The Geopolitics of China’s Rise in Latin America

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Foreign Policy in a Troubled World

GEOECONOMICS AND GLOBAL ISSUES PAPER 2 | NOVEMBER 2016

The Geopolitics of China's Rise in Latin America

TED PICCONE

ABOUT THE ORDER FROM CHAOS PROJECT

In the two decades following the end of the Cold War, the world experienced an era characterized by declining war and rising prosperity. The absence of serious geopolitical competition created opportunities for increased interdependence and global cooperation. In recent years, however, several and possibly fundamental challenges to that new order have arisen-- the collapse of order and the descent into violence in the Middle East; the Russian challenge to the European security order; and increasing geopolitical tensions in Asia being among the foremost of these. At this pivotal juncture, U.S. leadership is critical, and the task ahead is urgent and complex. The next U.S. president will need to adapt and protect the liberal international order as a means of continuing to provide stability and prosperity; develop a strategy that encourages cooperation not competition among willing powers; and, if necessary, contain or constrain actors seeking to undermine those goals.

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ACKNOWLEDGEMENTS

A working draft of this paper was presented at the Latin American Studies Association Meetings, New York, May 2016. For helpful comments on that draft I thank the panel discussants, Barbara Kotschwar and Margaret Myers, as well as my Brookings colleagues David Dollar, Harold Trinkunas, and Richard Feinberg. I also want to thank Boyang Xue and Josh Grober for excellent research assistance. This research was generously supported by the Director's Strategic Initiative Fund of the Foreign Policy program at Brookings.

Brookings recognizes that the value it provides to any supporter is in its absolute commitment to quality, independence, and impact. Activities supported by its donors reflect this commitment, and the analysis and recommendations of the Institution's scholars are not determined by any donation.

The Geopolitics of China's Rise in Latin America

TED PICCONE

China's fast growing economic and trade ties with a range of countries in Latin America and the Caribbean are increasingly intense and dynamic, as documented elsewhere.1 The pace of that change, and the difficulty of monitoring it, have raised legitimate questions about what kind of influence China has had on the region's economic and political development. Based on available data, it seems reasonable to conclude that current macro levels of Chinese trade and investment in the region have had important effects on enabling both good and bad policy decisions by Latin American governments, but have not yet translated directly into inordinate leverage on the region's domestic policies.2

What about China's influence on the region's geopolitics? Beyond its direct and indirect impact on the region's economic and governance trajectories, China's economic statecraft also contains its own geopolitical ambitions. This should come as no surprise. The 32 states of Latin America and the Caribbean (LAC) offer a number of opportunities for improving the general climate for China's "harmonious rise" on the world scene. The Chinese leadership's overt courting of the region over the last several years explicitly recognizes the value Beijing puts on close ties of friendship and cooper-

1 David Dollar, "China as a Global Investor," Asia Working Group Paper No. 4, Brookings Institution, Washington, D.C, May 2016; Kevin Gallagher and Roberto Porzecanski, The Dragon in the Room: China and the Future of Latin American Industrialization (Stanford: Stanford University Press, 2010); Margaret Myers and Carol Wise, eds., The Political Economy of China-Latin America Relations in the New Millennium (New York: Routledge Press 2016).

2 Harold Trinkunas, Does a Growing Economic Relationship with China Influence Policy and Politics in Latin America?, Brookings Institution, 2016.; see also Margaret Myers, "Shaping Chinese Engagement in Latin America," in Routledge Handbook of Latin America in the World, eds. Jorge I. Dom?nguez and Ana Covarrubias (New York: Routledge, 2015).

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The Geopolitics of China's Rise in Latin America

ation covering not just economic but cultural, political and security domains as well.3 China's aim to reform the international order to reflect the growing economic and financial weight it and other rising powers carry in the world needs like-minded allies from the global South to succeed, all the better if joined up by countries antagonistic to U.S. global leadership.

In this respect, Latin America's decade-long swing to the left in the early 2000s provided fertile ground for advancing this shared goal and synergistically fed the region's long quest for greater strategic autonomy and cohesion on the world stage, apart from the United States. More recent political trends in the region toward centrist governments,4 combined with the crisis faced by China's most important partner in the region, Venezuela, present an important test for what otherwise appears to be a durable geopolitical marriage of convenience built around traditional concepts of noninterference in internal affairs and balancing of the West.

The purpose of this paper is to assess whether China's growing economic and trade ties to Latin America and the Caribbean already represent or may translate into more assertive Chinese geopolitical influence in the region, particularly on issues relevant to the wider international liberal order championed by the United States. Given China's interest in protecting its system of authoritarian governance and state capitalism, which run counter to the dominant strain of liberal democracy in the region, it would not be surprising to find that its influence would have the effect of neutralizing, if not turning the LAC region against the international liberal order, to the detriment of U.S. leadership of the post-World War II system. On the other hand, China's traditionally soft approach to asserting its interests and values abroad, and its tendency to seek consensus or neutrality at the United Nations and other international fora, skew toward a more opportunistic set of relationships for both sides. Under this scenario, China would place a premium on building LAC support for more narrow interests like nonrecognition of Taiwan or Tibet, blocking international scrutiny of its human rights problems at home, and protection of economic assets and nationals. I conclude that, on balance, China and the United States implicitly may have reached a modus vivendi in which they will continue to compete for

3 Government of China, China's Policy Paper on Latin America and the Caribbean, policy paper, 2008, .

4 For example, in Peru, Argentina and Brazil, alongside the declining influence of leftist stalwarts in Bolivia and Ecuador.

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The Geopolitics of China's Rise in Latin America

attention and influence but will avoid direct conflict with each other in the region.5 In such a low-conflict environment, LAC states will continue to seek maximum advantage from both partners in accordance with their own interests.

To reach this conclusion, the paper will first examine China's increasingly sophisticated pursuit of "win-win" policies grounded on the basic premise that LAC states value traditional definitions of sovereignty and noninterference as much as it does. I also look at what makes China an attractive partner for many LAC states and the broad palette of relationships under development. Second, I look at China and LAC attitudes toward the international liberal order and how they have shifted over the last decade. In particular, I assess the varied approaches to human rights and international law as well as to such transnational issues as Internet governance, climate change, and counternarcotics. The paper then returns to two older issues that predate the surge in China-LAC relations, namely relations with Taiwan and Cuba. Finally, I consider what the new China-LAC relationship means for the United States by positing various potential scenarios for increased tension or even conflict.

China's win-win approach to Latin America and the Caribbean

For decades, the relationship between China and the LAC region was relatively insignificant from a geostrategic point of view. The dominant role of the Cold War as a dividing line between the communist East and the capitalist West led to a string of military governments that strongly favored U.S. interests while China was largely preoccupied with its own challenges at home and in its neighborhood. As democracy took hold in the region in the 1980s and 1990s and the United States grew increasingly more pragmatic about its relations with China, a more competitive scenario unfolded in which a broader range of ideological affinities emerged, allowing space in Latin America for a more pragmatic approach to Beijing. This phase was marked by a strong upsurge in China's economic ties to the region

5 For a similar conclusion described as "mutual accommodation," see R. Evan Ellis, "Cooperation and Mistrust Between China and the U.S. in Latin America," in The Political Economy of ChinaLatin American Relations in the New Millennium, ed. Margaret Myers and Carol Wise, (New York: Routledge, 2016) 31-49.

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The Geopolitics of China's Rise in Latin America

from nearly anemic levels of trade and investment to more significant exchanges, as well-documented by Dollar and others. For example, in 2000, China's volume of trade with the region amounted to $12 billion; by 2013, it had reached over $260 billion.6 More recently, the region's exports to China have declined to $104 billion in 2015 due to China's economic deceleration.7 Prior to 2008, Chinese loan commitments to the region never exceeded $1 billion; in 2010, Chinese loans to the region accounted for $37 billion, declining to $29 billion by 2015.8

Some countries in the region, like Brazil, took advantage of China's demand for its commodities to spectacular economic and social effects. For example, during the decade or so of rapidly increasing trade with China, Brazil's economy grew 3.3 percent and poverty decreased from 13.6 percent in 2001 to 4.9 percent in 2013.9 With the China boom, however, came certain costs like postponed industrialization or de-industrialization, a flood of cheaper Chinese goods, and undue reliance on China as a banker of last resort. As the boom subsides, these costs, along with rising doubts expressed by LAC leaders about the negative effects of trade with China and the lack of reciprocity of the benefits, have become more apparent. As a result, these trends have led to a more complex operating environment for China's assertion of soft power in the region.

In its concerted outreach to the region, China naturally emphasized the positives under the broad banner of peaceful coexistence. After a series of high-level visits by Presidents Jiang Zemin and Hu Jintao starting in 2000,10 the Chinese government issued a forthright statement of its strategic approach to the LAC region in 2008. Its first-ever white paper on the

6 Michael D. Swaine, "Xi Jinping's Trip to Latin America," China Leadership Monitor 45, (October 21, 2014), 2 , latin_america.pdf.

7 The evolving role of China in Africa and Latin America, Economist Intelligence Unit, 2016, 7. 8 Kevin P. Gallagher, Amos Irwin, and Katherine Koleski, The New Banks in Town: Chinese Finance in

Latin America, report, Inter-American Dialogue (February 2012); Kevin P. Gallagher and Margaret Myers, "China-Latin America Finance Database," 2015, map_list. 9 Author's calculations based on World Bank data on GDP from 2001 to 2014 and poverty headcount ratio at $1.90/day (2011 PPP) from 2001 to 2013. 10 Since 2000, Chinese presidents have visited Latin America eight times. These include: Jiang Zemin's 2001 visit to Argentina, Brazil, Chile, Cuba, Uruguay, and Venezuela and his 2002 visit to Mexico; Hu Jintao's state visit in 2004 to Argentina, Brazil, Chile, and Cuba, to Mexico in 2005, Costa Rica, Cuba, and Peru in 2008, and Brazil in 2010; and Xi Jinping's visits in 2014 to Brazil, Argentina, Venezuela and Cuba and in 2013 to Mexico, Costa Rica and Trinidad and Tobago (to meet with eight Caribbean leaders). He also visited the region twice as vice president, in 2009 (to Brazil, Colombia, Jamaica, Mexico, and Venezuela), and in 2011 (to Chile, Cuba, and Uruguay). Swaine, p.2.

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LAC region emphasized themes of mutual respect, South-South solidarity, and protection of national sovereignty, all of which played well in the sovereignty-conscious capitals of South America.11 Xi Jinping elaborated further on these themes on his visit to Brazil in 2014:

"We should jointly push forward the international order towards a fairer and more rational direction, safeguard the rights of peoples in choosing the social system and the development path by themselves, strengthen the global economic governance, push forward the international community to pay greater attention to the development issue, and help South American countries with poverty alleviation and the sustainable development cause."12

The white paper also emphasized support for the growing role of newer regional groupings like the Union of South American Nations (UNASUR), the Bolivarian Alliance for the Peoples of Our America (ALBA), and the Community of Latin American and Caribbean States (CELAC)--led by Brazil and Venezuela--as a way to balance its contributions to the U.S.-led Organization of American States (OAS) and the Inter-American Development Bank (IDB).13

According to the white paper, China's core policy aims in the region were to "promote mutual respect and trust, deepen cooperation and achieve win-win results." It laid out a comprehensive strategy of cooperation across multiple sectors and themes, including high-level exchanges in the political, legislative, diplomatic, subnational, media, business, and military arenas in such fields as agriculture, infrastructure, energy, customs, finance and money laundering, tourism, technology, and the environment. Notably, it promised to impose no political conditions on its economic and

11 China's Policy Paper on Latin America and the Caribbean. 12 "Xi Jinping Attends Dialogue," Ministry of Foreign Affairs of the People's Republic of China, July 17,

2014. 13 China became a Permanent Observer at the OAS in 2004; in 2014 China gave $333,000 in cash

contributions and $940,000 in in-kind contributions to the organization. Organization of American States, 2014 Contributions from Permanent Observers, accessed August 2, 2016, . org/en/ser/dia/perm_observers/Documents/CAAP%20Reports/2014%20Contributuions%20 from%20Permanent%20Observers.pdf. China joined the IDB in 2008 with a contribution of $350 million; in 2013 it contributed $2 billion for the China co-financing fund. Inter-American Development Bank, "China to Join the Inter-American Development Bank," news release, October 23, 2008, ; Inter-American Development Bank, "China to Provide $2 Billion for Latin America and the Caribbean Co-financing Fund," news release, March 16, 2013, , .

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