China’s Evolving Role in Latin America: Can It Be a Win-Win?
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Likewise, Rosales stated that China has intensified the concentration of Latin America's commodity export. Another theme in the literature is the Chinese foreign policy. Inthe Chinese government published its first policy paper regarding the region and a clear intention of its engagement, and a blueprint for the development of stronger ties between the two.
The document covers some historical milestones, the scope of the cooperation in the political, economic, cultural and social fields. It is worth to highlight the intention of China to negotiate free trade agreements with regional countries Chinese State Council, The role of China in international political and economic institutions led to tinker with the idea of "The Beijing Consensus", coined by Cooper as an economic and political model that challenges the established "Washington Consensus", which questions and challenges the legitimacy and relevance of the West and its political and economic practices in our contemporary world.
Similarly, Gallagher states that China has helped Latin America to overcome the slow growth and financial instability generated under two decades of the Washington Consensus.
Medeiros discusses the international behavior of China in different parts of the world; in this publication, there is a chapter that is dedicated to Chinese political and business ventures out of Asia, namely Africa and Latin America.
According to Medeiros, there are four major forces that drive Chinese endeavors in these regions; i to diversify access to natural resources; ii to expand access to markets for consumer goods, cars and conventional weapons; iii to promote multilateralism; iv to diplomatically isolate Taiwan from Africa, Latin America and the Caribbean where most of the support for Taiwan still exist. A monograph by Ellis is probably one of the earliest works linking China and the region.
This document presents a strategic-competitive approach to the relation between Latin America, China and the United States regarding strategic resources, investment and political alliances. In this work, the author suggests that the aim of China's investment in Argentina, Brazil, and Chile is to construct a vertical integration with the region in order to guarantee access to critical commodities.
The Chinese involvement in the region has made some influential think tanks call the U. Additionally, Yuargued that China's aim in Latin America is not only to increase trade and investment flows but also to create a "sphere of influence" in the region.
Roett and Paz debate the implications of developments in foreign policy for both regions; they cover some issues on Chinese foreign policy, geopolitical tensions, energy and investments overseas. Additionally, they formulate a question on what Latin America can learn from the economic progress of China and close with some remarks on the "trilateral" relation between China, the U. Security is one of the major themes that appear in specialized literature.
These reports, mostly based on military and security assumptions, demographics, and strategic factors and forecasting techniques, outline the ascent of new international players -mainly China- as contenders of the United States in Latin America and other parts of the world. Trade The economic growth in China, still strong in recent years despite the global financial crisis and its aftermath, incited the "Middle Kingdom" to explore beyond its traditional trading partners, and take a look at new places like Africa and Latin America, both for suppliers and new markets for its products.
China's growing demand for commodities -oil, iron ore, copper, aluminum and others-and abundant foreign reserves allowed China to secure -sometimes at fire-sale prices- some of these strategic assets in something that the international media dubbed as the Chinese "shopping spree" Barboza, These strategies are consistent with China's involvement in other developing countries Zhao, Then Figure 1depicts the trade flows between Latin America and China for the last 15 years.
Prepared by the authors with data from the International Trade Centre. Most of Latin American exports are commodities, highly concentrated in few products. While China's exports to the region are diversified. CEPAL a exhibits that the composition of Latin American exports to China are less sophisticated than the composition of the exports that go to the rest of the world.
According to Casanova et al. The vigor and dynamism of Chinese engagement means that, given proper strategic planning, there are many possibilities for advancing the relationship so it is a win all around, including for the United States. The five case studies included here illustrate the spectrum of historical ties with China.
From those with long and complex historical relationships, like Cuba, to those whose relationships are almost entirely structured around recent opportunities for economic cooperation, like Mexico. Rather, Chinese involvement can provide an avenue for all parties to collaborate in the shared goals of economic growth and social progress in the hemisphere.
But only when China plays by the same rules as other trade and investment partners. As President Obama and President Xi meet, we hope that they will take advantage of this important moment in US-China relations to set the stage for a new period of cooperation in Latin America and the Caribbean. What is the extent of its new relations in Latin America and the Caribbean? His visit was one of many recent high-level trips by Chinese officials to the region.
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Sinceit took the reins as the third largest source of overseas foreign direct investment FDI. China is also leaving a cultural footprint. Even after several centuries of connection in immigration and trade, a substantively new, and deeper, relationship has emerged since Expectations are that this new relationship will continue to intensify in the short to medium term. This report shows why this is likely. A new tunnel is inaugurated in February as part of the Coca Codo Sinclair hydroelectric project.
The dynamic goes far beyond economic interactions, with ties—for better or worse—permeating across sectors. In some countries, the broader relationship has already fundamentally recast the way both the public and private sectors operate. Much attention focuses on how the China-Latin America relationship is changing the game for the United States with significant emphasis on the consequences for US national security.
These issues are important but are comprehensively addressed elsewhere and are outside the scope of this report. Argentina, Brazil, Cuba, Mexico, and Venezuela.
China–Venezuela relations - Wikipedia
Each country analysis addresses the most relevant elements of the bilateral relationship to provide a framework for dealing with the opportunities and challenges ahead. China is poised to grow its presence and linkages with Latin America. That means countries must take measures now to ensure that the result is long-term benefits that help to further drive socioeconomic development. The final section recommends a series of proposals on how national governments and regional institutions can better respond to and invest in the relationship, so that both China and Latin America can benefit from the evolving relationship.
Among the top priorities should be constructing a long overdue development agenda between Latin America and China. Under the leadership of the Chinese Communist Party, the relationship between the central government, provinces, cities, municipalities, and counties is dominated by consolidated institutional interactions. The last decade has seen an attempted shift toward the domestic market and higher-level technological goods and processes along with an interest in financing global infrastructure projects.
Unlike the s, most of the region is no longer significantly competing with China on wages, although rising labor costs in China compared to Latin America have become an important factor in particular labor-intensive segments of value-added chains.
Four specific issue areas define the broader relationship: President Xi Jinping, pictured here in Venezuela, made a four-country trip to the region in July One infrastructure project that is causing concern is the potential construction of a new canal in Nicaragua.
Massive financing is still needed. The region is an important supplier of raw materials particularly minerals, copper, and soyabeans. Economic relevance has resulted in a steady stream of public and private sector delegations and other high-level visits from China. SinceChinese president and premiers have regularly visited Latin America, with thirty-one total trips [see figure 1].
Top destinations include Brazil six visitsfollowed by Argentina, Chile, and Cuba four each. The ability to offer such development packages in Latin America contrasts with the practices of most industrialized countries, where projects originate in the private sector. China now has free trade agreements in effect with ChileCosta Ricaand Peru in addition to the many institutional arrangements it has with other countries.
First, beginning in the s, trade and Chinese exports became the most dynamic part of the first stage of the new engagement. Imports from China grew from 2 percent to 16 percent. But statistics vary widely depending on their source. Based on Chinese data, Latin America has a trade surplus with China; the opposite is true if looking at numbers coming from the region. In Mexico-China trade, for example, Chinese exports versus Mexican imports differ by more than percent.
Trade with South America is relatively in equilibrium. Inthe value of trade fell for the first time sincemainly due to the drop in raw material prices. Medium- and high-technology exports to China barely account for 5 percent of total trade flows in the last decade versus 30 percent to 40 percent of total Latin American exports over the last two decades.
Chinese medium- and high-technology exports—all manufactured goods—accounted for over 60 percent of total Chinese exports to Latin America in the last decade. In Argentina, Brazil, Peru, and Mexico, for example, domestic-oriented business organizations and unions have demonstrated and publicly criticized what is seen as unfair competition in domestic and global markets.
Fourth, Latin American exports to China are more concentrated than with any other trading partner. The top-three export categories to China—ores, oil seed, and copper followed by oil and pulp of wood —increased from 50 percent to 72 percent of total exports from to This FDI is also highly concentrated, with 57 percent focused on the acquisition of raw materials.
In no other top-FDI source country do public sources account for more than 3 percent of total flows. Latin American investments in China, while dynamic in recent years, are much less substantial.
Firms from Brazil and Mexico such as Embraer, Marcopolo, Grupo Bimbo, and Gruma are seeking new ways to invest in China—both through on-the-ground plants and by developing new relationships with Chinese suppliers and clients. Venezuela alone accounted for more than 50 percent of total loans and 42 percent of infrastructure projects in the region. The increasing internationalization of the renminbi RMB is notably affecting trade and financial relationships.
The Chinese currency has amassed a growing regional importance since the global economic crisis. Argentina, Brazil, and Chile already have bilateral swap arrangements totaling more than billion RMB. Other countries may secure such arrangements in the future.
Social and political instability, environmental disputes, labor controversies, and disputes with local communities are among the key reasons. These recent strategies will require careful evaluation. There is no doubt that developing countries, including those in Latin America, need foreign investment to improve and develop infrastructure. The question is whether the investments will facilitate inclusive socioeconomic growth and development, beyond serving as conduits for commodity flows.
A lingering question is also whether transfers of power in multiparty democracies will affect investment strategies. Culture and Education Latin America and China share a deepening cultural relationship as well. One of the main and clearest signals of its recent boom is the increasing activity of Confucius Institutes in the region.
Today, China has more than three hundred such institutes in more than ninety-three countries, with the goal of expanding to one thousand centers by Stronger cultural and educational ties are seen at all levels—counties, municipalities, cities, and countries—and across the public, private, and academic sectors.
Public and private schools are increasingly teaching Mandarin Chinese. Student exchanges between universities are growing, and new cooperation agreements are seeking to promote common research agendas and establish binational projects.
Several business organizations and universities have established joint centers in China to promote their common interests, improve institutional relations, and support Spanish-language instruction in Chinese institutions. Educational exchanges are also on the rise.
Other universities such as the National Autonomous University of Mexico UNAMfor example, have signed more than a dozen cooperation agreements for jointly organized academic activities through exchange students and researchers. Countries in Focus China is ratcheting up its relations with a number of countries across Latin America. But five countries stand out for how individually and collectively they represent the diversity of Chinese interests and how the relationship is likely to evolve in the coming years.
These countries give an overall picture of when this growing relationship works— and when it backfires. In each case, China has learned from its successes and failures. Have Latin American countries done the same? The country analyses that follow highlight select aspects of the bilateral dynamic both at present and in the future.
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The mix of countries reflects a diversity of strong historical Cubapolitical Venezuelastrategic Braziland trade Argentina and Mexico ties with China. The results are often unexpected, with the impact permeating throughout the economy and society.
Although most of the ties and Chinese projects are too new to be evaluated definitively, key themes emerge that will shape the future relationships.
Argentina Since the establishment of bilateral diplomatic relations inArgentina, like most of Latin America, has substantially increased trade with China. Exports are mostly primary goods, largely without diversification and with low value-added and technology levels. One of the critical questions in the Argentina-China relationship is whether Argentina will be able to upgrade its value-added exports to China, particularly in the case of soybeans.
Soybean exports account for over 64 percent of total exports to China. Argentina is a top world producer of oil from soy and sold much of it to China. But, a few years ago, China slowed the purchase of Argentina soy oil, substituting the supply with their own capacity. Argentina exports to China are now only limited to soybeans.
China's Evolving Role in Latin America
Chinese FDI in Argentina increased in 11, but has fallen substantially since. Init accounted for less than 1 percent of total FDI in Argentina. Yet structural problems in the bilateral trade relationship remain, as technology inputs flows almost exclusively from China to Argentina.
Buenos Aires must find a way to upgrade the value added component of its exports to China. A recent bilateral agreement with China continues to generate controversy in Argentina, especially heading into the first round of presidential elections in October.
But this came with strings attached. Argentina granted Chinese investors preferential access to build the projects. Clauses guarantee preferences to Chinese suppliers and labor. The agreement continues to generate controversy especially heading into the first round of presidential elections in October. Some opposition leaders have declared that they will not respect the signed agreement if elected, which would generate tensions that China has yet to experience as a creditor.
But the China debate in Argentina goes far beyond a swap agreement. A growing chorus of influential voices question the tangible benefits of growing Chinese influence for Argentine firms. They also point out that the very limited positive effects of bilateral trade; in some cases, such as the soy value chain, the result is a downgrading in the type of Argentine exports.
But this may be less likely if Daniel Scioli, the government-supported candidate, does not win the fall election. Two issues, however, point to tensions in this new and dynamic relationship. First, if an opposition candidate wins the election, he may reject the preferential access component, and even the overall bilateral agreement, which would seriously affect the relationship.
Second, and given the importance of soybean exports to China, the soy value-added chain is a critical example—for Argentina and the rest of Latin America—of an effective downgrading process in the last years. This could have profound implications in the development agenda in Argentina and the rest of Latin America. Brazil Brazil-China diplomatic relations date back to August