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CSIS Commentary
Is Latin America Important to China's Foreign Policy?
Special Contribution
By Ryan C. Berg & Thiago de Aragao
Chinese President Xi Jinping (center) poses for a group photo with leaders from South American nations on July 17, 2014 in Brasilia.

The leading edge of China’s engagement with Latin America has always been economic in nature. Emerging market economies, principally led by China, displayed an intense interest in Latin America’s raw materials beginning in the early 2000s. Rising prices of commodities contributed to a reduction in poverty and the burgeoning of a middle class in what is still one of the most unequal regions of the world.

Following the commodity boom in the early 2000s, which lasted roughly a decade, China has sought to deepen its engagement with Latin America in other areas of cooperation. It now engages in security cooperation, technology export, cultural exchanges, and military-to-military exchanges, among other things. An intense debate among regional scholars is playing out between those who believe China’s engagement presents untold opportunities with few (or manageable) downsides and those who see reason for a multiple-alarm fire. This debate, however, has not managed to percolate into the broader strategic community — those developing US grand strategy in an era of great power competition with China (and to a lesser extent, Russia).

A case in point is a hearing of the US-China Economic and Security Review Commission in late May of this year on the topic of “China in Latin America and the Caribbean” — the first such hearing held by the commission in many years. Testimonies, including those of the authors, highlighted the lack of a US strategy aimed at pushing back on China in the multitude of ways it engages with Latin America and the Caribbean. They highlighted the inability (or unwillingness) of the United States to harness resources and work toward providing the region with a better alternative. One question remained critically unanswered during this hearing: Where does Latin America rank among China’s foreign policy priorities?

The conventional view of Chinese foreign policy holds that Latin America is the least important region in its foreign policy hierarchy. Besides the fact that the Western Hemisphere has been a traditional sphere of US. influence, the main piece of evidence mustered for this view is the fact that the country’s signature Belt and Road Initiative (BRI) arrived in Latin America only in mid-2017 — later than any other region in the world to join the BRI. In a little over three short years, however, 19 countries in the region have joined the BRI, with many more expected to do so in the coming years.

It is difficult to determine where Latin America fits into China’s foreign policy outlook, precisely because the United States lacks a strategy for countering China in the region, permitting it the ability to make considerable geostrategic gains while the United States supposedly practices “ benign neglect” by prioritizing other regions of the world less tangentially related to its security and prosperity. In many ways, a more developed strategy for rolling back China’s gains in Latin America — a strategy that puts on offer a more attractive alternative — would force China to reveal how much it prioritizes the region because it would ensure the country would have to commit greater time, energy, and resources to make the same level of strategic gains it has thus far.

The Conventional View of Chinese Foreign Policy Priorities

For many decades, China was an inward-looking country, seeking to maintain order and unity. An economic boom in the 1980s (which followed a consolidation of the Chinese Communist Party that assured that no opposition group could emerge and put its power at risk) enabled China to engage with the far corners of the world in dramatic ways. While ensuring markets for the export of manufactured goods and importing commodities became the essence of foreign engagement, these openings eventually granted China the opportunity to engage foreign governments in many other domains. The conventional view of Chinese foreign policy priorities emphasizes the importance of Southeast Asia and Central Asia, followed by Europe, then Africa.

Southeast Asiaand Central Asia

As China’s economy developed in this early period, it targeted Southeast Asia and Central Asia as it began vocalizing its geopolitical aspirations. In every sphere — commercial, security, economic, and even domestic — Southeast Asia and Central Asia have become critical in geopolitical terms, as well as China’s national security evaluation. As Latin America is to the United States, China considers Southeast Asia and Central Asia its traditional sphere of influence. This set of concerns encompasses potentially explosive issues, such as the status of the South China Sea and the future of Taiwan.

Europe

Europe is a commercially valuable region for China. Lackluster growth and lagging economic development in some southern and eastern European countries present China with the opportunity to engage in BRI projects and expand its mergers and acquisitions of critical assets and infrastructure. By acquiring strategic assets, such as energy companies in Portugal or ports in Greece, China believes it can mitigate any retaliation from Brussels (or any harsh rhetoric at all) over its human rights violations and predatory economic practices. In this sense, Russia is an example to China — action against the former has been limited and intermittent, owing to Europe’s dependency on Russian gas exports. China seeks to balance Europe and move it away from Washington’s narrative, while acknowledging that this is likely not fully possible.

Africa

Africa occupies an important role in China’s foreign policy as a supplier of mineral and agricultural commodities. Taking advantage of US and European inattention, coupled with heavy offerings of loans, China established itself as a key partner throughout the African continent. By financing infrastructure construction and linking it to existing infrastructure on the Asian continent, China has sought to ensure an export route, particularly from East Africa to the Chinese mainland. The country has positioned itself as a partner in economic development (while still managing to maintain control of many local projects), drawing a distinction between its European and American rivals, who still speak in terms of economic aid. Recent years have witnessed a greater Chinese desire to decrease credit offerings and instead expand acquisitions of companies and make way for Chinese companies on the continent.

Where Does Latin America Fit In?

In many ways, Latin America offers an opportune environment for China to engage with economically. Engagement with Latin America impacts domestic stability in China, with the need for continuous output of Latin America’s abundant natural resources and raw materials. With moderate levels of institutionality, Latin America possesses judicial systems capable of ensuring contracts (broadly speaking) and reducing some of the investment risk posed by many African countries. At the same time, because Latin America is a region comprised mostly of presidential systems, China manages to engage in multiple negotiations at one point of entry (with strong executives to boot), rather than with diverse and independent institutions across an unwieldly government bureaucracy. Further, China’s manufactured goods find a consumer base among Latin America’s relatively more prosperous middle class.

China’s approach to Latin America has been free to focus primarily on economic forms of engagement, while the United States is beset by the problems of illegal immigration, drug trafficking, corruption networks, money laundering, and populist-authoritarian governments ideologically opposed to its influence — trends sometimes influenced negatively by China’s very engagement. Indeed, China has demonstrated little appetite for engaging on the traditional challenges in the region, even lending vast sums of money to some of the region’s worst human rights offenders and most authoritarian regimes. In this values-free approach, China has sought a region that is more developed than Africa, less institutionalized than Europe (but more than Africa), bountiful in natural resources, and naturally consumer-driven.

Latin America in China’s Grand Strategy

In China’s grand strategy, its approach to Latin America appears to revolve around several specific axes. Unsurprisingly, those axes are economic and commercial dependency, which carve out market space for Chinese companies; influencing local policies and bureaucratic administration; and influencing public attitudes and combating anti-China sentiment in the region.

China’s attempt to create the conditions for economic and commercial dependence through commodity-backed lending presents a less risky strategy to ensure stable access to Latin America’s bountiful natural resources. This prong of the Chinese approach also opens the door to Chinese projects of strategic import. Latin American governments possess a scant understanding of the decisionmaking dynamics in Beijing, which harms their risk evaluation. In reality, China is highly dependent on Latin American commodities, for which the country has few alternatives. Often, this dynamic seems lost on Latin American capitals during sensitive negotiations. Economic dependency tends to engender more centralized channels of communication, which are also favored by the Chinese. One byproduct of greater lending to the region is that China continues to open more markets for Chinese companies, especially technology companies producing equipment for entertainment, security, government operations, and scientific research.

China also seeks to influence Latin American policies in favor of its interests at local, state, and national levels. Since the onset of Brazil’s first Worker’s Party administration in 2003, for example, China has sought to convince the Brazilian government to carve out bureaucratic benefits for large Chinese companies operating in Brazil. In the chaotic environment that is Brazil’s bureaucracy, the Chinese have not achieved success in this endeavor. However, in other countries, such as Argentina, China has managed to encourage greater regulatory flexibility, resulting in considerable strategic gains. The most obvious example is China’s military-run space station in the Patagonia region. The original agreement, forged in 2012, mentions Chinese-Argentine cooperation on satellites and data collection. However, in practice Argentines have not been permitted access to the base. Concerningly, the Argentine government completed an agreement with the Chinese for a similar type of base in late May, this time in the Santa Cruz region. The strategic imperatives are clear — as one of the southernmost provinces in Argentina, Santa Cruz lies just north of the Strait of Magellan, a major maritime chokepoint between the Atlantic and Pacific Oceans. China has leveraged Latin America’s institutional weaknesses and lack of transparency to bend the bureaucratic labyrinth in its strategic favor.

Increased Chinese presence in the region has also permitted the country greater access to local, state, and federal officials. Engagement represents a prime opportunity for officials to combat anti-China narratives and shape the perceptions of leaders. In particular, Chinese officials have been eager to combat narratives on sensitive issues that highlight the country’s human rights practices, lack of intellectual property rights, authoritarian political system, and more recently, role in the spread of Covid-19. One of China’s great strengths, from the Latin American perspective, is its ideological agnosticism. It engages with political parties of all stripes, often institutionalizing its relationships through the International Liaison Department (ILD), which fêtes foreign political parties in Beijing. Between 2002 and 2017, the ILD held nearly 300 meetings with 74 different political parties in 26 different countries in Latin America.

A US Plan to Test China’s Commitment

China’s engagement in Latin America has awarded the country considerable strategic gains at a relatively modest price — an opportune cost-benefit analysis for a region considered a traditional US sphere of influence. Until the United States develops a holistic strategy for the hemisphere that seeks to make Latin America a preferred partner, taps available resources to offer a more attractive alternative, and delineates when strategic interests are at stake — as opposed to highlighting more general economic and geopolitical competition with China — policymakers will lack an answer as to where exactly Latin America falls in China’s foreign policy priorities vis-à-vis other regions.

Further, without greater detail, leaders throughout Latin America are left to believe that the United States supports a total regional decoupling from China — a nonstarter for nearly every country. US failure to think more deeply and communicate a clear policy also leaves regional leaders with the impression that it is unaware of the cost Latin America would pay for decoupling from China or, worse yet, uninterested in the impacts of those costs. Instead, a more effective strategy would adumbrate clearer guidance regarding US national security concerns in Latin America and develop “tipping points” for action should China cross them. Importantly, the United States should mobilize resources when strategic interests are at stake in order to facilitate the conditions of more preferred alternatives.

Until the United States invests more in its Latin America strategy, the importance of the region to China’s foreign policy will remain unanswered — precisely because it does not have to be.

The above writer Ryan C. Berg is a senior fellow with the Americas Program at the Center for Strategic and International Studies (CSIS) in Washington, DC. Cowriter Thiago de Aragao is a senior associate (non-resident) with the CSIS Americas Program.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).



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