Economic statecraft works best when economic interests align with state interests. Therefore, China has been working for the last decade to increase trade relations with Latin America and Caribbean (LAC) countries for a variety of statecraft related reasons including fueling the People’s Republic of China’s (PRC) demand for natural resources, influencing countries to support the One China Policy, and gaining a strategic foothold in America’s “backyard,” to name a few.
President Xi Jinping travelled to Ecuador, Peru, and Chile almost two weeks after Mr. Trump was elected to be the next President of the United States. Though the strategic implications of this action were probably just due to timing, the irony of Mr. Trump walling himself inside of the United States while Mr. Xi brought billions of dollars worth of investment deals into areas traditionally marked by the Monroe Doctrine was not wasted by the political cartoonists in the West. At the same time, Chinese media made claims that his trip would bring in a new era of Chinese-LAC relations. While there have been as many as 31 visits to the region from Chinese leadership between 2000 and 2015, this meeting showed the whole world that Chinese interests in Latin America extend beyond simply natural resources and brought further attention to the oft-ignored China-LAC relations. Though natural resources will continue to be a centerpiece of the Chinese-LAC relationship, Latin America is looking for more than infrastructure and the export of raw goods. In order to forge stronger South-South relations, China must be engaged in South America to show solidarity and continue to proclaim its message that it understands developing nations far better than Europe or the United States. One such example of China forging long-term cooperation are the set of deals and agreements that China signed with the region in 2015 that promised to double the amount of trade to $500 billion by 2025. But beyond a general call of understanding and support for their southern counterparts, China has more specific goals in mind through developing these relationships.
China, Taiwan, and the LAC Countries
China is trying to influence LAC states into supporting the PRC’s One-China policy. With 12 of the remaining 22 states that recognize Taiwan located in Latin America and the Caribbean, such as the Dominican Republic, Haiti, Paraguay, Belize, and Panama, China needs to engage America’s backyard in order to gain universal recognition of their rightful control of Taiwan. The PRC specifically stated in 2008 that, “the one China principle is the political basis for the establishment and development of relations between China and America.” As far as empirical proof, deals between China and LAC countries show preferences toward nation-states that engage with Beijing. The Brookings Institution’s Ted Piccone stated in November 2016, “of the top 13 destinations of PRC loan commitments to the region between 2005 and 2015, none of the 12 states that recognize Taiwan made the list.” He does admit that overall trade volume increases were not statistically affected by a nation’s choice to recognize Taiwan or Beijing. The remaining 12 states in the LAC region have been playing back and forth between the two Asian countries in order to gain the best deals for themselves in terms of not only trade, but development assistance as well.
Bilateral trade deals are not the only thing on the minds of LAC states. President Xi’s visit to South America following Trump’s win December 8th potentially included the idea of Peru and Chile of joining China’s Regional Comprehensive Economic Partnership (RCEP), as opposed to the faltering Trans Pacific Partnership (TPP). Some have even considered Brazil, who was not privy to TPP negotiations at all, as a potential suitor for the RCEP as China overtook the US in 2014 as the largest trading partner with Brazil.
China’s Counter-pivot to Latin America
The RCEP is not China’s only reaction to the TPP. Some political analysts see China’s deepening ties as a counterbalance to the litany of US allies in China’s own backyard. Their claims are understandable when looking at China’s neighbors, many of whom are US allies and would become even more tightly bound with the passage of TPP (a much more likely scenario when China was considering policy options a decade ago). By cooperating with the US’s desire to uphold the liberal international order, they have free reign to move into Latin America and sign deals and invest in the region. For example, throughout President Xi’s trip to Brazil, Argentina, Venezuela, and Cuba in 2014, he signed over 150 deals and framework agreements, which totalled to around $70 billion. This course of action has the added benefit of forging better relations with Brazil and showing the world that the BRICS are a strong and institutionalized force. Though possibly sold politically as a re-balancing act with the US, there is no shortage of economic gains to be had with expanding trade with the LAC countries.
Featured Image: Xi Jinping by Global Panorama. Flickr Creative Commons.
Andrew Cech is a Master’s candidate at the Patterson School of Diplomacy and International Commerce, majoring in International Commerce and Economics. He is interested in East African politics, free trade agreements, and Chinese international development policies. He hopes to pursue a career in international trade facilitation with the US Department of Commerce.