Chinese Premier Li Keqiang begins an eight day trip to South America today, landing in Brazil with a promise of some $50 billion in Chinese investments in Brazilian infrastructure. This trip follows on and is consistent with the promise that President Xi Jinping made in January to invest $250 billion in Latin America and the Caribbean over the next 10 years.
Talk about checkbook diplomacy: whether each of these investments is ultimately consummated—and China has a history of big announcements that go unfulfilled—Latin American and Caribbean nations are paying attention.
The promise of infrastructure development is not unwelcome, even by the United States, which sees chronic underinvestment in Latin America’s creaking infrastructure to be a limiting factor in regional development. Resources are insufficient, and Chinese largesse meets a need. At the same time, China is not pursuing charity. Investments up to this point and into the future are clearly focused on the procurement of strategic natural resources, including energy and agriculture, and also the infrastructure to bring them to market—i.e. get them to China.
One of the key announcements for Li’s visit, in fact, will likely be agreement on a trans-Andean railway that will move Brazilian products to the Pacific coast, obviating the need to utilize the Panama Canal. The attractiveness on paper for such a route is compelling, although cost, engineering requirements, and environmental concerns may ultimately conspire to defeat the project the same way Beijing’s desire to build a route across Colombia has now been idled. (Similar concerns dog the Nicaragua canal project, which may or may not have Chinese government backing but in any event will prove to be a challenge to complete.)
In addition to Brazil, Li also plans to visit Colombia, Peru and Chile. These four countries are widely considered to be the most attractive investment locations currently in South America. Li is skipping countries like Venezuela, Ecuador and Argentina, all of which maintain strong political and economic relations with China but are also more complicated in terms of investment relations. At the same time, the Venezuelan, Ecuadorian and Argentine leaders have all recently been received in Beijing, so there is no pressing reason to pay a return visit at this time.
Officially, the United States is welcoming of Chinese interest in Latin America and the Caribbean. Commerce Secretary Penny Pritzker told journalist Andres Oppenheimer recently that there is enough investment opportunity to go around, and the need, particularly in infrastructure, is great. True enough. Questions arise, however, about the terms under which Chinese investments will be made, the sensitivity that might be paid to issues of corruption, labor rights and environmental protection, and, of course, political influence that may accrue with the announcement and potential completion of massive infrastructure projects.
Even so, in the global competition for influence, China is killing it in Latin America and the Caribbean. With repeated state visits that last longer than a week at a time, announcements of multi-billion investment projects, and a willingness to purchase massive amounts of commodities into the indefinite future, China is carving a lasting place in the Western Hemisphere.
For its part, the United States shrugs its shoulders and returns to its bitter fights about whether it will offer President Obama the authority to conclude, much less pass, the Trans-Pacific Partnership (TPP).
