AQ Feature

China Engages Latin America: Tracing the Trajectory by Adrian H. Hearn and José Luis León-Manríquez

During the early 1990s, many Latin American and U.S. analysts expressed concerns about an Asian giant that was buying Brazilian iron ore and investing in Mexican manufacturing, while at the same time showing signs of out-competing Latin American and U.S. firms in the region. That giant was Japan.

Hysteria heightened and academic research accumulated. But today few people worry about Japan’s role in the region—despite the fact that it is a top-five trading partner and has a large diaspora that includes Peru’s Alberto Fujimori, a former (now jailed) Latin American president.

Is history repeating itself? The new source of hand-wringing in the region is China, which, like Japan years earlier, is portrayed by many as stealing Latin American jobs, plundering the region’s resources and creating diplomatic alliances that could erode the rule of law. At the same time, some U.S. observers see China’s inroads as a threat in the U.S.’s backyard.

How do we make sense of China and Latin America? Are China’s ever-expanding ties a significant threat to Latin American development and/or U.S. strategic interests in the region? These are the questions that a burgeoning group of scholars are beginning to ask. Among them are the editors of China Engages Latin America: Tracing the Trajectory—Adrian H. Hearn of the University of Sydney and José Luis León-Manríquez of the Universidad Autónoma Metropolitana in Mexico City. This is a must-read for those seeking to better understand Chinese engagement in Latin America.

Not only is their book one of the broadest and most balanced in a steady stream of volumes dedicated to the topic; it truly breaks new ground. It does so by presenting the latest and most dispassionate economic analyses of the China–Latin America relationship and anthropological evidence on how this relationship is playing out in communities.

Much of the recent scholarship has concluded that China’s growing economic ties, while fairly beneficial to South American countries, have been costly—politically and economically—to Mexico and Central America. South America has natural resources that it sells to the Chinese, but many Central American countries have suffered retaliation from China because of their recognition of Taiwan. And Mexico’s fewer natural resources not only offer little opportunity for exporting to China but make it more difficult to compete globally with Chinese firms. Meanwhile, U.S. observers are increasingly alarmed that South Americans may be creating political alliances with the Chinese. Not all alliances are of concern, but loans-for-oil deals with Venezuela and satellite cooperation between Brazil and China have raised eyebrows in some Washington circles.

While there is some truth to that overall view, this book goes deeper and wider. Economic essays  do a nice job of separating some of the benefits and costs of the China–Latin America relationship. For example, as Javier Santiso of ESADE Business School and Rolando Avendano of the OECD Development Centre point out, China offers a new source of trade and finance for many countries, and, as the U.S. economy continues to slump, this diversified portfolio is a good thing for many Latin Americans.

However, there are costs as well. Chinese imports are putting pressure on Latin American firms by out-competing them in both world and home markets, and Chinese investment in natural resources can exact a heavy environmental and social toll. The combined effect can push up the value of a country’s currency and threaten long-term economic growth.

In Brazil, for example, China has triggered a debate over de-industrialization and the future of economic growth. In the essay “China’s Challenge to Latin American Development” Enrique Dussel Peters of the Universidad Nacional Autónoma de México shows how Chinese economic activity is accentuating inequalities and creating new sets of winners and losers across the hemisphere. Dussel shows that despite the increasing exports of primary commodities to China from the region (winners), the region as a whole experiences a significant trade deficit due to the import of light manufactured goods (losers).

But the relationship is too new for Latin America or the U.S. to be alarmed. This point is made through contributions by Daniel P. Erikson of the Bureau of Western Hemisphere Affairs at the U.S. Department of State and the essay co-written by Javier Santiso and Rolando Avendano. The Erikson chapter was written before he joined the State Department and does not reflect government views.

Santiso and Avendano show how some Latin American firms, such as Bematech in Brazil, Nemak in Mexico and Koramsa in Guatemala, are forging alliances with China to climb value chains and become more competitive. Erikson brings balance to the U.S. security side by highlighting select opportunities for U.S. cooperation with China in the Western Hemisphere, such as widening the Panama Canal, disaster relief and environmental protection. Erikson concludes, “If China and the United States both deal with Latin America in a manner that is open, transparent and respectful of multilateral systems, then this may usher a new breed of regional diplomacy with lessons for U.S.–China cooperation in other parts of the world.”

This volume adds depth and nuance to the polarized debates over development and security. But even more valuable is the contribution it makes to a broader understanding of China in Latin America, drawing not just on the work of economists and political scientists, but anthropologists as well.

An example of this is the chapter by Hearn, Alan Smart and Roberto Hernàndez Hernàndez, which is perhaps the most unique in this emerging literature on China and Latin America. These authors trace the evolution of Chinese communities in Mexico, beginning in 1864, when Chinese laborers were contracted to build railroads between the U.S. and Mexico. Those communities have now established diaspora networks with mainland China and facilitate Chinese imports into Mexico.

The book also features one of the first treatments of the Cuba–China relationship in a chapter written by Mao Xianglin, Carlos Alzugaray Treto, Lis Weiguang, and Hearn, which documents the key role played by China in technology transfer to Cuba in the form of medical exchanges, language training, household manufactures, and technology to help access natural resources.

Any anthology will be uneven, and thus some of the contributions in the book will be longer lasting than others. Much of the work by the economists is clear and rigorous. But since the China–Latin America economic relationship is changing so rapidly, such analyses stand as simply the latest snapshot. The chapters by anthropologists run the deepest, and will find interested readers for a long time to come.

If this book has a unifying argument, it is that, while China presents a “challenge” on a number of different levels, Chinese resource extraction is not yet de-industrializing the region; nor is it squandering Latin American resources or causing domestic ecological crises and geopolitical problems beyond the region. But a careful reader of this book would be keen to follow these issues and start a conversation about how to mitigate such problems in a preventive manner. “As China becomes a more active and assertive global player, it is crucial that the international community develop ways to integrate Chinese business practices into multilateral regimes for improving governance and accountability,” the editors conclude.

That said, Chinese engagement raises serious questions for both the region and the United States. Will Latin America respond by abandoning the Washington Consensus and adopting a more state-led model of economic development, as China has? Will the region learn to develop a foreign policy that accommodates both China and the U.S. or will nations make a choice? Will Latin Americans treat newcomers as they hope to be treated when they enter foreign lands? All future books on the subject will need to build on this one.

Any opinions expressed in this piece do not necessarily reflect those of Americas Quarterly or its publishers.
Tags: China-Latin America