In Search of a Balanced Relationship: China, Latin America, and the United States
This study focuses on the four stages of Chinese relations with Latin America between 1949 and mid-2008. Ties during the 1950s were limited but directed toward a broad cross-section of individual Latin Americans. This was abruptly reversed during the Sino-Soviet dispute of the 1960s by militant advocacy of guerrilla warfare in Latin America. From the early 1970s until the death of Mao Zedong, militant Maoism was blended with a renewed opening of relations, now to military and civilian Latin governments. The final period began with Deng Xiaoping and his reforms and continues to today. This study focuses on Sino-Latin political and economic relations in general and links to the radical governments of Cuba and Venezuela in particular and weighs the impact of this expansion on Sino-U.S. relations. It concludes with comments on how China's presence may affect political and economic developments in Latin America itself and how to hone productive cooperation among China, the United States, and Latin nations.
The meteoric expansion of the People's Republic of China (PRC) into Latin America in recent years has caused varying degrees of exhilaration and apprehension around the Western Hemisphere. Chinese contacts with the region date back 60 years to the founding of the PRC government, but they have changed radically over time and expanded exponentially during the past decade as a result of reforms launched by Deng Xiaoping and developed by his main successors, Jiang Zemin and Hu Jintao. The expanding ties are directly related to (a) China's explosive economic growth; (b) the country's escalating need for raw materials, markets, and food to sustain that growth and satisfy rising consumer demands; and (c) the nation's increasing drive to participate in the affairs of the world. Each new stage is built in some degree on earlier experiences, but each also has its own distinct, at times contradictory, characteristics. Assuming China's continuing growth in the years ahead, the prospects are for ties to continue expanding rapidly, bringing further growth for many on both sides of the Pacific. Taken as a whole, China's expansion into Latin America illustrates a movement that far transcends the events and contacts in this region and demonstrates a shifting power configuration in the world, as discussed by Singapore diplomat Kishore Mahbubani in his book The New Asian Hemisphere (Mahbubani, 2008b). This article focuses on relations between China and Latin America since the PRC took control of the mainland and on how the United States has responded to this movement into its traditional “backyard.” Latin America is perhaps the ideal location in the world for the honing of mutually constructive relations and nonhostile competition among Chinese, U.S., and regional players that could serve as an example for a new, constructive alignment of major powers and regions of the world in the decades to come.
Of course, Chinese relations with Latin America are nothing new. Many scholars believe they date back to the peopling of much of the region by immigrants from Asia some millennia ago. Recently, a British naval officer turned historian has argued that China “discovered” the Americas, though he has not yet convinced most historians (Schurz, 1939). Clearly documented links date back to the mid-16th century after Spain conquered the Philippines and launched trade between its colony in today's Mexico and China by means of the so-called Manila Galleons. Even that early, the perceived liabilities and benefits of Latin relations with China emerged. Shortly after some Chinese settled in Mexico City in 1669, Spanish barbers there petitioned the government to relocate the Chinese barbers to the outskirts of the city because they worked too hard and thus were engaging in “unfair business practice” (Hu-Dehart, 1995, p. 220). Still, as a Spanish padre wrote just a few decades later, “[o]ne cannot imagine any exquisite article for the equipment of a house which does not come from China” (Schurz, 1939, p. 74), and these items were hotly sought after by the wealthy in the Spanish colonial heartlands of Mexico and Peru, and even in Spain itself. The first formal links between the Chinese and some Latin governments date back to the final decades of the Qing Dynasty in the late-19th century and were prompted by the mistreatment of some of the hundreds of thousands of Chinese who went to the New World as coolies to work in mines and on construction gangs and plantations. The Chinese Nationalist Party (Guomindang) maintained official relations with some Latin governments before and after it moved to Taiwan, setting the stage for a competition between Beijing and Taipei that continues today in parts of Latin America.1
PRC Policy in a Global Perspective
Like imperial leaders before them, and unlike most political leaders and policies in the West, Chairman Mao Zedong and later generations of PRC officials have tried to look at China's needs and goals over the long term with a unified perspective, though their “global” views have sometimes varied greatly. Chinese President Hu Jintao made his case for a “harmonious world” in a speech at Yale University in April 2006, using both traditional and modern concepts and terminology, as a foundation for domestic and international relations that would serve the interests of Chinese and all others in the long term. (Hu, 2006). A very Western interpretation of China's more comprehensive perspective, comparing it to Latin America's short-term vision, was presented recently by an analyst advising the U.N. Latin American program. He said that China “is a place where economic actors tend to know where they want to go, not only today and tomorrow but ten to fifteen years from now. Latin America, in contrast, seems much less forward looking and more absorbed by day-to-day events” (Devlin, 2008, p. 128).
On foreign relations specifically, President Hu Jintao told the 17th Communist Party of China (CPC) Congress in 2007 that the Chinese government will “pursue an independent foreign policy of peace” and “safeguard China's interests in terms of sovereignty, security and development” (Hu, 2007). He explained how international relations should function cooperatively to serve the people of the world (Hu, 2007):
- * Politically, all countries should respect each other and conduct consultations on an equal footing in a common endeavor to promote democracy in international relations.
- * Economically, they should cooperate with each other, draw on each other's strengths and work together to advance economic globalization in the direction of balanced development, shared benefits, and win-win progress.
- * Culturally, they should learn from each other in the spirit of seeking common ground while shelving differences, respect the diversity of the world, and make joint efforts to advance human civilization.
- * In the area of security, they should trust each other, strengthen cooperation, settle international disputes by peaceful means rather than by war, and work together to safeguard peace and stability in the world.
- * On environmental issues, they should assist and cooperate with each other in conservation efforts to take good care of the Earth, the only home of human beings. (Hu, 2007)
Realists in the West generally consider this as a menu of platitudes hopelessly seeking an ideal world. Even in China, “leaders believe in a set of principles in international affairs, but consideration of its national interest causes Beijing to make pragmatic compromises” (S. S. Zhao, 2007, pp. 4, 15). But President Hu's is a useful framework for seeing foreign relations, and much of it is much more specific than it may seem, a point the article returns to later. For now, the article identifies four broad periods in Sino-Latin American relations, though each could be further subdivided for greater subtlety. The first three periods are worth looking at with some care, since they are all little more than “yesterday” in the context of Chinese history and all must still be factored into China's current relations around the world.
First Period: Cultural Diplomacy
Between 1949 and about 1961, China pursued a neighborly policy toward Latin America, a region very far geographically from its primary concerns, in large part to break the isolation promoted by the United States and the United Nations. In a sense this was the original application of China's current “value-free” perspective. During this period China sought quite successfully to develop friendly relations with a broad cross-section of individual Latin Americans on the basis of an appeal to real and alleged similarities in histories, interests, and goals—more specifically, needs for national development and independence from American imperialism. One of the main differences between policies then and today, besides the former being much more limited in scope, was China's fervent “anti-Americanism,” resulting from Mao's own perspectives in the context of international conditions of the time, including the Korean War. For many years there was little incentive and less opportunity for China to establish formal relations with any government in Latin America, though Fidel Castro, who took power in Cuba in 1959, recognized China in 1960, being the first government in the region to do so. During the 1950s, Latin America was not only too far away to be of real interest to China, but it was also much more dominated by the United States than it is today.
Though limited, these contacts were relatively productive from Beijing's perspective. The policy adopted might most accurately be called a program of “cultural” or “people's” diplomacy, utilizing “the exchange of information, ideas, persons, and culture as a systematic and unified arm of foreign policy” (Walker, 1959, p. 45). More specifically, it involved visits to China by roughly 1,400 Latin Americans, including sometimes important, sometimes marginal, labor, political, economic, cultural, and other groups from the Americas. The numbers and diversity peaked in 1959. Even the least important guests, often in groups, met Chairman Mao, Zhou Enlai, or some other top leader. As Guillain wrote in Paris's Le Monde on January 18, 1956, after a two-month visit to China: “‘Come and See.’ This invitation is one of China's most formidable weapons, a weapon which she uses with consummate skill” (Guillain, 1956, quoted in Ratliff, 1969, p. 60). A much smaller number of individually selected Chinese, and some performing groups, visited Latin America (Ratliff, 1969).
In contrast to the 1960s, Chinese calls for “revolution” in Latin America during the 1950s were low-key and stressed above all opposition to U.S. influence in the region. An article in a Chinese foreign affairs journal in August 1958 stated that “armed struggle is still not the primary form of struggle” in Latin America (Yen, 1958, p. 18). Even after Castro took power in Cuba at the end of 1959 by armed revolution, top leaders of the Cuban Communist Party for almost two years tried to slow down his reforms by promoting the “Chinese road” that focused on building a new society with a broad, united front, including the “national bourgeoisie” (Ratliff, 1974).
Second Period: Anti-Imperialist Guerrilla Warfare
This is a period most in China and some outside would like to forget but cannot because it occurred very recently, and the mere fact that it occurred once and might occur again feeds the fears of some of China's critics today. These events exhibit a China whose policies suddenly became so irrational, unpredictable, and fanatical as to resemble madness. The common denominator of the first and second periods was anti-Americanism, but there the common ground ends. The 1960s were forged in the fires of the Sino-Soviet dispute and Chairman Mao's own most extreme domestic policies, including the Great Leap Forward and the Great Proletarian Cultural Revolution. During its peak, from the early 1960s to the early 1970s, Chinese foreign policy was “value-intense,” highly doctrinaire, mostly stressing the need for rural guerrilla wars to seize power around Latin America. This policy was aimed at a very much reduced cadre of militants than those courted in the 1950s. The “imperialist” targets were the United States and Western imperialism generally, as before, but now adding Soviet “social imperialism,” the heretical doctrine that for a time became more despised in China than the imperialisms Vladimir Lenin and Leon Trotsky had analyzed and condemned. From the mid-1960s onward, Castro-ism also became a target in an era of China contra mundum.
In the early 1960s China advocated the Cuban victory as the model for other Latin American countries. In terms of ideology, Fidel Castro and Che Guevara were much closer to the Chinese than to the Soviets (Ratliff, 2004). But in the mid-1960s Castro pragmatically sided with Moscow in the Sino-Soviet dispute, mainly because the Soviet bloc had more money and arms to give to Cuba and could offer a shield against attempted U.S. reprisals. In 1966, Castro launched an abusive attack on Chairman Mao, charging that China had confused Marxism-Leninism with fascism. China was guilty of criminal economic aggression, he said, because it had cut back rice shipments to Cuba. In fact, as Halperin has written, Castro was just trying to hide the fact that his own policies had reduced Cuban production of this staple food by 90% in several years (Halperin, 1981, p. 206).2 Very shortly thereafter, Guevara was killed in Bolivia behaving like what the Chinese considered a “petty bourgeois adventurer.” So after mid-decade, the Chinese insisted that the model conflict for Latin America was Maoist guerrilla warfare (Ratliff, 1976). The Chinese government then worked, usually in a very loose fashion and to a limited degree, with whatever extremist individuals or small groups it could dig up or came scrambling to the gates of Zhongnanhai, as a few did (Ratliff, 1972, pp. 852–853).
In a parallel movement, and even before the explosive feud between Chairman Mao and Castro emerged publicly, Chinese leaders began calling on Marxists abroad who considered themselves “real” revolutionaries to take a stand with China against Soviet “social imperialism.” Communist parties in Latin America, most of which were not very important, began splitting apart, with the bulk of most parties remaining what was then called “pro-Soviet,” while a minority broke loose to proclaim themselves “pro-Chinese,” or in the terminology of the day, “Marxist-Leninist.” Splits took place in Communist parties in Brazil (in 1962), Ecuador (1963), Peru (1964), Chile (1964), Bolivia (1965), and Colombia (1965). By the late 1960s, Chinese publications usually spoke of 10 to 12 “Marxist-Leninist” parties and organizations in Latin America that supported China, though only parties in Colombia, Bolivia, and Peru ever set up even remotely serious guerrilla armies (Ratliff, 1972, p. 852).
Third Period: A Partial Opening
At the beginning of the 1970s, China had diplomatic relations with only the two self-proclaimed socialist governments of Latin America, Cuba and Chile. But even before Chairman Mao died in 1976, and the Cultural Revolution was closed down, things began to change in some significant respects. The new “line” was characterized by a smorgasbord of elements from the first two periods: some of the Maoist guerrilla warfare, which was very “value intense,” but also a renewal of the broader receptivity toward Latin Americans of any political stripe, which was much more “value free.” The partial opening of relations largely followed the U.S. lead. In 1972, U.S. President Richard Nixon and Henry Kissinger visited Chairman Mao in China and a joint defensive agreement was struck, aimed at their common enemy, the Soviet Union. With this partial relaxation of hostilities, Latin American governments in Washington's “backyard” felt freer to engage more openly with China. Many established formal diplomatic relations with Beijing during the next few years, beginning with Peru, which was already alienated from Washington, in 1971. Then Mexico, Argentina, Guyana, and Jamaica followed suit in 1972; Trinidad and Tobago, Venezuela, and Brazil in 1974; and Surinam in 1976. Most important, in Argentina, Brazil, and Chile, Beijing developed diplomatic and economic relations with military or military-installed governments. At that time, this “value-free” approach drew fevered criticism from many on the Left around the world, particularly when China refused to break relations with Chile after the military there overthrew President Salvador Allende in September 1973 (see Jiang, 2003, pp. 315–317). One result of this policy, however, is that by and large rightist parties and militaries in Latin America are often at least as positively inclined toward the Chinese as are leftists (Dominguez, 2006).
The political reversals of the Maoist period were felt in trade as well, though recovery began in the early 1970s as more countries established diplomatic relations with Beijing. Sino-Latin America trade in 1950 was US$1.9 million, growing to $7.3 million in 1955 and $31.3 million in 1960. Even during the Great Leap period, trade expanded to $343.1 million by 1965. In 1970, with China going through the extremes of the Cultural Revolution, trade with Latin America was more than halved, falling to $145.8 million. During the next five years it surged, trebling to $475.7 million in 1975, and it has continued to grow ever since, as noted later in the article (S. X. Jiang, n.d.).
Fourth Period: Escalating Reengagement
The fourth period began, as did almost everything constructive in contemporary China, with the resurrection of Deng Xiaoping and his reforms beginning in the late 1970s. First, the new Chinese leadership purged the Gang of Four and formally terminated the Cultural Revolution. Next the CPC focused on developing China's disastrous economy and moving into the modern world. At first, dealing with the chaos Chairman Mao left behind precluded China's paying much attention to distant Latin America. But as China began averaging a roughly 10% annual GNP growth for year after year, the country needed raw materials from abroad and a consolidation of political power in the competition with Taiwan. Thus interest in and links to Latin America were expanded for pragmatic and political reasons. The main difference between the fourth and the first periods, aside from the former's far greater scope, is the absence of overt anti-Americanism. The main Latin American relationship that did not change immediately after Chairman Mao's death, as discussed later in the article, was the one with Cuba.
China's interest in Latin America has matured and greatly expanded over time, though the basic framework in the fourth period has always fallen at least in substantial degree into the terms stated by President Hu Jintao in a talk to the Brazilian Legislature in November 2004. In a more detailed presentation than is quoted here, President Hu said that China's primary objectives in expanding relations in Latin America are (1) “deepening strategic common consensus and enhancing political mutual trust,” (2) “focusing on practical work and innovation and tapping cooperation potential,” and (3) “valuing cultural exchanges and enhancing mutual understanding” (Hu, 2004).3 Chinese leaders have tried to pursue these goals by appealing to the interests of the Latin people, typically stressing such points as peace and friendship, equality, reciprocal support, mutual benefit, and common development (Xu, n.d.a). This appeal to mutual assistance and goodwill was also promoted on earlier trips to the region by President Jiang Zemin, beginning in 1993, and others.
In its best of times, Chinese diplomacy has an attraction that tends to be in short supply in the policies of some other world powers. It often has an appeal of both style and substance. For example, during his 2004 trip to Brazil, Argentina, Chile, and Cuba, President Hu Jintao stressed China's common interests with his first three hosts, ranging from wanting a multipolar world to complementary economies. He was accompanied by many officials and businessmen who pledged closer relations with Latin America and substantial exchanges of dollars and goods. Stressing mutual respect in a harmonious world, President Hu (and other Chinese travelers abroad) pushed positive buttons to win friends and influence people and nations. Contrast this to President George W. Bush's 2004 trip to South America, which to Latin Americans emphasized mainly the security-oriented issues that so concern officials in Washington but not most Latin Americans, though his trip in 2007 was more effective. Singapore diplomat Mahbubani writes, “American diplomacy is being trumped by Chinese diplomacy through the powerful combination of enhanced geopolitical acumen and better professional diplomacy” (Mahbubani, 2008a).
China's Pragmatic, Global Objectives Today
All this talk of “goodwill” and “harmony” should not obscure the fact that China has very hard-nosed objectives in its relations with Latin America. These have paid off increasingly well over the years but are not without potential complications that are already evident in some nations. China's objectives include (1) buying commodities ranging from oil and iron to copper and soybeans that are needed for China's development and to satisfy increasing popular demands for a better life; (2) investing in the production of these commodities abroad, and in infrastructure to facilitate their delivery to Latin American ports and then to China according to agreed-upon schedules; (3) exporting assorted manufactured goods to the region, legally and sometimes illegally; (4) regional stability, so as to guarantee security of investments and prompt delivery of contracted purchases; (5) reducing the absolute superpower status of the United States by promoting a multipolar world; and (6) eliminating Taiwan as a rival in the “One China” sweepstakes around the hemisphere.
And Latin Americans have their own and sometimes varying special interests in relations with China. These include: (1) China offering an alternative source of power and influence, through trade, investments, aid, and large-power orientation, to the United States; (2) China offering new markets to trade, ideally complementary, particularly for the sale of raw materials and foodstuffs, both to promote growth at home and to reduce excessive reliance on one major nation, namely, the United States; (3) increasing foreign direct investment, or FDI, without the strings associated with Western investments; (4) non-American trade and investment, promoting national and regional diversification in economic and political terms; and (5) the generally unspoken appeal of China's development experiences that maintain elitist political control in the country while undertaking economic reforms. Because it has the healthiest market economy in Latin America, Chile has taken the greatest strides in its relations with China. It was the first country to establish a bilateral trade agreement with China, and in 2007 China replaced the United States as Santiago's main trading partner. This shift, like many other Chinese advances in Latin America in other contexts, was in part attributable to Washington's needless and counterproductive drawing out of the process of passing a bilateral trade agreement with Santiago.
Political Relations and Taiwan
In political terms, Deng Xiaoping's opening of relations paid off quickly with the establishment of bilateral diplomatic relations with additional Latin American countries during the first reform decade, all at the expense of the Republic of China (ROC), or Taiwan. They were: Barbados in 1977; Ecuador and Colombia in 1980; Antigua in 1983; Bolivia, Grenada, and Nicaragua in 1985; Belize in 1987; and Uruguay in 1988. Only 20 years later, by 2008, China had established diplomatic relations with all South American countries except Paraguay; that is, with 21 of the region's 33 independent countries. Among these nations, the PRC has established what it considers its closest relationship, that is, a “strategic partnership,” with Argentina, Brazil, Mexico, and Venezuela, and lesser but not necessarily less important relationships with others, chiefly Chile (Sullivan, 2008).
Even with these PRC successes in South America, the Caribbean Basin harbors the highest number of countries in the world still recognizing the Republic of China (ROC), or Taiwan, as the One China. The 11 who remain loyal to Taiwan in the Caribbean Basin are Belize, Dominican Republic, El Salvador, Guatemala, Haiti, Honduras, Nicaragua, Panama, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines. Once in a while a country flips back to Taiwan, as St. Lucia and Nicaragua have done after shifts in ruling parties. The most recent to abandon Taipei for Beijing, as of mid-2008, was Costa Rica in 2007, under President Oscar Arias, though other prime candidates for a switchover include Nicaragua, again under Sandinista President Daniel Ortega, who had recognized the PRC once before, and Paraguay, which in April 2008 elected Fernando Lugo, a former liberation theology priest, as president. The competition between Beijing and Taipei over the recognition of these countries has been intense, with both sides often utilizing financial, trade, and other incentives in exchange for formal diplomatic ties. This support ranges from building sports stadiums—e.g., the PRC in Grenada and Taiwan in St. Kitts—to funding assorted forms of infrastructure, education and health programs, and limited emergency aid. Indications are that the elected administration of President Ma Ying-jeou, which took power in Taiwan in May 2008, will “call a ‘truce’ in the dollar-diplomacy warfare” (Adams, 2008). If President Ma and Beijing continue the rapprochement underway in mid-2008, a less competitive relationship with Latin American (and other) countries may come about, perhaps with a tradeoff of diplomatic recognition of Beijing and more ROC involvement in international institutions.
An Argentine analyst raises another important point by noting that “the PRC's external diplomatic model” can be “seductive” to Latin Americans because it stresses issues that coincide with certain Latin American traditions and aspirations and have become more attractive because of recent developments that most Latin Americans reject in U.S. foreign policy. That is, China stresses multipolarism instead of unipolarism, multilateralism instead of unilateralism, noninterference instead of interventionism, soft power instead of hard, collaboration instead of domination, and persuasion instead of coercion (Tokatlian, 2008, p. 64). Whether or not China always practices these principles, they do appeal strongly to many Latin American leaders, who do not always practice them either. Finally, China's leaders know that other cultures often have trouble understanding Chinese thinking and actions; to combat this they have established “Confucius Institutes” in many countries to promote the learning of the Chinese language as well as culture in many aspects.
China's primary interests in Latin America at this point are securing the political recognition discussed above; economics, namely, foreign trade and investment to feed the people; and reforms at home. As a scholar at the Inter-American Dialogue in Washington notes, “China's global search for the commodities necessary to sustain its rapid economic expansion forms the bedrock of its relationship with Latin America” (Erikson, 2008). Economic ties have expanded to unpredictable levels in just a quarter-century. Measured simply in total volume, according to Chinese figures, Sino-Latin American trade surged from US$1.9 million in 1950 to $475.7 million in 1975, $1.331 billion in 1980, and $ 2.572 billion in 1985, only to fall back slightly to $2.294 billion in 1990. In 1995 it jumped to $6.114 billion, in 2000 to $12.6 billion, and in 2005 to $50.475 billion (S. X. Jiang, n.d.). In his November 2004 address to the Brazilian Congress, President Hu Jintao predicted that Sino-Latin American trade would reach US$100 billion by 2010, but in fact it reached $102.6 billion in 2007, an increase of 42% over the previous year. In practice, this has meant that in most cases the big winners in terms of balance of trade have been countries in South America with strong agriculture and abundant raw materials, while the losers, in terms of trade, have usually been Mexico, Central America, and the Caribbean, where Chinese exports are in competition with local manufactures.
As reported in the Latin Business Chronicle in early 2008, nearly 60% of China's trade in 2007 was with Brazil, Mexico, and Chile. Brazil is by far the most important single trade partner in terms of value, the total in 2007 being US$29.7 billion, up $9.4 billion over the year before. China's trade with Mexico was almost $15 billion in 2007, and its trade with Chile was $14.7 billion. Other top trade partners with China in 2007, in descending order, were Argentina, Peru, Venezuela, Panama, and Colombia. Latin America as a whole had a slight trade deficit with China, but some countries, including Mexico and some other Caribbean Basin countries, overwhelmed by the importation of inexpensive Chinese goods, have significant deficits; Mexico's, for example, was 80% of US$15 billion (Bamrud, 2008). The main Latin American export commodities of interest to China are copper and nitrates from Chile, mining products from Brazil and Andean countries, and oil from Venezuela, Brazil, and Ecuador. China exports plastics; various types of clothing, from shoes to textiles; and machinery. “On average and despite some exceptions,” write three international economic analysts, “Latin America is a clear trade winner from Chinese global integration” (Blázquez-Lidoy, 2007, p. 45).4 An important factor when it comes to living conditions is the fact that many in the middle and lower classes of Latin America have been able to buy more necessities and “luxuries” than before because of inexpensive imports (González, 2008; Ellis, 2008).
Chinese investments in Latin America have caused much concern and confusion everywhere but China because, as Devlin puts it, they are “somewhat murky” (Devlin, 2008, p. 115). Among other factors, the confusion over Chinese FDI seems to result from a misunderstanding of Chinese promises, on the one hand, and what appears to be some deliberate obfuscation on the Chinese side, on the other hand. In his talk to the Brazilian Congress in November 2004, President Hu said that total trade between China and Latin America would grow to $100 billion by 2010 (Hu, 2004), but that was reported as a pledge that China would invest $100 billion during that period, a totally different and totally unrealistic goal. Chinese trade exceeded the estimate in 2007, but FDI has been just a small fraction of that amount.
Most investment has been directed at securing raw materials and infrastructure. One clear indication of how much more serious the Chinese are about development than most Latin American countries are the facts, as reported by OECD Development Centre Director Javier Santiso, that China invests 10% of its GDP in infrastructure while Latin America averages 2% (Santiso, 2008). Thus if the Chinese want to move Latin raw materials to Latin American ports of embarkation, they know they must invest in Latin American infrastructure as well as their own, which they do. An American analyst who has followed levels of investment closely in recent years testified to the U.S. Congress in June 2008 that China has invested substantially in primary product sectors. His examples were a $500 million agreement between China Minmetals and the Chilean national copper company, Codelco; joint ventures between the Chinese Baosteel and the Brazilian mining giant EVRD; and purchases of the Rio Blanco copper mine in Piura and the Toromocho mine in Junin, involving investments of $3 billion. And there is ongoing interest in China's Shandong Luneng in iron fields in Bolivia, Chinese CNPC and Petrochina investments of $1.42 billion in the petroleum sector of Ecuador, and a loan of $4 billion to Venezuela through a “heavy investment fund,” which may be followed up with up to $18 billion more in the future (Ellis, 2008).
It sometimes seems the Chinese themselves do not know how much they have invested where, or just will not be specific. At the end of March 2007, for example, the Chinese ambassador in Venezuela, Ju Yijie, reportedly said China has invested more in Venezuela than any other Latin nation. He added: “We're talking about 600 million dollars in conservative terms, but I believe it could be more than 2 billion dollars” (Carlson, 2007). A Chinese official said in April 2008 that total Chinese investments abroad were more than $90 billion by the end of 2006 and that a quarter of that amount (US$20+ billion) was in Latin America (China Daily, 2008), which hardly jibes with Ju's comment. In May 2008, the Xinhua news service reported that total Chinese FDI in 2007 was $18.76 billion and that it had rocketed up to $19.37 billion in the first quarter alone of 2008 (Xinhua, 2008b). If one assumes that roughly a quarter of that 2007 investment was in Latin America, as some commentators claim, one might extrapolate that investments in Latin America through 2007 were somewhere between $25 and 30 billion. But no matter how one adds up Chinese promises and known investments in the region as of 2008, they do not reach $25–30 billion.
Part of the answer to this puzzle is “round-tripping.” Many billions of FDI reportedly sent to Latin America seem to have gone to three British dependencies in the region that have served as tax havens, namely, the Cayman Islands, the British Virgin Islands, and Bermuda. There is a high probability that Chinese investors have put capital into these islands so that they can bring it home again “to take advantage of preferences given to foreign firms” (Sullivan, 2008, p. 22.) And Devlin reports that some “investments” were in fact long-term loans that stipulated the use of Chinese labor (Stallings, 2008, p. 253), the latter a practice that has angered many Latin American countries. Finally, one might compare the Chinese FDI figure, whatever it is, to EU investments of $620 billion and U.S. investments of about $350 billion.
Another important area of Chinese investment is in a cooperative program with Brazil for building and launching earth satellites, underway since 1988 after Brazil and the United States were unable to work out terms. Brazilian-Chinese earth satellites were launched in 1999, 2003, and 2007, and others are in the works. Meanwhile, one U.S. analyst reports that Latin American companies have already invested some $20 billion in China, and more is promised (Erikson, 2008).
China's largest trade partners in mid-2008 were moderate leftist governments, mainly in Brazil, Chile, and Peru, and center-right governments in Mexico and Colombia. But there was also significant interaction with the region's leading anti-American, would-be miracle man, Venezuelan President Hugo Chávez, and his main current acolytes in Bolivia, Nicaragua, and in some respects Ecuador, which is discussed later in the article. Recent governments in Argentina have been semi-Chávista, and the new president of Paraguay has a leftist background that may take him into the Chávez camp as well. The populist-oriented leaders sometimes make tempting trade or investment offers to China, which the latter sometimes takes, though Beijing is not altogether comfortable with the anti-Americanism and not at all in agreement with the sure-to-fail economic programs of the Chávistas. China knows full well that the ultra-nationalist, Bolivarian populists are introducing instability into the region, a particularly flagrant example being the near-war in March 2008 that would have pitted Venezuela and Ecuador against Colombia, with much wider repercussions.
China also is a member of a variety of political and economic organizations in the region, ranging from the Organization of American States to the Asia Pacific Economic Cooperation group (Sullivan, 2008). Levels of Latin American support for China's positions in the United Nations do not seem to be affected by the types of bilateral trade and political relations countries may have with China, though long-time political ally Cuba often votes alongside China (Dominguez, 2006).
The China, United States, Latin America Triangle
One serious PRC foreign policy preoccupation today is that Chinese expansion into the Western Hemisphere will cause frictions with the United States and revive the concerns first spoken to in 1823 by the Monroe Doctrine. Today, no one in Washington can expect to prevent or reverse current international ties in the Western Hemisphere, including massive E.U. investments, but many do believe the United States should resist what are perceived as hostile or even potentially hostile influences developing there. Some Americans already consider China a growing security threat in the Americas. Many others (in the United States) believe, however, that China is too dependent on U.S. markets, too heavily invested in American debt, too concerned about potential unrest in Latin America, and too determined to play by the generally accepted international rules to conduct policies in the Americas to provoke Washington. One of China's leading Latin America experts and spokespersons has written, “China understands well that Latin America is the backyard of the United States,” and that China should not challenge U.S. influence there. He continues, “China and Latin America have been opening to the outside world . . . in the age of globalization . . . cooperation between China and Latin America will benefit regional peace and development in Asia-Pacific and Latin America. This outcome would certainly be in the favor of the United States” (S. X. Jiang, n.d.).
Still, security concerns must be taken seriously, though most U.S. officials, if one can believe their words or silence, do not consider them a problem, at least yet. Most officials do not testify often on strategic concerns, and thus analysts still often hark back to comments made in early 2005 by Rogelio Pardo-Maurer, then U.S. Assistant Secretary of Defense for Western Hemisphere Affairs. Pardo-Maurer testified that there is no “evidence that Chinese military activities in the western hemisphere, including arms sales, pose a direct conventional threat to the United States,” though he continued that Washington must “be alert to rapidly advancing Chinese capabilities, particularly in the field of intelligence, communications, and cyber warfare, and their possible application in the region” (Pardo-Maurer, 2005, p. 19.) The intelligence concerns alluded to relate particularly to Cuba. For example, delegation traffic between Cuba and China, and other information, suggests that China has actively supported Cuba's Air and Air Defense Forces (DAAFAR) in the development and use of sophisticated radar, early-detection, and anti-aircraft systems. Certainly, China has a listening post of some importance in cooperation with Cubans (Ratliff, 2006c). Other developments U.S. intelligence will watch in the future include what China may get from satellite cooperation with Brazil and, in the future, from Venezuela, and what these Latin American countries themselves will learn. But the commitment to watch what China is doing is more common sense and job description than alarmist, for when possible China is watching U.S. activities just as closely.
The main military “penetration” China has made in the region as a whole is in large degree the result of U.S. policy. The 2002 American Servicemembers Protection Act, with its Article 98 restrictions, was clearly intended to protect American servicemembers from prosecution at the International Criminal Court. But when almost a dozen Latin American governments refused to grant this modern version of extraterritoriality, and the United States cut off military equipment and training as a result, the Chinese stepped into the spots the United States had vacated. Secretary of State Condoleezza Rice later said the act was like shooting oneself in the foot, but by the time a partial revision came in 2006, much of the harm had been done (Mann, 2008). What has been widely perceived in Latin America as a U.S. withdrawal of interest, or unacceptable dictating of how other nations should act, opened a door the Chinese have simply walked quietly through. A professor at the U.S. National War College testified to the U.S. Congress that the People's Liberation Army has carried out some modest military exchanges, education programs, and sales in Latin America, but concluded that this is hardly surprising, for “if Washington is not interested in having a sustained, deep and satisfying, mutually respectful relationship with Latin America, the latter will turn elsewhere” (Watson, 2008).
Most U.S. commentators have shown careful restraint in their responses to China's expansion into Latin America. As analyst Gonzalo Paz notes: “This increasingly intense interregional activity hasn't sparked strong U.S. reactions yet. Washington has either shown indifference or has considered such activity relatively inoffensive” (Paz, 2006, p. 105). U.S. Assistant Secretary of State for Western Hemisphere Affairs Thomas Shannon met with Chinese Latin Americanists in Beijing in 2006 and in the United States in 2007. In June 2008 he told a seminar in Miami that in the second meeting, his Chinese counterpart said,
China recognizes that the political vocation of the Americas is democratic, and that successful democracies are the best path to political stability, and that therefore the Chinese do not come into this region with a political or revolutionary purpose, that they come into the region really trying to build stable partnerships. (Shannon, 2008)
A top Latin Americanist at the Chinese Academy of Social Sciences reported after the 2006 Beijing meeting that the Chinese side had said China aims at peace, development, and cooperation in the region and that China's expansion has “no ideological color nor [is] it directed against the interests of any other country” (Xu, n.d.b).
Many other U.S. comments in 2008 were in substantial part positive. In congressional testimony, U.S. Deputy Assistant Secretary for East Asian and Pacific Affairs Thomas J. Christensen said:
We believe that China can make positive contributions to economic growth in Africa, Latin America, and the South Pacific through increasing both direct investment and foreign assistance, and can serve as an exemplar of how pragmatic economic policy and trade openness can lead to increased literacy, managed urbanization and poverty reduction. (Christensen, 2008)
Christensen did add his concern that China sometimes provided aid without strings to “problematic regimes” and thus might undermine international efforts to promote transparency and good governance in certain countries. He concluded with remarks on China's military contacts in the region and said only that “we seek for China to carry them out responsibly” (Christensen, 2008; Ratliff, 2007a).
Case Studies: Provocative Ties?
Three specific issues concern many North Americans and some Latins and thus require additional comment. The first two are Chinese relations with the Cuba of Fidel, and later Raúl, Castro, and expanding Cuban ties to the Venezuela of Hugo Chavez. These two countries are the only ones in Latin America that look on relations with China more in political than economic terms, though the economic side is also an important factor for each. And then the Panama Canal, whose two main users today are the United States and China, which the United States turned over to Panama at the beginning of the new millennium. What special challenges, if any, do these pose for Chinese and U.S. policymakers and the region?
During the past half-century, no large Latin American country has drawn so much attention as the island of Cuba. Over the past two decades China has developed a special relationship with Cuba for several reasons, ranging from loyalty to intelligence gathering. Though Chinese leaders today devote most of their energies to domestic market-oriented development and to cultivating an increasingly prominent role for themselves in the globalized world, they also want to retain some links to their more revolutionary past. Cuba was China's first friend in the region, having recognized the PRC in 1960. Ties between the CPC and the Communist Party of Cuba are a link to that past, even though, ironically, China's relations with Castro during much of the Cold War period ranged from bad to appalling, as described above. Even Deng Xiaoping's succeeding Chairman Mao did not bring improvement because of Chinese hostility toward Vietnam, the foreign country above all others that Castro admired because of its war of resistance against the United States. Post-Mao vitriol peaked when China invaded Vietnam in early 1979. Castro loudly condemned “the mad neo-fascist faction that rules China” and its leader, “this numbskull [mentecato], this puppet, this brazen Deng Xiaoping . . . a sort of caricature of Hitler” (F. Castro, 1979, quoted in Ratliff, 2004, p. 10). As a bland Chinese Foreign Ministry posting stated many years later: “There were little substantive contacts between China and Cuba during the Cold War period from the middle of the 1960s to the early 1980s” (People's Republic of China Foreign Ministry).
While ties became less hostile during the early and mid-1980s, a sudden improvement in relations came with the Tiananmen confrontation in June 1989, which occurred while Chinese Foreign Minister Qian Qichen was touring Latin America. The minister suddenly found his visits to several countries cancelled in protest over Tiananmen, but when he arrived in Cuba he was treated like an emperor. As Yinghong Cheng has noted, this reception above all else “opened the door for Sino-Cuban rapprochement” (Cheng, 2007, pp. 3–4). The Chinese Foreign Ministry says that exchanges of foreign ministers in 1989 “marked the full resumption and development of Sino-Cuban relations” (Ibid.). This improvement necessitated Castro eating a lot of crow, for by the time Deng Xiaoping died in 1997, Castro was lauding him as “an illustrious son of the Chinese nation” who made a “valiant contribution to the consolidation of socialism in China” (Reuters, 1997, quoted in Ratliff, 2004, p. 10). The successes of China's reforms overwhelmed Castro on two visits to China, and when President Hu Jintao visited Cuba in November 2004, Castro said that “objectively speaking [China] has become the most promising hope and the best example for all developing countries.” After adding, “I do not hesitate to say that it is now the main engine of world economic growth,” he said that China's success notwithstanding, capitalism had no future in Cuba (Agence France-Presse, 2004).
China has become Cuba's second-most important trading partner, after Venezuela. Political and military exchanges are frequent and cooperation in collecting intelligence is considerable though not easily identified, despite some falsified published claims. For China, Cuba is of particular interest because it lets Beijing take a tit-for-tat jab at Washington, characterized as the “mirror” effect. Cuba is an island important to and just off the coast of the United States. Friendly Chinese relations with that island, which greatly concern the United States, counter China's even greater concern over U.S. relations with Taiwan, the island off the Chinese coast that is part of the “One China” dispute and is heavily armed by Washington (Ratliff, 2006b).
For many years, Fidel Castro's brother Raúl, who officially took power in early 2008 when his elder brother “retired,” has been an admirer of China's reforms (Ratliff, 2004). In recent years several top Latin Americanists who are friendly toward Fidel Castro at the Chinese Academy of Social Sciences (CASS) in Beijing, the chief government think tank, have nonetheless said that if Cuba is to get out of the economic doldrums it must “deepen its reforms . . . and smash [da po] egalitarianism” (Xu, n.d.c). Another CASS Cuba specialist, Mao Xianglin, wrote in late 2007 that if Cuba wishes to catch up with the rest of the reforming world it must do so by “moving rapidly to break out of its intellectual straitjacket and intensifying its reform” (Mao, 2007). On July 11, 2008, Raúl Castro gave a major speech that more than any of his other words and actions since formally taking power suggests that this process may now be getting under way. Among other things, he told people to be prepared for a “realistic” form of Communism and reversed a very long-standing belief of his elder brother when he stated that “Socialism means social justice and equality, but equality of rights and opportunities, not of income. Equality is not egalitarianism. The latter, in the end, is also a form of exploitation: of the good worker by one who isn't, of the bad worker by the vagrant” (R. Castro, 2008). It remains to be seen if tentative movement in the direction of real social and economic reforms will be stepped up, while authoritarian political rule may continue for a while.
Venezuela has long been one of the world's leading oil exporters and according to some reports has the largest reserves in the world, though most of it is an extra-heavy, sour, highly sulfurous crude in the Orinoco Tar Belt in Central Venezuela that requires extensive and expensive refining to be usable. One of Venezuela's great problems today is the level of production by PdVSA, the state oil company. PdVSA itself reports producing 3.2 million barrels a day and claims that production will soon be raised to 5.1 billion bpd, while the Paris-based IEA says that production is stagnating at something like 2.4 million bpd (Jones, 2008). Still, as long as prices continue to rise, Venezuela will make more money each year even if production declines.
For many years the United States has bought roughly 60% of Venezuela's output, usually 1.2 to 1.4 million barrels per day. In a long interview in mid-2005, the Chinese ambassador in Caracas, Ju Yijie, said he understood the Venezuelan wish to diversify its clients, but added that the natural markets for Venezuelan oil are North and South America (Ju, 2005, cited in Ratliff, 2006e). It takes only four or five days for a tanker to reach the United States to be refined there instead of many weeks through potentially treacherous waters and straits to get to China. Still, because of oil China has developed a significant if somewhat problematic relationship with President Chávez. Despite Ju's obviously correct comment, China is always drawn to oil, even if it is almost half a world away from the motherland (Ratliff, 2006a). The first PRC oil contract with Venezuela was signed a year and a half before Chávez became president, and Beijing expects the ties established with Chávez to continue after his departure. For Chávez, relations with China signal above all anti-American nationalism, with both political and economic ramifications, and China is increasingly investing in and buying more Venezuelan oil. Deliveries to the United States declined from 1.28 million bpd in the first four months of 2007 to 1.13 million bpd during that period in 2008, while shipments to China have been rising gradually. Exports to China were an estimated 250,000 bpd in mid-2008, with a goal of 500,000 bpd by 2010 (Gentile, 2008). It is a sign of the unreliability of many reports that have flowed out of Venezuela and sometimes China that in mid-2006 Venezuela was predicting shipments of 300,000 bpd to China by the end of 2006 and predicting deliveries of 1 million bpd by 2010. (Ratliff, 2006f).
China is also working with Venezuela on the construction of heavy oil refineries in Venezuela and China and on building rigs and a shipping fleet to deliver the product. In May 2008 Chinese Vice-Premier Hui Liangyu visited Caracas, and the New China News Agency reported that he said:
The Sino-Venezuela strategic partnership has ushered in a stage of full development, featuring close high-level contacts and deepening mutual trust; growing bilateral trade and optimized trade structure; remarkable progress in cooperation in energy, agriculture, infrastructure, and science and technology; and close cooperation and mutual support in international and regional affairs. (Xinhua, 2008a)
To the extent that this very positive release is truth rather than propaganda, it will heighten the concerns of some in Washington about the intentions of both China and Venezuela.
But though some things seem to be going well between China and Venezuela, the reality is more complicated. Both Chávez and China reject a unipolar world dominated by the United States, but while the Venezuelan leader often wants to challenge that reality head-on, China is usually more careful. Beijing has balked at antagonizing the United States by joining Chávez's informal anti-American political alliance that includes Iran and in some respects Russia. A Chinese government advisor at the Institute of International Strategy in Beijing emphasized in a 2007 interview that China does not want unrest in the Americas or problems with Washington, any of which could threaten energy and other deliveries to China, which in turn would impede the country's domestic development and popular well-being. In Venezuela itself, Chávez arbitrarily cancelled a contract with China to produce orimulsion, a low-grade, dirty fuel used mainly in power plants. Chávez also forced the renegotiation of Chinese contracts, as with all oil companies in the country, and claimed back taxes. In mid-2007 I asked a top official of the China National Petroleum Company what his company thought of Chávez's frequently unpredictable actions and he just shrugged his shoulders. “What can anyone do?” he asked.
Chávez is a revolutionary firebrand, one of the most colorful caudillos ever in a hemisphere long famous for its strong and resourceful, rather than brilliant and progressive, leaders. He thrives today because he has made himself the chief spokesman for this decade's wave of Latin American “anti-Americanism” and because Venezuela is now awash in oil money from the United States that he spends freely on programs to aid and court the poor and the powerful at home and abroad. Chávez and his regional followers take advantage of age-old popular frustrations with the seemingly intractable problems of poverty and inequality and generally unresponsive elitist governments and their relations with the United States. They have excluded or harassed some Western investors and buyers and presented China with opportunities that are a mixed blessing, for the Chinese, too, have suffered from disturbances by the disgruntled in mines and other industries (Ellis, 2008). One of the most telling developments of 2008 was the long strike across the agricultural sector in Argentina, in protest against increased government taxes imposed by President Cristina Fernandez de Kirchner, which for months angered China by delaying large shipments of soybeans.
The continental tragedy of Chávismo is that it will drag down every country that follows or adheres to it in any degree and then will have to start rebuilding once again. Only Venezuela has the vast oil revenues needed to pay debts incurred for any period of time, and even Chávez will fall unless he alters his course. Chinese leaders know very well that these governments will fail and that China's trade and investments will not turn bad domestic policies in Latin America into good ones. The PRC can only calculate that its relations will survive the collapse of the Chávistas, whenever that comes. On the other hand, if leaders in Chávista (and some other) countries begin listening to and acting upon some of the economic advice they get from Beijing, they and the region will be better off for their having done so, as Secretary Christensen told Congress in 2008.
The article focuses here on concerns expressed over the 1996 Panamanian concessions of two of five ports to the Panama Ports Company (PPC), a member of the Hong Kong–based Hutchinson Port Holdings Group (HPHG), the world's largest independent port operator, which now also operates a former U.S. base at Manta, Ecuador. The two Panamanian ports (Balboa on the Pacific and Cristobal on the Caribbean) control only a small percentage of cargo traffic when compared to the other ports owned by U.S. and Taiwanese firms. The dispute is over what powers were given the PPC and whether the PPC is now a stalking horse for Beijing or in danger of becoming one. It is true that Beijing can apply pressure on the HPHG, but doing so would exact a very high price for the HPHG, Panama, China, and the United States. In the end the pressure would fail because if Panama gave such authority to China through the PPC, it would be inviting the United States to intervene in accordance with the terms of the supplementary canal treaty written to guarantee the permanent neutrality of the waterway (the Panama Canal) (Ratliff, 1999).
Will China Impede Reform in Latin America?
Like Secretary Christensen above, many U.S. leaders and analysts say they worry about China's possible negative influence in Latin America. A 2007 report published at the University of Miami states this concern very clearly:
The expanding relationship with China is transforming Latin America. Major infrastructure projects, including contemplated rail, road and pipeline projects, are focused on getting goods to and from Pacific ports. Growing trade with China is increasing the significance of Latin American cities on or near the Pacific Ocean, from Guayaquil to Valparaiso. A new generation of Latin American students is studying Mandarin Chinese and the mechanics of doing business with China. In broader terms, Latin America is increasingly attracted to the Chinese economic model, which suggests that rapid growth can be achieved in an authoritarian political system pursuing mercantilist trade policies. By presenting an alternative political and economic model and an alternative to the United States as a trade partner, the PRC is significantly undermining the U.S. agenda to advance political reform, human rights and free trade in Latin America. (Center for Hemispheric Policy, 2007, p. 2)
But this argument about undermining the U.S. agenda in Latin America both makes U.S. policy in the region seem much more consistent and committed than it has been and places far too much responsibility for the possible advancement of political, trade, and human rights reforms on a secondary player, China, rather than on those who are chiefly responsible, the Latin Americans themselves. Yes, there have been occasional reasonably serious reform efforts in Latin America, but very few have made a lasting difference. If Latin Americans have really wanted the kinds of democratic and market reforms that are on “the U.S. agenda,” they have had about 200 years of independence to carry them out. Indeed, Latin America might have developed more in tandem with the United States from the period of European settlement some 500 years ago if people then, and their leaders, had chosen to do so. It was not the fault of the United States or Great Britain that liberal democratic and market-oriented reforms were not adopted during either the colonial or independence periods, nor will it be the fault of the Chinese if those reforms are not made in the future. Indeed, it is not a matter of fault at all, but matters of choice and commitment by Latin Americans themselves (Harrison, 2006; Ratliff, 2005, 2006d.) The bottom line is that these reforms have not occurred, mainly for institutional and cultural reasons, and as a result many aspects of daily life for many Latin Americans, in the words of Mexican political analyst Luis Rubio, “remains a never-ending ordeal” (Rubio, 2007, p. 3; also see Harrison, 2000; Vargas Llosa, 2005; Wiarda, 2001).
Clearly, there is greater individual political freedom in many parts of Latin America today, and in some of the past, than there has been or is in China, but this has not brought the widespread rollback of poverty and inequality that has come from changes in recent decades in reforming Asia.5 Argentine analyst Juan Gabriel Tokatlian (Tokatlian, 2008) and some others (e.g., González, 2008) have correctly noted that Latin American countries have become somewhat more democratic in recent decades and that democratic values in Latin America derive from the Western tradition that many would be reluctant to give up. According to Shannon (2008), Chinese leaders accept this. But polls also show that across the continent as a whole, 46% of the people lack a strong or moderate commitment to democracy. Across Latin America, only 37% are satisfied with democracy as practiced, and only 25% think their democratic governments work for the well-being of all the country's people (Latinobarómetro, 2007, p. 81).
In 2007, I asked a top CPC leader working in international affairs if China had any interest in changing Latin American politics and he replied: “No. Why should we? We are perfectly happy with a democratic system controlled by elites that keeps real popular involvement to a minimum, so long as they continue to enforce the agreements made with us.” This is roughly in line with the comments Chinese officials made or implied to Shannon (2008). Still, if Latin American leaders ask for consultations on how the Chinese have accomplished so much with their economic reforms, it is not likely that PRC officials will refuse to discuss their experiences. Indeed, as several top Chinese Latin Americanists have written, the PRC consciously develops party-to-party relations as extensively as possible, with parties in and out of power (Xu, n.d.a; S. X. Jiang, 2003, pp. 318–319, n.d.). One Latin Americanist has written: “As fellow members of the developing world, the CPC and its Latin American counterparts exchange views on strategies to improve governance, the management of party affairs, political modernization and socioeconomic development” (S. X. Jiang, 2008, p. 35). The prospects for consultations are increased by the comparative scales of poverty and inequality in reforming Asia and Latin America, the continuing popular frustrations with the performance of Latin American democratic governments, and the feeling of leaders from the two regions that they have every right to make decisions for, but not necessarily in close consultation with, the masses. The probability of Chinese discussions of political and other matters is all the greater if the Latin American economy sinks into another of its periodic and historically seemingly inevitable economic downturns, or crashes, though not if the next slump is related to a downturn in the Chinese economy, which itself could spell disaster for Latin Americans (and others) who now so depend on Chinese purchases and merchandise.
Latin Americans' repeated love affairs with the paternalism of authoritarian governments is a central characteristic of Latin American civilization, one originating in Spain (with earlier Roman roots) that is conveyed by the word caudillo. This is the strong man in many forms who has come up again and again in one country after another throughout Latin America's colonial and independence histories. But while these caudillos have bought off certain constituencies from time to time to keep power, very few have tried or succeeded in promoting long-term good for majorities in their countries. Thus if one looks at the figures on inequality and poverty in Latin America over not just decades but centuries, it is clear that the region's relative freedom has not served the economic interests of most of the people. Governments in China and reforming Asia have been more wisely led, sometimes in the distant past and certainly in the recent past and present, and have been far more actively involved than Latin American governments in constructive reforms that have produced tangible results for majorities. Compared to the successes in reforming Asia since World War II, including China over the past quarter-century, Latin American governments have failed to reduce poverty and inequality or provide access to fairly good education, health services, and other markers of a modern developing society. Asia's successes may seem to recommend a degree of enlightened political and economic authoritarianism, the unenlightened version of which is already so popular in most of Latin America, if conditions do not begin to clearly improve under democracy.
But whether honing a new version of political authoritarianism would actually improve conditions in Latin America is far from certain, mainly because in Asia a period of central leadership, while important, was accompanied by another even more critical factor, namely, the more informed and capable leaders themselves who were operating within a culture with a far greater focus on (a) education as the expressway to success, (b) high goals pursued with single-minded diligence and a relentless work ethic, (c) broader respect for and rewarding of merit, and (d) frugality and focus to guide expenditures of funds and energies (Ratliff, 2007b). Thus a refined authoritarianism in the Latin American context, without the above cultural characteristics, might well increase problems for most of the Latin American people, but again this is their choice to make. This would be particularly so if China pressed Latin Americans to concentrate only on buying Chinese manufactures and themselves producing largely natural resources and foodstuffs, thus tending to keep Latin America a cluster of “banana republics.” This is a greater threat so long as Latin American governments continue to invest too little of their current profits in things that would bring greater long-term development to their countries, ranging from infrastructure to education. As Wiarda has shown, the Latin American elites over centuries have been extraordinarily successful at adapting new ideas to upholding the old system of elite leadership at the service mainly of the elites themselves (Wiarda, 2001). After noting the commodities boom in Latin America during the early 21st century, University of Miami Latin Americanist Susan Kaufman Purcell correctly concludes that “most of Latin America is just spending the money, taking it in but not thinking ahead, not planning, not using it to make Latin America more economically competitive globally. So these are chickens that are going to come home to roost” (Purcell, 2006).6
The Next Generation of “Gringo Imperialists?”
It is entirely possible that a generation from now Latin Americans will be denouncing Chinese “imperialism” and “exploitation” of the Americas, as in the past they denounced American and British, and even Spanish, “colonialisms” and “imperialisms.” Indeed, those complaints have already been heard for some time in Mexico and several smaller countries hard hit by the importation of Chinese manufactures. Already at the time of President Hu Jintao's 2004 visit, Chinese leaders were well aware of “the so-called ‘China Threat’ saying that is popular in some Latin American countries” (W. Jiang, 2004). A top Korean specialist on Latin America wrote an op-ed about China and Mexico for a major Mexican paper at about the time of President Hu's visit, saying that China had become Mexico's “Favorite Villain” (Kim, 2004). Other countries, such as Brazil and Argentina, which in 2004 recognized China as a “market economy,” have repeatedly charged China with selling goods in Latin America cheaper than in China, or dumping, sometimes with good reason. In short, we are hearing echoes of complaints made as far back as the 16th century, when the Mexican barbers tried to get Chinese barbers out of the city because they worked too hard.
When touring Latin America in 2004, President Hu sweet-talked Latin Americans by making the best possible case (and it is a good one) for why Chinese and Latin Americans should work together, remarking on the value of cooperation as they climb the development ladder together. But for Chinese leaders charm sets the stage for serious, tough negotiating. Chinese businessmen and officials are interested in cooperating, but they are also interested in contracts, terms, responsibility, and timely delivery. They will be unhappy with inefficiency, low productivity, irregular and expensive business practices, and disruptions that, like those in the Argentine rural sector, prevented the delivery of contracted goods in 2008. Nor will they forever put up with the scapegoating that is so common in Latin America.
Thus the problem for China is that exacting negotiations do not guarantee trouble-free contracts. The problem for Latin Americans is that they often fail to take anything close to full advantage of opportunities offered by Chinese or other foreign investors, and they do not make significant progress toward changing what is inadequate. For example, in many respects Latin America is behind and falling farther behind developed, and even some developing, countries in conditions that encourage progress. These shortcomings include the failure to (a) substantially reduce poverty and inequality, (b) seriously reform and expand public access to quality education and health care, (c) provide equality before the law and control of crime, (d) provide people the opportunities to succeed, (e) accommodate to change in a globalized world, (f) fund and carry out research and development, and (g) build physical infrastructure. While China still has some of these problems today, evidence of Latin America's failure to cope is legion. One important comparison is China's far greater success in developing “endogenous technological capacity and competitiveness” (Gallagher, 2008, p. 2.) And when it comes to developing science and technology, the head of the Inter-American Development Bank (IDB) division in charge of those matters, Gonzalo Rivas, says that Latin American universities are guilty of “navel-gazing tendencies” and though governments and leaders often talk of the importance of spending on innovation, “they never put up the resources” (cited in Cevallos, 2008). Decisions to deal effectively or not with these matters are made by Latin Americans themselves, and Chinese are not likely to be much more effective in changing Latin American culture and institutions than North Americans, or Latin America's own well-informed reformers, have usually been in the past (Oppenheimer, 2005).
So two questions here are, first, whether Latin Americans will come to consider China the 21st-century foreign imperialist on a par with or worse than the United States, and, second, whether such a charge would be justified. The answers are probably “probably” and “no.” In recent decades, to a large degree, the Chinese and Latin Americans in their contrasting ways have proven the efficacy of the first commandment of development penned by Singapore diplomat Mahbubani: “Thou shalt blame only thyself for thy failures in development. Blaming imperialism, colonialism, and neo-imperialism is a convenient excuse to avoid self-examination” (Mahbubani, 2001, p. 190). Latin Americans very often blame others for their problems and fail to keep pace with the developing world, while Singapore, China, and others have taken the development bull by the horns and to a large degree succeeded with reforms. Three Latin American economists writing for the IDB emphasize
the need for countries in [Latin America] to embark on an introspective examination of the factors that may be holding back productivity growth. Latin American countries consistently trail other regions in the integrity of their institutions, in the quality and availability of their infrastructure, in R&D spending and in the number of available skilled workers. These are among the factors that the region must address in order to participate successfully in world markets and compete effectively with China and other countries. (López-Cordova, Micco, & Molina, 2007, p. 125)
Conditions in Latin America today are largely the choice of the Latin American leaders and people over many centuries. It is no one's “fault,” but a matter of ideas, choices, and consequences. With uneven levels of enthusiasm, North Americans have long urged reforms in Latin America, usually with only marginal success. The last thing North Americans should be doing now is encouraging Latin Americans to make China the scapegoat for the probable next round of failures in Latin America, but that is what all these “worries” about China's impact are doing.
Quo Vadis, China?
The recent, rapid resurgence of China has grabbed the world's attention and left everyone wondering how it was possible and what the country and its leaders may do in the future. Of course this will be a critical question for the Chinese themselves, but the country's future will also have an enormous impact on other parts of the world, including the United States and Latin America. If China continues to prosper, Latin America will benefit and lose in important respects hinted at above and below, but if China stumbles or collapses, Latin America and much of the world will feel it even more, and it will be almost entirely negative. The prospects of China's two most extreme alternative futures are noted here, though they cannot be examined in detail.
On the first, China's resurgence is the most natural and predictable development imaginable for this ancient land. During much of the history of high civilizations on earth, China has been the most advanced or very nearly so. Hudson Institute Sinologist Charles Horner has reminded us that as recently as several hundred years ago China had the largest economy in the world, generating some 30% of the world's GDP (Horner, 2006). What is more, economic historian Albert Feuerwerker has written that if one looks back 500 years, “[n]o comparison of agricultural productivity, industrial skill, commercial complexity, urban wealth, or standard of living (not to mention bureaucratic sophistication and cultural achievement) would place Europe on a par with the Chinese Empire” (cited in Fairbank, 1992, p. 2). Even when China had the power to move far beyond its traditional (though greatly fluctuating) continental borders, as in the early Ming Dynasty, it did not do so, in contrast to Western colonial powers that for centuries conquered, occupied, and exploited countries around the globe, including China. This and other “lessons” of Western colonial history and recent military campaigns to “right wrongs and prosecute just causes” (Blair, 1999), from Yugoslavia to Iraq, are not lost on Chinese and others abroad today.
Many in the United States and some other Western countries seem to think the current configuration of world powers must and can remain in perpetuity. But history does not record any such perpetual power, though leaders in some countries throughout history have naively imagined themselves or at least their creations as immortal or nearly so, the wan sui (10,000 years) of Chinese civilization.7 But as Mahbubani argues, the West has shaped the discourse and goals of the modern world, in many ways for the better, but Western nations will not forever remain the only or overwhelming dominant powers. The surge of vitality in China and much of Asia cannot be denied, and it represents “a new opportunity both for the West and for the world. If the West can learn to work with, rather than against, this march to modernity, it can help make the twenty-first century one of the happiest centuries of human history” (Mahbubani, 2008b, p. 9).8
At the other extreme for China, there is a chance that the leaders and people may stumble or fall flat if they do not resolve some of the major political, economic, and social problems they already face today at home, ranging from pollution to bureaucracy, from inefficient energy use to corruption and bad loans. One of the most forceful analyses of recent years focusing on wide-ranging problems in China is Minxin Pei's China's Trapped Transition (2006). Pei cites serious concerns about the future held by a majority of China's analysts in the Academy of Social Sciences and even by cadres at the Central Party School. He argues that unless China can move beyond its current “limits of developmental autocracy,” it could “not only fail to fully realize its potential, but also descend into long-term stagnation.” It could become an “incapacitated” state with “spillover effects” that would “make China's problems those of the entire international community” (Pei, 2006, pp. 11, 214, and passim). Should China suffer such a setback at home, Latin America, which on balance in recent years has benefited much from China's expansion, could become a casualty of Chinese domestic failure, along with many other nations.
Finally, whether or not China largely succeeds or grinds to a halt domestically, the country's fate will be related to that of Asia more broadly, and the West's relationship with Asia, as will China's potential to continue reaching far into the Western Hemisphere. In most respects, if things continue roughly as they are going today, Latin America will benefit, but its influence on China will be incomparably less than China's influence on Latin America. Why? Because Asia in general is the region on the move, while Latin America mostly is not. Latin American countries could change that, as Chile and a few others in some degree have done, but the region as a whole is behind today and falling farther behind with every day that passes.
Many tentative conclusions have been suggested in the discussion above, and I do not so much review them here as suggest and sometimes reiterate some of the main challenges and how the involved parties must respond to current conditions and prospects if the future is to serve the interests of the vast majority of countries and their peoples. The irony is that all parties will benefit if all parties benefit. This seeming platitude simply means that the world should strive for a pattern of international relations that would in time reduce the manipulation and exploitation that stoke frustrations and drive people to confrontation rather than cooperation. There will be much shifting among world nations in the next 30 years as U.S. domination in many spheres is shared or replaced by China and perhaps other countries and regions. The accommodation reached by China and the United States in Latin America could set a pattern for working out a new world balance. In essence, this is the framework that President Hu Jintao presented at the 2007 Congress as a method and goal for future international relationships.
Finding the balance in Latin America will first require the will to do so, using common sense, flexibility, adaptability, and a willingness to take chances, including temporary losses in pursuit of mutual benefits or a tradeoff of benefits looking to the longer run. It must be founded in careful, realistic analyses of obvious developments. It will require the same quality analyses of currents beneath the surface that improved intelligence will turn up, the latter particularly during the period of growing trust among the various parties. While intelligence will always be necessary, its role will diminish as trust is improved and the benefits of cooperation and nonhostile competition become clearer to all parties. There must also be a degree of self-criticism and genuine humility that will not come naturally to the cultures of the United States, China, or Latin America, for all believe themselves to be very special civilizations, in some cases with much to teach the world. All parties are going to have to “seek common ground while shelving difference” and “respect the diversity of the world.”
China and the United States have had tolerably good relations most of the time except during the Maoist period, though today each has what seem to be significant reasons to be concerned about the other. All parties must begin by applying Robert Burns's wish to “see ourselves as others see us” and go on from there. Looking first at the two major powers, the United States may well be concerned about what may come from China's expanding role in the world, not just in Latin America, including the development of its military forces. What Westerners and many Chinese consider the madness of the Cultural Revolution, and even the Great Leap Forward, is only a couple of decades in the past. Would a serious economic downturn, or something else, reignite this madness? And if the chaos or luan does return, what does that mean for the world, especially if China then has a modern military force? It is in this context that many in the West worry about the closed nature of Chinese society, and the perceived need for transparency is heightened by the fact that the PRC has been so long guided by Deng Xiaoping's phrase, “Hide brightness and nourish obscurity”(tiaoguang yanghui), which to outsiders means “secrets to achieve hidden objectives.” And China is concerned about the following, among other things: the United States is an overwhelming force in a unipolar world and to a degree can still do what it wants to. This particularly concerns the Chinese because many Americans militantly believe the world must be essentially “like us.” Not only does the West have a centuries-long record of colonialism and imperialism worldwide, including in China, which China does not, but the United States today also has by far the strongest military in the world, and both Republicans and Democrats, in Iraq and Yugoslavia (among other places), use it to intervene in other countries that are not threats to U.S. security. Moreover, the United States has military forces all over the world, including on all sides of China, and militarily arms what Beijing considers a renegade Chinese province, Taiwan.
It will be a constant challenge to get Beijing and Washington to get along, though so far in Latin America they have done very well. The meeting of the two is complicated, predictably, by the countries that provide the playing field for the engagement: the Latin American countries. In fact, this region's particular characteristics could either draw China and the United States into greater cooperation and goodwill or ignite a conflagration, depending on Latin America's readiness and competence to carry out its part of the relationship. Latin America's apparent prosperity toward the end of the first decade of the new millennium is likely to prove temporary, as economic upturns in Latin America historically have been temporary, booms followed by stagnation or busts. Thus in 2006 Marta Lagos, the editor of the best polling service covering all of Latin America, Latinobarómetro, wrote, “Latin Americans know that, after a good year, there will be a bad one. These ups and downs have been characteristic of the region's economy and most transitions have taken place without sustained growth, economic stability or constant improvement in the economic situation of the country and its inhabitants” (Lagos, 2006). Latin America's basic problems are imbedded in its culture and institutions, and 200 years of independence have done remarkably little to change them. Latin America's current prosperity occurs at a time of growing malaise in the U.S. economy, this juxtaposition alone accentuating the reality that many Latin American economies have moved a considerable distance from their previous dependence on the United States. The problem in most of Latin America is that the commodities boom with Asia, and with China in particular, has not inspired nearly enough Latin American dedication to pursuing basic reforms seriously; that is, not just saying one wants change but doing what is necessary to bring it about. As Oxford fellow Laurence Whitehead has written, historically Latin America has been “receptive to the importation of ‘modern’ techniques, but not necessarily to undertaking the social and cultural adjustments that they require if they are to operate as expected” (Whitehead, 2002, p. 39). If Asia's purchases of Latin American resources decline significantly, for example, and inexpensive consumer goods from Asia begin to dry up, Latin American prosperity, which has shallow domestic roots, will wither or crash in most places.
The strongest incentive to working for success in this endeavor may be contemplating or sampling the alternatives, including a violent, chaotic Latin America and U.S.-Chinese suspicions of each other, hostile competition, and perhaps confrontation. It is for this reason that high-level contacts between China and the United States are so important to continue and expand. The links were launched in 2005 by then U.S. Deputy Secretary of State Robert Zoellick and expanded in 2006 to include annual meetings focusing on Latin America. In an address to the National Committee on U.S.-China Relations in New York in late 2005, Zoellick presented an enlightened evaluation of China and future relations, not altogether unlike President Hu's, when he said that China
- • does not seek to spread radical, anti-American ideologies.
- • while not yet democratic, [it] does not see itself in a twilight conflict against democracy around the globe.
- • while at times mercantilist, [it] does not see itself in a death struggle with capitalism.
- • does not believe that its future depends on overturning the fundamental order of the international system. In fact, quite the reverse: Chinese leaders have decided that their success depends on being networked with the modern world. (Zoellick, 2005)
These talks and related relations should be expanded to cover a lot more than each informing the other what its interests are. They should include serious planning on cooperation in the region. Once the United States and China have worked out the format for productive meetings, supplementary talks should be held including Latin American leaders who agree to eschew propaganda in favor of real issues that will promote constructive and respectful reform of Latin American culture when necessary, as well as more productive trade relations, investments, and assistance by the United States and the PRC.
Some differences and suspicions will continue among the parties on cultural grounds and because the “competition” for energy, food, and other resources for domestic needs will continue and grow among all countries of the world. Meanwhile, China and the United States will continue to invest in and trade with Latin America, providing the major thrust of that region's economy and making possible better lives and funds for further development. The challenge for Latin America, whether dealing with the United States or China, will be to change conditions at home so that Latin Americans can cope in the world and thus be better able to deal with and benefit from any outside trading/investment opportunities or partners. If Latin Americans do not want change enough to make necessary accommodations, then that is their choice. But it will be no good to blame the United States or the Chinese if the chickens of the centuries continue coming home to roost.
I will examine these pre-Communist ties, and current developments, in a forthcoming book on China's relations with Latin America.
On this “rice war,” see Halperin (1981, pp. 195–207) and Ratliff (1990, pp. 210–212).
Also see article from Brasilia in China Daily (H. X. Zhao, 2004).
By way of comparison, U.S. trade with the region in 2006 was almost US$555 billion (Sullivan, 2008, p. 26).
By “reforming Asia” I mean the East and Southeast Asian countries that became the “dragons” and “tigers” of the region, not Myanmar, Laos, Cambodia, North Korea, and those that have done little or nothing to change. All that have reformed had significant Chinese populations and/or a strong background of many centuries of Confucianism.
Professor Lanxin Xiang, who teaches in Geneva and at Fudan University in Shanghai, has written that the former vice-president of the Chinese Academy of Social Sciences, Li Shenzhi, pointed to a possible “Pinochet political model,” which demonstrated how a country could move from authoritarianism to democracy, for China. This, Xiang notes, was “the first time in China's history [that a link was drawn] between the internal politics of a Latin American country and the political future of the Communist Party of China” (Xiang, 2008, p. 49).
This fallacy has rarely been expressed more effectively than by Shelley in his sonnet, “Ozymandias.”
Mahbubani writes that the two most salient features of our historical epoch are that “we have reached the end of the era of Western domination of world history (but not the end of the West, which will remain the single strongest civilization for decades more). Second, we will see an enormous renaissance of Asian societies. The strategic discourse in the West should focus on how the West should adapt, but this has not happened.” He continues, “[i]t is clear that the mental maps of the leading minds of the world, especially in the West, are trapped in the past, reluctant or unable to conceive of the possibility that they may have to change their worldview. But unless they do, they will make strategic mistakes, perhaps on a disastrous scale” (Mahbubani, 2008b, pp. 4, 9).