The Chinese Dragon and Latin America

by Luís Hernández Navarro
Feature graphic from The Economist by Lo Cole

The Chinese locomotive advances unstoppably. Already the main driver of the global economy. And according to  a report of McKinsey Global Institute, it surpassed the United States as the richest nation on the planet (https://mck.co/2ZdpRxc).

The consulting firm’s report analyzes the national balances of 10 countries, which hold more that 60 percent of the global income. It documents how the net wealth in the world passed from 156 billion dollars in 2000 to 514 billion dollars in 2020. It concludes: the Asian giant generated 50 percent of the growth of its net wealth in the last 20 years. 

Despite the pandemic, China is the only major economy that did not suffer a recession in 2020. In fact, it grew 2.3 percent. According to the experts between 2021 and 2025, it will reach an average annual growth of 5.7 percent. Right on track, last year it overtook Washington as the primary trading partner of the European Union (EU.) According to the World Economic Forum, it is poised to be the primary trading partner for Latin America and the Caribbean in less than 15 years.

The great eastern dragon is key to Latin America’s economy. It is a voracious consumer of foods, minerals, metals, and fuels produced in the region. The trade exchanges, financial aid and investments of the country have been central in enabling the area, beyond the political leanings of its governments, to face the challenges of growth. 

According to Alicia Bárcena, executive secretary of the Economic Commission for Latin America and the Caribbean (Cepal), the cooperation between China and Latin America and the Caribbean offers an opportunity to reduce the global asymmetries and support an inclusive transformational economic recovery that promotes sustainable development  (https://bit.ly/3oST3m1).

Although the Asiatic giant has restricted its lending in the hemisphere (https://bbc.in/3cy9rCu), it is increasing rapidly in other sectors: trade, direct investment, development cooperation, and even cultural activities. In the context of the pandemic, research and development agreements have been intensified, more than anything in the pharmaceutical realm. Their focus (without abandoning other sectors) is on advancing logistics, services, telecommunications and transportation. Nothing indicates that this trend is going to disappear.

The Asian nation is Latin America’s second most important trading partner, ahead of the European Union. Now it represents 15% of trade in the region. Simultaneously, it is third as a source of investment in the economies of the region. Between 2015 and 2020, private and parastatal companies invested some 7 billion 850 million dollars in the hemisphere. Countries like Chile have had since 2006 a free trade agreement with the homeland of Mao Tse-Tung. And Peru became the favorite destination for investment from Chinese companies on the continent. 

According to the Center for China-Mexico Studies (Chechimex), the colossus of the east has 138 infrastructure projects in Latin America, with approximately 94 billion dollars in investments that has generated 600,000 direct jobs (https://bit.ly/3kT1L2g).

The growing Chinese presence in an area of traditional U.S. influence is meeting with growing concern in Washington. The empire has sought to contain and administer the impact of the eastern power and circumscribe it to the economic sphere. At the same time Peking has been cautious and has made clear that its intention is to expand its economic frontiers.

It has to do with businesses, investments, and loans not conditioned to acceptance of the dogma of development, ideological considerations, or strictly political criteria. They always speak of cooperation and mutual aid. 

In an interview with La Jornada, the ex president of Bolivia Evo Morales explained the relationship this way: China supports development without blackmailing us, and without imposing conditions on us. The United States supports, but in exchange for privatization of natural resources and basic services, in addition to imposing the fight against drug trafficking. China, on the other hand, gives you credit without placing any conditions on you. This is the profound difference. The same with Russian and other countries. In my experience, we are fighting with an empire, but not with other powers. We are well balanced. (https://bit.ly/3DHg3ub).

In a brief videotaped message broadcast at the summit of the Community of Latin American and Caribbean States last September, the Chinese president, Xi Jinping, offered help to the countries of Latin America and the Caribbean to contribute to their prompt recovery from the pandemic and to advance their socioeconomic development. The relations, he indicated, have entered into a new era characterized by equality, mutual benefit, innovation, openness and well-being for the peoples. His country, he said, is inclined to work in a coordinated fashion to create opportunities in the region and construct a shared future. According to Enrique Dussel Peter, one of the most knowledgeable on the relation between China and Latin America, the video message is no small detail. 

The strength of China’s presence in the region means, plain and simple, that there is no viable  process of Latin American integration without it. The dragon of the orient has arrived in the region to stay.

This piece was published in La Jornada on November 23rd, 2021. https://www.jornada.com.mx/2021/11/23/opinion/025a2pol English translation by Schools for Chiapas.