The response
across the hemisphere has been mixed. Some countries view China’s
presence as a threat, others see it as a panacea, and a third
group of countries believe Beijing is their ideological ally.
All three groups are wrong.
The United
States, Mexico, and the Central American republics are among the
countries that feel threatened by China’s presence in Latin
America. Brazil’s early enthusiasm has also cooled down.
Judging by the recent hearings in the Senate on China’s
increasing involvement in the Western Hemisphere, the U. S. thinks
China is challenging its geopolitical standing in the area. Mexico
and Central America fear that China will displace them from apparel
markets. Brazil thinks China is unfairly undercutting its exports
of car engines.
Argentina,
Peru, and to some extent Chile are among the countries that think
China’s presence in the region will be their panacea. They
see China as an insatiable buyer of commodities and therefore
a guarantee of their economic development. Brazil—a seller
of soybeans to China--likes that part too.
Then, there
are the ideologues. Cuba sees China, a country that has invested
$500 billion in a nickel plant in the island, as the friend who
will help the Communist Party perpetuate its monopoly on power
after Castro. Hugo Chávez also believes China will invest
astronomical amounts of money in Venezuela for political reasons.
Are U.S.
fears that China wants to be a hegemonic power in Latin America
justified? No, China is essentially seizing economic opportunities
under a strategy that seeks to maintain current levels of growth.
That strategy also explains why China spent $10 billion looking
for oil in Africa last year. Although Beijing has a few political
goals—such as luring the twelve Latin American countries
that support Taiwan towards the “one China” policy,
Chinese presence in the region is economically motivated.
Is China
a danger to the Central American and Andean economies? Although
Chinese textiles are competing with Latin American textiles, most
Latin American economies are protected against these Chinese imports
(Mexican trade barriers have probably cost China some $20 billion
in the last fifteen years). All of this imposes costs on the citizens
of the “protected” nations and props up privileges
in those societies. Chinese competition can eventually help Latin
Americans get rid of parasitical producers and their political
allies.
Is China’s
thirst for Latin American commodities a guarantee of prosperity,
as countries like Argentina and Peru believe? No. Latin America
has been selling raw materials and commodities to many countries,
including Britain and the U.S., for the past two centuries. The
result is always the same. In times of high prices, growth figures
look good and everyone thinks prosperity will soon arrive without
realizing that prosperity requires a system conducive to systematic
wealth creation. In times of low prices, everyone blames the “unjust
terms of trade” for the region’s backwardness.
When Hu Jintao
toured Latin America at the end of 2004, he discussed investing
$100 billion in the region’s infrastructure. Latin Americans
celebrated the fact that China’s supposed displacement of
the U.S. in the area would produce roads, ports and oil rigs across
the region. In fact, China was trying to obtain official recognition
as a “market economy” from countries like Brazil and
Argentina in order to protect itself against anti-dumping measures
at the World Trade Organization. While Beijing does have an interest
in improving the region’s appalling infrastructure to insure
a steady supply of raw materials, China will only invest in countries
where it can actually make a profit. Because Latin America is
still a place where investors expect smaller returns and greater
insecurity than in other places, the $100 billion have not even
started to materialize.
Finally,
is China’s bureaucracy an ideological ally of Fidel Castro
and Hugo Chávez, as both men think? For China, Castro is
a temporary embarrassment, while Chávez is the President
of a country that happens to be the world’s fifth largest
oil producer. Since U.S. investors cannot, for the moment, invest
in the island, the Chinese are filling the space. Hu Jintao would
have done business with whoever replaced Chávez in Venezuela,
if the coup attempt there in 2002 had been successful. Ironically,
the country that China trusts the most is Chile—Latin America’s
number one capitalist country, which is why Beijing and Santiago
have been busy negotiating a free trade agreement.
The last
thing the Western Hemisphere needs is to adopt the Chinese model
of political dictatorship and relative economic freedom or to
see Beijing as some form of ideological ally. But moving decisively
toward the free flow of ideas, goods, services, capital and people
across the Pacific is something that will benefit everyone--the
U.S., Latin America and China itself--immensely.
