GEOPOLITICS

INFILTRATING THE U.S.’ BACKYARD

As China makes a defi nite push for global primacy, the Latin American and Caribbean regions are emerging as a keen site for contestation.

SYNERGIA FOUNDATION

RESEARCH TEAM

China’s rapidly growing investments and strategic coverage of the LATAM markets marks a shift in global trade and power. Not surprisingly, these moves in what the Americans consider as their backyard, are raising red fl ags in the U.S. China’s engagement with Latin America has always been spearheaded by its economic heft and soft power since it fi rst started courting LATAM in early 2000. Latin America’s natural riches in fuels, energy, foodstuff s, and basic products, and the LATAM market appeared as a lucrative destination for Chinese-made industrial products and, consequently, Chinese investments.

Beijing’s LATAM strategy has been worked around specifi c axes; economic and commercial dependency, which carve out market space for Chinese companies; infl uencing local policies and bureaucratic administration, and turning public attitudes to combat widespread anti-China sentiments in the region. The strategy integrates both domestic and foreign policy through two complementary prongs— the so-called Going Global strategy and the Belt and Road Initiative (BRI).

GEOPOLITICS OF TRADE

China’s trade with Latin America and the Caribbean (LAC) grew 26-fold between 2000 and 2020. This came at the cost of LATAM’s historically strong trade relations with the United States and Europe, which are witnessing a diversifi cation towards China’s growing economic presence. As per World Economic Forum data, at the current rate, LAC-China trade is expected to exceed $700 billion by 2035, more than twice as much as in 2020. China has quickly replaced leading western countries to become the top trading partner in Brazil, Chile, Peru and Uruguay and has a free trade agreement with Chile, Costa Rica and Peru.

Through the trade route, the Chinese footprint has been fast expanding. Today China is an observer/ member in all major LATAM multilateral organisations like the Organisation of American States, Inter-American Development Bank and the Caribbean Development Bank and the Asia Pacifi c Economic Cooperation forum.

The pandemic provided an opportunity for Beijing to reach out to the worst-aff ected LAC countries with a soothing touch, providing much needed medical assistance,

The pandemic provided an opportunity for Beijing to reach out to the worst-aff ected LAC countries with a soothing touch, providing much needed medical assistance. The goodwill generated has enabled China to further advance its interests through various bilateral agreements with countries throughout LAC, including “comprehensive strategic partnerships” with Argentina, Brazil, Chile, Ecuador, Mexico, Peru, and Venezuela.

Chinese vaccines, including easy loans to procure these medicines/ vaccines. Over a dozen countries were happy recipients of this aid. The goodwill generated has enabled China to further advance its interests through various bilateral agreements with countries throughout LAC, including “comprehensive strategic partnerships” with Argentina, Brazil, Chile, Ecuador, Mexico, Peru, and Venezuela.

CHINESE CHECKERS

China has extended its Belt and Road Initiative (BRI) into the LATAM region, offering trade and infrastructure opportunities. Thus far, nineteen countries in Latin America and the Caribbean have signed up for the BRI, including Chile, Peru, Costa Rica, Panama, Jamaica, Trinidad and Tobago, and Antigua and Barbuda. These economic measures have been effective in blocking Taiwan, as evidenced by Panama’s defection to China in 2017. El Salvador and the Dominican Republic followed in 2018, and now also Nicaragua.

Though seldom publicised, since 2004, the Chinese Ministry of Education has been spreading its language and culture throughout the world via its Confucius Institute (CI) initiative called ‘Hanban’ in Chinese. It partners with universities around the globe to finance the establishment of CIs, thus showcasing its own culture and enhancing its soft power. In an October 2021 article for the William J Perry Centre of the U.S. National Defence University, Jake Gilstrap has claimed that presently there are 548 such CIs all across the world and has listed 43 in 19 LAC countries.

Meanwhile, 2021 witnessed major Chinese inroads into LATAM, including a new deal to share nuclear tech, build 5548G networks, develop space programmes, and pump cheap loans into the region. China is obviously looking at a multidimensional engagement strategy, officially called the ‘Joint Action Plan for Cooperation in Key Areas’. The deal was signed between China and CELAC, an alliance of Latin American and the Caribbean States that includes major players such as Brazil, Argentina, Colombia, Venezuela, Uruguay and Chile.

AMERICAN RESPONSE

The pandemic has highlighted the importance of ‘hemispheric relations’ —especially those which involved deep supply-chain integration as essential for sustained and robust economic growth. Severe disruptions in global supply chains have reinstated calls for ‘reshoring’ or ‘nearshoring’ and for greater regional integration. This has implications for Chinese ambitions in the region provided the U.S. can muster these sentiments to develop credible and attractive regional options to China-based supply chains through a regional cooperative effort.

The U.S. administration’s view towards China’s growing presence in the region has evolved over time. Bush and Obama administrations viewed it positively as a useful contributor to the region’s economy. Then, as China started to demonstrate its technological and military muscle in the global arena through its geopolitical manoeuvres in the Indo Pacific, warning bells began to ring in Washington. The Trump administration was blunter and started warning countries hobnobbing with the Dragon in the region. The 2020 U.S. strategic framework clearly spelt out the changed outlook calling for ‘countering economic aggression and malign political influence from external actors, such as China.’ The Biden administration has followed an identical line on this ‘strategic competition’.

The Americans have been quick to respond. In June last year, the Senate recommended, among its LAC provisions, a capital increase for the IDB, increased exports of U.S. goods and steps to bolster U.S. economic competitiveness in the region. It also emphasised the promotion of good governance, human rights and rule of law as well as an assessment of China’s engagement with international organisations and the defence sector in LAC. Clearly, China’s moves have not gone unnoticed in the Pentagon.

The American military has been at the forefront in cautioning its political masters about the inherent danger to American hegemony with China’s steady ingress into the region. The Florida based U.S. Southern Command, responsible for LAC, has expressed strong reservations about Chinese activities across a wide spectrum in the region - cyber dominance, space, extractive and energy industries, transportation infrastructure and hubs, telecommunications, fishing (both legal and illegal), agriculture and military-related activities like training and supply of weapons.

To counter the 2013 Chinese BRI, the U.S. has conceptualised a ‘Build Back Better’ World (B3W) project, which originated as a plan to reconstruct the U.S. after the COVID-19 pandemic. The B3W mega-project has set aside $40 billion for infrastructure development in Latin America, Africa, and Asia by 2035. The overall focus will be on four main areas: climate, health and health security, digital technology, and gender equity and equality. The announcement of B3W as a new possible strategic alternative to BRI will help G-7 countries form a new relationship with developing nations.

Assessment

The post 9/11 U.S. shift in focus on the Middle East and Asia was at the cost of LAC. China was quick to fill this vacuum which was widely welcomed by LAC nations, desperate for investments for their sustained development. Countries like Argentina have failed to draw loans from U.S.-controlled multilateral organisations like the World Bank and IMF, and China has, in turn, invested boldly. Therefore, for the U.S. to expect its B3W strategy to defeat BRI would be a tall order.

Based on experience from the pandemic and global supply chain issues, it would be to the advantage of the U.S. to reinvigorate hemispherical trade. The pandemic has reemphasised the importance of regional linkages, and LATAM would do well to keep this in context.

For LAC, this plurality of choice offers a rich harvest of investments, provided they do not let it all go to waste through their innate deep-seated institutional corruption and wasteful investments in grandiose schemes, as they have done in the past.