China in Latin America: The Whats and Wherefores by R. Evan Ellis. Boulder, Colorado: Lynne Rienner Publishers, 2009. 329 pages.
published in China Review International (CRI) 17.2 (2012): 212-18
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University of California, Merced
In spite of having a not very promising subtitle, China in Latin America: The Whats and Wherefores is an impressive work of research on the widespread economic and political influence of the People’s Republic of China (PRC) in Latin America and the Caribbean. Parts of the book, and especially the last chapter, which works as a sort of conclusion, read as a recommendation to the US government to wake up and counteract the “invasion” of China in the United States’ “backyard” of Latin America. Not in vain, Ellis is a professor at the Center for Hemispheric Defense Studies. This last chapter, titled “Considering Latin America’s Future,” is perhaps the most original and interesting part of the book, as R. Evan Ellis predicts both the positive and the negative outcomes that will result from the new partnership between China and Latin America, with a particular focus on how this will affect US security. Each chapter includes a brief but well informed study of the local Chinese community in each country and its ability to help in the trade with China, as well as a summary of the historical context of each country’s relationship with China. They also explore military relations between China and Latin American countries as well as the intellectual infrastructure of each country to establish commercial connections with China.
The first chapter, “China’s Expanding Ties with Latin America,” can be conceived as an introduction to the rapidly expanding commercial and political influence of China in the region. It addresses the way in which many in Latin America see China as both a key market and an important new source of investment, but also as a sometimes unfair source of competition through both legal and contraband products. In the political realm, Ellis adds, some see the Chinese presence as a potential alternative to the traditional political influence of the United States in the region, while others fear they might be changing one type of dependency for another. Several chapters also study the on-going struggle for diplomatic recognition between China and Taiwan, particularly in Central America and the Caribbean.
The author describes how the PRC has dramatically expanded its exports of low-end manufactures, such as toys, textiles, and footwear, and has also begun to compete in the market of more sophisticated goods, such as automobiles, telephones, domestic appliances, and computers. In turn, Latin American countries have increased their exports to China, especially of primary products, including fishing and agricultural products (such as soy), petroleum, metals (such as copper), and minerals. The new Chinese relevance is reflected in the increase in sister-city relationships, Chinese-language programs, Confucius Institutes, and China-oriented business programs throughout Latin America. Chinese corporations, banks, and state enterprises are investing heavily, sometimes through joint ventures, to secure reliable sources of primary products. In some cases, this investment has contributed to partially sustain governments with well-known anti-US foreign policy, such as those in Venezuela, Ecuador, and Bolivia, or to change some countries’ diplomatic relations with Taiwan, as was the case of Costa Rica. The increase in exchange of official visits of politicians between China and Latin America has also been impressive.
One of the negative impacts of the new Chinese presence in Latin America, argues Ellis, is that it has turned the region away from its development of manufacturing industries and back towards primary product sectors: “Although Latin America is currently experiencing a period of unprecedented growth, this structural shift will have important long-term implications for both the development and the political stability of the region” (p. 4). Latin America’s deindustrialization and reliance on exports of primary products is, according to several experts, detrimental to its development and it may have negative sociopolitical consequences in the future. By contrast, and still in the realm of the issue of comparative advantage, the author also points out how some experts have argued that Latin America must continue capitalize on its abundant natural resources and available land.
Ellis emphasizes China’s multidimensional relationship of China with Latin American countries, which depends on their economic weight (resources, markets, size) and their political orientation (strategic advantage, location, historical relationship with China, relationship with Taiwan and the United States). Other important factors are the presence of ethnic Chinese communities in each country, which can help to build links between both countries, and the ability of local companies to do business with China. Ellis also addresses, albeit briefly, military exchanges between China and Latin America, through officer exchanges, military visits, and sales or donations of military goods.
Chapters 2 explores Chinese interests in Latin America. The dramatic growth of China’s export-oriented and industrial economy requires the acquisition of huge amounts of primary products that are often available in Latin America. In addition, its agriculture is increasingly unable to feed its people and, as a result, the country needs to import food products from Latin America and other regions. By the same token, the constant construction of new buildings requires importing cement, steel, and wood, and the consumption of petroleum in China has increased so much that the country needs new providers. For these reasons, China Minmetals and China National Petroleum Corporation are pursuing cooperative relationships and joint ventures with foreign companies as well as acquisitions throughout the world. Venezuela, Brazil, and Ecuador can export more oil to the PRC; Chile currently exports copper; Brazil and Bolivia, iron; Peru, other metals and minerals; Chile and Peru export fishmeal (to feed people, as well as poultry and livestock); Brazil and Argentina, soybeans and associated vegetable oils; Chile, wine; Mexico, beer; and Colombia and Costa Rica, coffee. China also sees Latin America as a new market for Chinese products. In 2007, “China sold $51.5 billion in goods to Latin America, an amount slightly greater than the $51,1 billion that it purchased from the region during that year” (p. 13). In many cases, the author reveals, Chinese exports are damaging local manufacturers.
In Central America and the Caribbean, China is also pursuing the diplomatic isolation of Taiwan. Currently, twelve of the twenty-three countries in the world that recognize the Republic of China (ROC) are in this region: Panama, Nicaragua, El Salvador, Honduras, Guatemala, Belize, Dominican Republic, Haiti, St. Kitts and Nevis, St. Vincent and the Grenadines, and St. Lucia (Paraguay is the only country in South America that recognizes Taiwan). For this reason, these countries have become strategic targets and, as a result, Dominica and Costa Rica have switched its diplomatic recognition to the PRC. Ellis argues that as China emerges as a superpower, it is also trying to secure strategic alliances in competition with the United States. In this context, it has recognized four powerbrokers as “strategic partners”: Brazil, Argentina, Mexico, and Venezuela. Brazil and Argentina have traditionally been the political and economic powers in South America. In turn, Mexico influences the countries of Central America, and Venezuela influences several Caribbean countries. China has also supported the populist regimes in Venezuela, Ecuador, and Bolivia, because of their opposition to the US presence in the region.
Chapter 3 analyzes Latin America’s interest in China. Many Latin Americans hope that export sales to the 1.3 billion-person market in China, with an ever increasing middle class, will develop their countries’ economies. Many also hope that Chinese investment will offset the lack of investment from Western lending institutions in recent years and the difficult conditions attached to it. When in 2004, Chinese president Hu Jintao promised to invest $100 billion in Latin America over the following decade, China began to be seen as a driver of development in the region. Ellis also reveals that China has invested in final-assembly facilities and automobile manufacturing in Mexico, in mines in Peru, in oil fields in Venezuela and Ecuador, and in telecommunications networks throughout Latin America. Others see the Chinese influence as a way to offset the traditional political, economic, and institutional dominance of the United States. According to the author, the PRC has helped support anti-US regimes by buying their petroleum and providing technology, such as telecommunications satellites. In addition, “China has important symbolic appeal to a group of Latin American leaders on the left side of the political spectrum, though what may be termed ‘nostalgic radicalism’” (Ellis p. 30).
Chapters 4 through 6 provide specific studies of Latin American countries divided in three subregions. Chapter 4 focuses on Argentina, Brazil, Chile, Paraguay, and Uruguay. China’s relationship with these countries is driven by economic reasons. With the exception of Paraguay, China conceives them as markets for Chinese manufactured goods and as suppliers of food imports, mainly soy products. As the author explains, while the other countries have to surmount the great obstacle represented by the Andes, Chile has the advantage of counting with ports in the Pacific. It also has one of the best commercial and bureaucratic infrastructures for doing business with Asia in the region. In addition, Chile is one of the three nations in Latin America that are members of the Asia Pacific Economic Cooperation (APEC) forum and was the first country in the world to sign a free-trade accord with the PRC. This country was also the first in South America to establish formal diplomatic relations with China in 1971. China is interested in importing Chilean copper, potassium nitrate, and other mining-sector products, as well as agricultural and fishing products. In fact, Chile and Peru supply 80 percent of Chinese fishmeal imports. Chile also sells wine to the new Chinese middle class. In turn, China exports clothing, automobiles and motorcycles to Chile and the Chinese telecommunication giants Huawei and ZTE have a major presence in the country, as they do in the rest of Latin America. China is also exploring cooperation in the nuclear industry and conceives Chile as a commercial nexus between Asia, Latin America, and the United States. Finally, it is also an attractive market for China, because it is one of the wealthiest nations in Latin America in per capita income.
Ellis emphasizes the fact that Brazil is the region’s largest exporter to China (mainly of soy products, iron, steel, and petroleum) and the second-largest importer of Chinese products. Brazil also has the largest Chinese community in Latin America, with 300,000 members who live mostly in the state of São Paolo. The country is an increasingly important market for Chinese products, including more sophisticated ones such as consumer appliances, cars, and motorcycles. As is the case in the rest of Latin America, the Chinese telecommunication companies Huawei and ZTE have a strong presence in Brazil. China plans to cooperate in the improvement of Brazil’s deficient infrastructure. In addition, there is cooperation between the two countries in deepwater exploration and drilling technology, the aircraft and nuclear industries, and space technology.
Argentina, like Brazil, is a supplier-and-market country for China. It is the fifth-largest market for Chinese manufactured products in Latin America, behind Mexico, Brazil, Chile, and Panama. In turn, it exports soy products (87 percent of all Argentina’s exports to China and 23 percent of the PRC’s soy imports) and sunflower oil, and it accounted for 12.4 percent of all Latin American exports to the PRC in 2007. In 2005, a Chinese company purchased an Argentine mine, making it the only country, along with Peru, to have sold mines to China. Argentina also sells modest amounts of oil and natural gas and, more recently, it has begun to sell wine to China. The Chinese are interested in infrastructure projects and in technology cooperation. The fourth chapter ends with the more modest economic relations between China and Uruguay (which exports agricultural products, wool, leather goods, and frozen fish, while importing manufactured products) and Paraguay, which recognizes the Republic of China instead of the PRC, a limiting factor in its potential ability to export its products (mainly soy) to China.
Chapter 5 is dedicated to the Andean region (Bolivia, Colombia, Ecuador, Peru, and Venezuela), focusing in particular on the export of fishmeal and oil, as well as on the “tenuous alliances” (p. 107) between China and some of the populist governments in these countries, as it seeks access to their oil reserves. Strategic and ideological issues are important in China’s relationship with Venezuela, Bolivia, and Ecuador. Venezuela is China’s most recent “strategic partner” and it is an economically relevant country because of its petroleum reserves. President Hugo Chávez’s anti-US rhetoric has contributed to expand Venezuela’s relationship with China. However, Ellis argues, political chaos may end up hurting Chinese companies in that country. China is also interested in Venezuelan iron and gold and sees the country as a good market for its products and services. As mentioned, there has been cooperation between the two countries in the creation of a telecommunications satellite as well as in infrastructure and social projects. Venezuela also has one of the largest Chinese communities in Latin America, with 130,000 people of Chinese ancestry.
Ecuador is the largest recipient of Chinese capital in Latin America thanks to the purchase of Ecuadorian assets by Chinese oil companies in 2005. However, as is the case of Venezuela, institutional instability may damage the cooperation between both countries. The Chinese Ecuadorian community has approximately 50,000 people and Chinese Ecuadorian companies, such as Grupo Wong, own a big share of the banana industry, the country’s traditional export. The Ecuadorian banana industry, however, is not competitive enough to be able to export to China. China is interested in Ecuadorian petroleum but Chinese companies have come into conflict with local populations, including indigenous communities, leading in some cases to violence. China, according to the author, may also be interested in Ecuador’s copper and uranium. In addition, Ecuador’s Pacific ports of Manta and Guayaquil are emerging as a strategic gateway for Chinese products destined for Brazil and other countries. The Manta-Manaus-Belén corridor will also be vital for Chinese-Brazil economic relations.
Bolivian President Evo Morales’s anti-US policies are welcome by China, according to the author, but political unrest is also a source of concern. China has shown some interest in the Bolivian hydrocarbons sector, but the nationalization of the gas and oil industries has made investments difficult. In reality, China is more interested in Bolivian iron. Peru is also of interest to China because of its Pacific ports, natural gas, oil, and mining sector. In fact, China is Peru’s largest commercial partner. Peru signed a free-trade agreement with China in 2008 and has a trade surplus with respect to China. As in the case of Argentina, Chinese companies own Peruvian mines but they have been harshly criticized for their violations of environmental laws and their failure to invest in the improvement of the mines. China imports Peruvian fishmeal and is also interested in the fishing sector. In addition, Peru’s strategic geographic position in the middle of the Pacific coast of Latin America has generated interest in the interoceanic highway project. Peru, like Chile, is a member of the Asia-Pacific Economic Cooperation forum and is very effective in its trade-promotion activities in China. As regards Colombia, its relationship with China is relatively limited compared to the other Andean countries, mainly because of its close strategic relationship with the United States. Its current exports to the PRC are dominated by nickel, coal, and uranium.
Chapter 6 studies China’s relationship with Mexico, Central America, and the Caribbean, with an emphasis on these countries’ strategic position (closeness to the United States for commercial and potential military purposes) and their recognition of Taiwan. As previously noted, half of the nations that recognize the government of Taiwan as the legitimate government of China are in this region. However, only Mexico, a “strategic partner,” is a significant market for Chinese manufactured good. Ellis points out that “Mexico’s economic relationship with the PRC has begun to evolve from competition to partnership. In part, the evolution is rooted in Mexico’s competitive advantages, which include a combination of technological knowledge in high value-added manufacturing sectors, such as autos; physical proximity to the United States; and tariff-free access to the US market” (p. 201). In this context, Chinese car companies are planning to build plants in Mexico and Mexico has been successful exporting its beer to China.
Costa Rica switched diplomatic recognition from Taiwan to China in 2007 and it has a trade surplus with the PRC thanks to the sales of computer chips made by Costa Rica’s Intel plant. In addition, China is Costa Rica’s number two export market after the United States. In 2007, China recognized Costa Rica as a recommended destination for Chinese tourism and Costa Rica also sells luxury coffee to China. As to Panama, China’s interest rests on the importance of the Panama Canal for trade as well as in the fact that Panama continues to recognize Taiwan. The Chinese logistics firm Hutchison Whampoa operates key Canal Zone facilities and a Chinese company is trying to expand and modernize the canal. As the author explains, “an estimated 40 percent of all traffic going through the canal is tied to China in one way or another” (p. 227). Panama has a large community of 150,000 persons of Chinese ancestry, one of the largest in Latin America, and is the third-best customer of Chinese products in Latin America.
Cuba is a unique case. Its value to China is based on its proximity to the United States, since Chinese facilities could be used for intelligence collection. In addition, Cuba’s relationship with China mirrors that of Taiwan with the United States. Perhaps more importantly, Cuba is a source of ideological legitimization, since it continues to be “an important ideological point of reference for the Latin American left, and thus its good will is useful for the PRC in differentiating itself from established capitalist states such as the United States and the European Union” (p. 236). China is also interested in Cuban nickel, sugar, and petroleum.
The final chapter draws from evidence presented in previous chapters to discuss the main implications of Latin America’s increased relationship with China. The author foretells that Latin America’s economy will be increasingly tied to China and that Chinese communities and corporations will participate more intensely in local politics. Latin American pacific ports will be expanded and modernized, and this will have a big impact on nearby cities. This increased economic exchange could also lead to a new interaction between Chinese and Latin American organized crime. The Chinese presence will make United States’ activities in the region more difficult and the US military will have to take it into account in case of war between the two countries.
While, as mentioned, this is an outstanding and eye-opening study, which can be an important resource in several disciplines, there are also a few errors and misspellings. For example, the president of Paraguay is once called Ferdinand Lugo (p.82) and later, correctly, Fernando Lugo. The author also writes “Universidad Privado de Santa Cruz” (instead of “Privada” p. 146) and “Callo” (p. 279), instead of Callao. Likewise, Telefónica, a Spanish corporation, is given a different nationality in one of the chapters, and Mexico is considered a nation a few centuries before it became one: “Mexico was arguably one of the first nations in the Americas to establish trade relations with China, in the sixteenth century” (p. 201). In any case, Ellis’s book is an intelligent, informative, and entertaining study, which is highly recommended for anyone interested in the topic.
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