January 31, 2012
In the last 5 years China’s military activities in Latin America and the Caribbean have grown at an unprecedented rate. Beijing now regularly hosts officers from Colombia, Chile, Mexico, Peru and Uruguay in its military academies, has expanded arms sales and technology transfers to countries like Argentina, Bolivia, Brazil and Venezuela, and in October last year even sent a navy ship to the Caribbean.
Is China—now Brazil and Chile’s number-one trade partner—buttressing its economic interests in the Western Hemisphere with military ties and alliances? Is this the Middle Kingdom’s equivalent of President Barack Obama’s Pacific pivot to balance China’s saber rattling in Asia?
There’s no doubt that China’s torrid economic growth rate and its arrival as an emerging—if not already emerged—global economic superpower has shifted the international system and brought a more muscular Chinese foreign policy. That policy—part of what the Chinese labeled its “Going Out” strategy—has come with a growing Chinese diplomatic, economic and even military presence in many of its closest trade partners. Given China’s need for raw materials to feed its manufacturing growth and urbanization—gobbling up everything from iron, to oil, to soybeans and frozen chicken—the country’s rise has been felt most obviously (at times with alarm) in the developing world, including Latin America.
First the economics. From 2000 to 2010 Latin America’s exports to China shot up 1,500% from 2000 to 2010. With increased commerce has come investment. In 2010 Chinese companies—most of them state-owned enterprises—invested $10.5 billion. While not a large amount relative to China’s other investments globally, it was a 180% jump from just two years earlier. In both cases, though, the focus has been on raw materials. Over 60% of Chinese imports from Latin America are primary products; for Argentina and Venezuela that percentage increases to 88% and 97% respectively. And China’s largest investment deals in the region have been from China’s state-owned enterprises snapping up energy and mining ventures, in Brazil, Argentina and Ecuador.
With China’s economic attention have come loans and grants. Recently the Financial Times estimated that in 2009-2010 the Chinese provided more loans globally (over $110 billion) than the World Bank (around $103 billion) in 2009–10. This included generous long-term concessionary loans to President Hugo Chávez of Venezuela and President Rafael Correa of Ecuador guaranteed by both with cheap oil exports to China.