Red Star Over Latin America

Li, He

SEPTEMBER/OCTOBER 2007 report: the multipolar moment? raúl Castro receives Chinese president Hu Jintao in Havana. Castro and many other Cuban officials have expressed their admiration for...

...These trends could reduce regarded Latin America as its “backyard” and that Wash-trade frictions associated with China’s economic expansion...
...Nonetheless, the Beijing Consensus represents an attractive alternative to its Washington counterpart largely because Beijing respects the sovereignty of Latin American nations, not meddling in their affairs and certainly not dic­tating their policies, as in the famous structural adjustment of neoliberalism...
...For these reasons, Chinese leadership has been study, and see very cautious in its overtures to Latin America, and for themselves it will likely continue in that manner in the future...
...South America Percent On the other hand, Mexico and Central Value (Total $18,095) of total America have suffered from a growing trade defSoy Iron Copper Wood/wood pulp Crude oil Mexico and Central America (Total $2,900) Electronic parts Electronic microcircuits Copper minerals and concentrates Iron ingots Nonferrous metal waste and scrap icit with China...
...nacla SEPTEMBER/OCTOBER 2007 report: the multipolar moment...
...It has eagerly promoted the strengthening of the role of the United Na­tions, while also identifying China with the Third World and suggesting that devel­oping countries still have a long way to go to secure economic autonomy...
...interests in the region since the Soviet Union...
...NACLA REPORT ON THE AMERICAS report: the multipolar moment...
...Those that produce raw materials and food—Argentina, Brazil, Chile, and Peru—have been favored with positive commercial bal­ances and direct investment...
...policy in the hemisphere, the Monroe Doctrine.27 countries may Furthermore, some of the pink tide’s populist turn to the agendas, especially nationalizing foreign-invested Chinese way of companies, could hurt Chinese long-term eco­nomic interests in Latin America...
...insertion that, while not openly confronting the developed They fear that Washington is “losing” Latin America—that nations, is based on South-South cooperation.23 Lula has the huge financial resources China is promising to bring to crafted an assertive foreign policy that in some ways parallels Latin America, its growing military-to-military relations in China’s, seeking to unify opposition among poor and undeveloped countries to the Washington Consensus and to push for better terms of trade for the Southern Hemisphere...
...It has also consistently supported Pacific-rim countries in Latin America to join the Asia-Pacific Economic Cooperation forum, as well as the aspirations of Brazil and Venezuela to join the UN Security Council...
...according to Chávez, the Chinese contract will include the transfer of technology, which may en­able Venezuela to build and launch its own satellites in the future...
...These countries have be­come important suppliers of primary products to China, sending more than 60% of Chinese imports of soybean (chiefly from Brazil and Argentina), 80% of fishmeal (from Peru and Chile), close to 60% of edible poultry offals (from Argentina and Brazil), and 45% of wines and grapes (from Chile...
...Chinese foreign aid and loan programs attach no con­ditions except that recipient countries must recognize the People’s Republic as the sole legitimate government of Chi­na...
...Argentine president Néstor Kirchner has also praised China’s great achievements in economic development and said Argentina should learn from it.24 For others, the Chinese state-led development model offers little beyond the theoretical contribution made by Raúl Prebisch 50 years ago...
...And unlike neoliberal transformation, which often includes abandoning the domestic market as a source of growth, China has concentrated on boosting domestic demand, a method it used to keep its economic engine running in the wake of the 1997–98 Asian financial crisis...
...This practice, known as “round tripping,” is a prominent feature of Chinese investment in the region...
...This has prompted Chinese leaders to identify Latin America, together with Russia/Central Asia and the Middle East/Africa, as a candidate to be a principal energy supplier.7 In 2006, China bought EnCana Corporation’s oil and pipeline assets in Ecuador for $1.42 billion, and in the same year teamed up with the Indian state oil firm to invest $800 million in a 50% stake in Omimex de Colombia.8 The Chinese have also discussed investing in the Panamanian government’s project to widen the canal to accommodate larger ships and attain higher shipping volumes...
...42, 44...
...market, despite their greater proximity to it...
...In 1960, Cuba became the first Latin Ameri­can country to recognize Mao’s China, and un­til the early 1970s what few trade and cultural exchanges between it and Latin America existed were concentrated on Cuba...
...Castro and many other Cuban officials have expressed their admiration for China’s economic model...
...Venezuela too signed a satellite deal with China...
...Close ties with left governments years ahead...
...Technology cooperation be­tween the countries has been on the rise since 1999, when they launched a jointly developed satellite for surveying the earth’s resources (another was launched in 2003 and two more are planned...
...China is certainly different from many de­veloping countries, in that it enjoys a huge domestic market, access to which it has used as a carrot to persuade Western countries to transfer their technology...
...In fact, the first trip between 1995 and 2004, Argentina was responsible for a tenth of anti-dumping cases brought against China at the WTO...
...Chile, the first non-Asian and only Latin American country to sign a free trade agreement with China, reached $8.8 billion worth of trade with China in 2006, comprising mostly copper exports to China (along with other raw materials), while Chinese textiles, clothes, and light engineering and electrical products arrived in Chile.11 Likewise, China’s imports from Brazil are mostly pean colonial powers: Latin American and Afri­ can nations export raw materials to China while importing cheap Chinese products that compete with, and undercut, local industries.12 And it does appear that China may well end up completely assimilating to global capi­talism...
...See table at left...
...Whereas before, China’s development policy relied almost exclusively on a strategy called “welcome in” (yinjinlai), i.e., attracting foreign capital, technology, and managerial skills, today it also pursues a strategy of “going out” (zouchuqu...
...In the last several decades, both Taipei and Beijing have consistently provided financial assistance to countries that maintain official relations with them, and both have established mutual trade offices in the countries that they don’t have diplomatic relationships with, often the first step toward switching recognition...
...The mix of products that Mexico and Central America ex­ $745 4% Percent port to the United States market is fairly similar Value of total to that of the products that China sends to that $322 11% market...
...Addition­ally, China’s giant state oil company has acquired exploration and operation rights in Cuba, Colombia, Ecuador, Peru, and Venezuela...
...Argentine and Brazilian manufacturers also face stiff competition from Chinese imports...
...From 1995 to 2000, Brazil initi­ated 15 anti-dumping investigations against China, and nomic growth and diversification—and to reduce their dependence on the United States.17 I n 1988, the late chinese leader deng xiaoping said he believed the 21st century would not only be “the Pacific era,” as some had predicted, but also the “Latin American era...
...Cuban leaders have expressed their admiration for China’s Thomas Shannon paid an unexpected visit Beijing...
...In Combined with China’s extraordinary economic growth April 2006, just before President Hu came to the United and global outreach, China’s involvement in Latin America States, U.S...
...ington is very sensitive about its activities in the region...
...a few of which the Chinese government has designated as China knows well that the United States has traditionally official tourism destinations...
...Latin American man­ufacturers in countries that also rely on labor-intensive nacla NACLA REPORT ON THE AMERICAS report: the multipolar moment...
...Almost 95% of that FDI went to the Cayman Islands and the British Virgin Islands, both tax havens where Chi­nese firms channel their funds, only to move them back as FDI, sidestepping strict foreign-exchange controls and tax regulations...
...But its impressive trade relations with the region have not affected all countries in the same way...
...He is the author, most recently, of From Revolution to Reform: A Comparative Study of China and Mexico (University Press of America, 2004...
...dollars (millions) primary products like soybeans, iron ore, and petroleum...
...China imports less than 1% of Mexico’s total exports but is the second supplier $5,174 29% $3,909 22% for Mexico’s imports...
...China Customs Statistics little more than half of the country’s total in­vestments abroad that year...
...Most of China’s exports to Latin America, on the other hand, consist of machinery and electrical products, especially those with high value added, like automobiles, tractors, motorcycles, televi­sions, computers, and so on...
...Excluding the tax havens, Chinese FDI in the south­western hemisphere concentrated most heavily in Mexico ($141 million, 25.6%), followed by Brazil, Peru, Venezuela, and Panama.6 Of this, much of the investment has been in the energy sector...
...China is, after all, the world’s third-larg­est net importer of oil, and faces a huge and widening gap between its stagnant energy production and booming con­sumption...
...Unlike other oil-exporting countries in the region (like Argentina, Brazil, and Ven­ezuela), Mexico, as a neighbor and member of $263 9% $133 5% NAFTA, is committed to selling oil to the United $125 4% States, not to China...
...116 4% Given these asymmetries, Chinese economic linkages with the Third World might seem not Source: Economic Commission for Latin America and the Caribbean, Latin America very different from those established by the Euroand the Caribbean in the World Economy, 2005–2006 (United Nations, 2006), pp...
...Congress members view China as the most serious chal­with his Chinese counterparts a desire for an international lenge to U.S...
...Red Star Over Latin America ismael francisco gonzalez / ain / latinphoto.org by He li S ince the bandung conference of 1955, China has consistently identified itself with the developing world, calling itself the “world’s largest developing country” and making constant reference to its shared historical experi­ence of colonialism with the other states of Asia, Africa, and Latin America.1 Yet until recently, Lat­in America was a low priority for Beijing, which viewed the region as too geographically remote to be relevant to the international relationships that preoccupied it, especially those with the major powers and neighboring countries...
...The imbalance is reflected $3,346 19% in the fact that the 15 main imports by China $943 5% from Mexico and Central America are manufac­tures, especially in the electronic sector, with the exception of copper and iron ore...
...For their part, Latin American countries will the benefits of put increasing priority on their relations with the the Chinese emerging superpower in Asia...
...Indeed, China has overtaken Mexico as the sec­ond-largest source of U.S...
...But large-scale Chinese FDI has yet to arrive, as many in South America had anticipated, leaving them disappointed.10 The glitter of Chinese investment initially cheered many, but with the significant exceptions of the Cayman Islands and the British Virgin Islands, it remains relatively small...
...exports, particularly the Central American nations and Mexico, have been severely hurt by Chinese competi­tion in the U.S...
...China is likely to boost its investment and like that of Chávez might strain China’s relations with the technology cooperation, and more Chinese tourists are ex-United States, its largest trading partner, critical to fueling its pected to visit Latin American and the Caribbean nations, whirlwind economic growth...
...China’s new friends in Latin America, in addition to their willingness to form alliances, are increasingly attracted to the Chinese economic model, a model based on rapid growth achieved within an authoritarian political system pursuing mercantilist trade policies.21 Raúl Castro and many other Justin guariglia / the image Works SEPTEMBER/OCTOBER 2007 report: the multipolar moment...
...There, China assumed an active role in the Group of 20 (G20), supporting the leadership of the IBSA bloc (India, Brazil, and South Africa) in fighting for the interests of developing countries...
...Top Five Latin American Exports to China, 2004 By region, in U.S...
...China’s votes in the United Nations concur with 95% of those from other nations it defines as developing.19 China has increasingly sought African and Latin American votes at the United Nations and other world forums to shield itself from international crit­icism on its human rights records...
...Some predict it could reach $100 billion by 2010...
...imports (after Canada).13 It’s no surprise, then, that Mexico became the first coun­try in Latin America to levy a high anti-dumping tariff against China back in 1993, charging more than 1,100% against Chinese shoes and other products...
...Latin American Trade With China, 2000–2006 veloped into a new but increasingly important player in Latin America.4 As Chinese leaders see it, their country can be both a partner and a model for the developing world—a model, that is, a of state-directed market economy without democracy.5 China’s trade with Latin America has dra­matically increased, having grown fivefold be­tween 2000 and 2006, reaching in 2006 an all-time high of $70 billion, after growing 40% over the previous year (see figure at right...
...18 Following in that spirit, Chi­ nese leaders now take greater interest in South-South co­ operation within international organizations and forums...
...From the Chinese perspective, Sino–Latin American ties have now entered their best period in history...
...Diplomatic and economic engage­ment with the region has seen a meteoric rise, inseparably linking China’s economic develop­ment with political considerations...
...This has led China to become one of the most intrepid investors in the West­ern Hemisphere, with Chinese foreign direct investment (FDI) in Latin America and the Caribbean reaching $11.5 billion in 2005, a Sources: Chinese Ministry of Commerce...
...Despite Daniel Ortega’s presidential victory in late 2006, as has encouraged of this writing, Beijing is still anxiously waiting for by welcoming Managua to drop its diplomatic recognition of Tai­wan and switch to China...
...Whatever Beijing’s geopolitical motives, however, what stands out to many Latin Americans is the flood of cheap manufactured products from China...
...In spite of these concerns, many Latin Americans view engagement with China as a welcome opportunity to promote eco­ by Chinese dignitaries after Tiananmen in 1989 was to Latin America.20 This interest in forming alliances was manifested most sig­nificantly at the September 2003 World Trade Organization meeting in Cancún, Mexico...
...Half of Taiwan’s 24 diplomatic allies are in the re­gion, with all but one (Paraguay) located in Central America and the Caribbean...
...Thus, cooperation aside, reunifying Taiwan with the Chinese mainland is a key tenet of China’s Latin American strategy...
...And China will still model...
...China is also participating in a natural gas pipe­line project in Brazil.9 As Latin America’s largest country, Brazil has attracted special attention from China, having become its largest trade partner in the region, while China is Brazil’s third largest trading partner in the world...
...Beijing nonethe­ development, less hopes the pink tide will help China win more which beijing allies in its diplomatic battle with Taiwan...
...SEPTEMBER/OCTOBER 2007 report: the multipolar moment...
...From then to the mid-1980s, competi­tion with Moscow was in fact a major factor in Beijing policy toward Latin America, leading it to shun Cuba...
...source told the BBC, “We beyond Cuba.22 For example, despite his country’s com-want to make sure we don’t get our wires crossed...
...Even at that, contacts diminished after relations soured between China and Cuba, with Fidel Castro openly criticizing China in the 1960s and condemning its invasion of Vietnam at the 1979 Non-Aligned Movement assembly...
...seek the support it needs from Latin America on issues like human rights and Taiwan...
...Assistant Secretary for the Western Hemisphere is likely to deepen and intensify...
...In 2004, when Chinese president Hu Jintao went on a Latin American tour—visiting Brazil, Argentina, Chile, and Cuba, and signing 39 commercial agreements—he announced that China would invest $100 billion in Lat­in America during the coming decade, boosting hopes for the region’s development...
...Beijing also recognizes international that—despite Deng’s talk of a “Latin American delegations to era”—the region will unlikely become central to come discuss, the burgeoning multipolar system anytime soon...
...Many Latin American presidents, including Brazil’s Lula da Silva, Argentina’s Néstor Kirchner, and Vene­zuela’s Hugo Chávez, have spent more time in Beijing than in Washington.2 No longer claiming to be a paradigm of social­ist revolution, China has adopted a different role in its relations with developing countries, offer­ing a “Beijing Consensus” as an alternative to the Washington Consensus.3 Through a mixture of development aid, trade ties, direct investment, and high-level political exchange, China has deHe Li is professor of political science at Merrimack College, North Andover, Massachusetts...
...Discuss­“market socialism,” and the Chinese model resonates far ing the meeting, an official U.S...
...Beijing prefers a multi­polar world...
...Diplomatic back on Latin America while fixated on Iraq, more Latin closeness may even be aided by the huge distance between American countries may turn to the Chinese way of devel-the two regions: Although it generates barriers in transpor­opment, which Beijing has encouraged by welcoming in-tation and mutual understanding, it also means China and ternational delegations to come discuss, study, and see for Latin American nations have neither serious ideological themselves the benefits of the Chinese model.25 clashes nor territorial conflicts...
...Although Beijing is excited about the new left and cen-The potential for further development of trade, invest-ter-left governments in Latin America that have changed the ment, and technology across the Pacific will provide a good political landscape of the region, it is cautious about creating foundation for closer Sino–Latin American relations in the deep alliances with them...
...C hina has targeted latin america not only as a new market for its goods but also as a rich source of the foodstuffs, raw materials, and energy re­sources it needs to continue its economic expansion...
...He continued: “China’s policy is to develop and maintain good relations with Latin American coun­ tries, and make Sino–Latin American relations a model of South-South co-operation...
...As China’s economy and its soft power keep growing, and Washington continues to turn its the region, and its clear political ambitions there more latin all pose potential threats to the long-standing pillar American of the U.S...
...Lacking this option, many small countries instead offer fiscal incen­tives like tax concessions and cash grants...
...26 Some petition with China in manufacturing, Brazil’s Lula shares U.S...
...14 Meanwhile, China is replacing Brazil as a supplier to other countries in the Americas.15 And according to Rodrigo Maciel, executive secretary of the Brazil-China Business Council, most Chinese investment in Brazil has been in infrastructure that supports the commodity ex­ports China desires, which does not necessarily match Brazil’s own economic interests.16 Many see China as the new “workshop of the world,” an unfair competitor whose export-oriented develop­ment strategy relies heavily on the country’s abundant low-cost workers and undervalued currency...

Vol. 40 • September 2007 • No. 5


 
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