China’s Pivot to Latin America

By Terence Rosenthal*

The quest for global naval power runs parallel to competition for control of markets in Latin America.. The two largest world economies, the United States, and China are vying for control of these markets.

  China has an enormous population of approximately 1.3 billion people but   is only able to use a very small percentage of its land mass. Its’ consumer market is the wealthiest it has been in modern times. China desires access to key resources such as petroleum, coal, iron, uranium, as well as agricultural products. Latin America is in high global demand, with 500 million people, and a $3trillion market. In its quest to be Latin America’s foremost business partner, China has risen out of ambiguity to become one of the top three exporters, sometimes surpassing the United States in countries like Argentina, Peru, Venezuela, Chile, and Brazil.

  China has sought to be the prime lender in Latin America, loaning $110 billion dollars thus exceeding the World Bank’s contribution for the past two years. Some of China’s other most noteworthy loans include $28 billion to Venezuela, $10.2 billion to the Argentine debt swap, and 10 billion to Brazilian oil company, Petrobras. China wishes to benefit from developing infrastructure, ports, roads and rail systems in Latin America. In Nicaragua,  China is planning the start of a canal bigger than the Panama Canal, facilitating passage to larger container ships than the Panama Canal is now able to handle. In Panama,  China controls the leases at both ends of the Panama Canal and is in the process of widening the Canal in order to accommodate larger vessels. This constitutes excellent strategic positioning for China, giving them virtual control over two major passageways. Though a huge amount of the world’s trade transits the Panama Canal, the United States remains its biggest user.

 China’s economic relations in the Caribbean are also growing by leaps and bounds. Consider a $2.6 billion resort, among a gaggle of Chinese owned hotels and casinos being built by the Chinese in the Bahamas, 80 miles off the U.S. coast. Or Complant, a Chinese company, investing millions of dollars in Jamaica’s sugar industry. The Bahamas and Jamaica are great strategic places for the Chinese to invest due to their close proximity to the U.S., as well as in  Cuba, with whom they already have solid military, diplomatic and commercial relations.

In recent years, China has embarked on a well-planned pivot to Latin America, focusing on a multifaceted military approach. In terms of soft military power, the Chinese naval hospital, Peace Ark has sailed the Caribbean offering medical and military services, similar to America’s USNS Comfort, but, with the addition of military council. China conducts military exchange and arm sales with Colombia, Chile, Mexico, Peru, and Uruguay.  In Argentina, the Chinese are providing  technological assistance  with aircraft and helicopters and in Brazil with civilian and military operations. In addition, specific attention is being paid to Venezuela as a launching pad for military and diplomatic influence in South America.

 One cannot completely blame the Chinese for wanting to establish trade relations with countries in close proximity to the United States. As a result of the magnitude of American influence in China’s neighborhood,  China has globally voiced its disapproval of the U.S. Military. In its pivot to Asia, the U.S. has enhanced its military relationships with Japan, South Korea, the Philippines, and Vietnam. China believes that the U.S. is practicing containment of Chinese diplomatic, military, and economic relations. Recently, the U.S.  made a deal with Australia for the installation of new military hardware in existing military bases in Darwin. Interestingly, China is Australia’s largest trading partner. It can be deduced that the military climate in Asia is escalating to Cold War proportions as China has recently launched its first aircraft carrier, and has been having territorial disputes in the South China Sea with its neighbors; Vietnam, Japan and the Philippines.

 Both China and the U.S. are focused on South America for trade, financial and military investment due to its wealth in commodities and fuels. Washington has signed annual exchanges of $800 billion dollars with Latin America for the development of trade pertaining to various goods and services. Ideally, however, this should have happened sooner as the U.S. has reacted to China’s push toward Latin America with delay.  For example, China has become the largest trading partner of South America’s most pivotal economy, Brazil, in pursuit of iron and soy. As stated by Bill Gertz of the Washington Free Beacon in 2013, “China has been quietly taking steps to encircle the United States by arming western hemisphere states, seeking closer military, economic, and diplomatic ties to U.S. neighbors, and sailing warships into U.S. maritime zones.”

In response to the U.S. pivot to Asia, China wishes to rival the U.S. in Latin America. China is aggressively seeking commercial, diplomatic, and military ties with countries in the Americas.  Recently, the Chinese president Xi Jin Ping visited Trinidad, Costa Rica, and Mexico offering loans in the hundreds of millions of dollars, including $4 billion to Venezuela for oil development. China may float money easily to Latin American regimes, but these loans usually come with pre-conditions. For instance, it is highly possible that countries receiving money from China will have to support their claim to the Senkaku islands, or perhaps their sovereignty over Taiwan. Such indirect coercion ought to indicate to these countries the true nature of the Chinese government, and should make them think twice about wanting to take easy money from China.

 As the Chinese increase the size of their navy, they are also drastically growing the size and significance of their influence in the Americas, not just in South America, but in Cuba, Nicaragua, Mexico and even Canada. As the emerging world super power, China has been steadily gaining the reputation of being a country that is coercive with regard to the current treatment of its neighbors, as well as being politically manipulative in the way it drafts treaties with new trading partners, especially those in Latin America. The U.S. and the rest of the free world should take notice of this as an indication of what will happen if the Chinese surpass the U.S. as the world’s most dominant economic and naval power.

*Terence Rosenthal is a political consultant and writer who is currently interning at The Center for Security Policy in Washington DC.