_winter2012.html
  5. 1 2 Fitch: China's Economic Rise Provides Mixed Benefits for Latin America, May 9, 2012, http://newamericamedia.org/2011/01/latin-america-divided-over-ties-with-china-growing-suspicions-over-chinese-presence-in-latin-america.php, Fitch Ratings, BUSINESS WIRE
  6. ↑ http://www.dialogochino.net
  7. ↑ Kevin P. Gallagher and Roberto Porzecanski. The Dragon in the Room: China and the Future of Latin American Industrialization. 2010. Stanford University Press
  8. ↑ ROMERO, SIMON (3 October 2015). "China’s Ambitious Rail Projects Crash Into Harsh Realities in Latin America". www.nytimes.com (New York Times). Retrieved 3 October 2015.
  9. ↑ Louis E.V. Nevaer , Latin America Divided Over Ties with China, Jan 26, 2011, New American Media, http://newamericamedia.org/2011/01/latin-america-divided-over-ties-with-china-growing-suspicions-over-chinese-presence-in-latin-america.php
  10. 1 2
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