China in Latin America

June 18, 2009

By Antonio Castillo

‘China has implemented a lengthy training programme that has allowed Venezuelans to learn how to make drills – something that they have been doing since 2008,’ says Hearn. And technology transfer is exactly what Latin American countries need desperately to improve their economies.

Integrated development is the third way China has been able to forge relationships with Latin American countries. For example, Cuban workers trained by Chinese technicians are manufacturing a wide range of electrical goods, from televisions to electrical fans. These are moved to the ports by a transport system designed and developed by Chinese experts. The Cuban docks – from where the goods will be shipped to China – are no longer inefficient facilities. Chinese investors have transformed them into world-class ports.

Dr Hearn argues that soft power, integrated development and technology transfer have a political edge: ‘It is a way not to upset the US. You can build cooperation with a country and never express a political ideology or affinity – and this is what China is doing in the case of Cuba and Venezuela.’

China’s global economic and political model of expansion has another name, the Beijing Consensus. ‘With the collapse of the maligned 1990s’ Washington Consensus, the Beijing Consensus with its core values of growth, self-determination and equality resonates in Latin America,’ says Professor Ariel C Armony, a US Fulbright academic at Nankai University’s Zhou Enlai School of Government. According to Professor Armony, there is lot of interest in Latin America for the Beijing Consensus. ‘It offers hope to developing countries through partnerships and also foreign aid,’ he says.
Voraciousness for energy, resources and commodities

The Sino-Latin American relationship is undoubtedly driven by China’s voracious appetite for energy, natural resources and commodities. ‘China is in search of energy and this is a matter of national interest,’ Professor Yang Zhimin, Deputy Director of the Institute of Latin American Studies at the Chinese Academy of Social Sciences, told The Diplomat. ‘Latin America is today China’s most important source of petroleum, gas and other natural resources key to China’s energy viability.’

Oil is one of the key resources China seeks in Latin America, and Beijing is embarking on all sorts of partnerships to keep it flowing. In 2004, the Chinese state oil company Sinopec invested US$1 billion in a joint venture with Brazil’s oil company Petrobras to build a gas pipeline that goes from south to north-east Brazil.

In 2006, in a partnership supported by China, Venezuela and Colombia began the construction of a US$200 million oil pipeline from western Venezuela to the Colombian Pacific coast.

The gas pipeline is due to be extended to Panama, a country where Mandarin is a compulsory language in schools. Panama’s president, Martin Torrijos, managed to get congressional support for a proposal to widen the Panama Canal allowing ultra-large Chinese cruise carriers to pass through. The Chinese want this to happen and the Chinese giant Ocean Shipping Company is putting its resources into this massive project. Currently, Chinese companies control the entry and the exit of the Panama Canal.

The unstoppable Chinese inroad into the Latin America economy was further reinforced on 23 October, 2008, when the People’s Bank of China, the central bank, became an official member of the Inter-American Development (IDB). This is a major step in the Sino-Latin American relationship. The move will undoubtedly strengthen Latin American-Chinese financial cooperation, trade and investments. China has pledged US$350 million to the IDB to bolster key economic programmes in the region, especially in areas of heavy Chinese investments such as petrochemical, mining, information technology, electricity, telecommunications and automobile industries.

While the Sino-Latin American relationship seems to be cruising, it is not exempt from friction. Mexico and the Caribbean nations, highly dependent on textiles, have trouble competing with Chinese imports. Mexico has lost one million manufacturing jobs to date, and the Caribbean nations are not doing any better.