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||Posted: Aug. 04 2022,03:55
China’s Growing Influence in Latin America
China’s role in Latin America has grown rapidly since 2000, promising economic opportunity even while raising concerns over Beijing’s influence. China’s state firms are major investors in the region’s energy, infrastructure, and space industries, and the country has surpassed the United States as South America’s largest trading partner. Beijing has also expanded its diplomatic, cultural, and military presence. Most recently, it has leveraged its support in the fight against COVID-19, supplying the region with medical equipment, loans, and hundreds of millions of vaccine doses.To get more international business news china, you can visit shine news official website.
But the United States and its allies fear that Beijing is using these relationships to pursue its geopolitical goals, including the further isolation of Taiwan, and to bolster authoritarian regimes. U.S. President Joe Biden, who sees China as a “strategic competitor” in the region, is seeking ways to counter its growing sway.
China’s ties to the region date to the sixteenth century, when the Manila galleon trade route facilitated the exchange of porcelain, silk, and spices between China and Mexico. By the 1840s, hundreds of thousands of Chinese immigrants were being sent to work as “coolies,” or indentured servants, in Cuba and Peru, often on sugar plantations or in silver mines. Over the next century, China’s ties to the region were largely migration-related [PDF] as Beijing remained preoccupied with its own domestic upheaval.
Most Latin American countries recognized Mao Zedong’s communist government following U.S. President Richard Nixon’s trip to Beijing in 1972, but it was not until after China’s entry into the World Trade Organization in 2001 that they began to form robust cultural, economic, and political ties. Today, Peru has the region’s largest Chinese diaspora community, amounting to about 5 percent of the population, or one million people. Other countries with large diaspora communities include Brazil, Cuba, Paraguay, and Venezuela.
In 2000, the Chinese market accounted for less than 2 percent of Latin America’s exports, but China’s rapid growth and resulting demand drove the region’s subsequent commodities boom. Over the next eight years, trade grew at an average annual rate of 31 percent, reaching a value of $180 billion in 2010. By 2021, trade totaled $450 billion, and economists predict that it could exceed $700 billion by 2035. China is currently South America’s top trading partner and the second-largest for Latin America as a whole, after the United States.
Latin American exports to China are mainly soybeans, copper, petroleum, oil, and other raw materials that the country needs to drive its industrial development. In return, the region mostly imports higher-value-added manufactured products, a trade some experts say has undercut local industries with cheaper Chinese goods. Beijing has free trade agreements in place with Chile, Costa Rica, and Peru, and twenty Latin American countries have so far signed on to China’s Belt and Road Initiative (BRI). (Talks on a free trade agreement with Ecuador began in February 2022.)
Chinese overseas foreign direct investment (OFDI) and loans also play a major role. In 2020, Chinese OFDI in Latin America amounted to roughly $17 billion, mostly in South America. Meanwhile, the state-owned China Development Bank and the Export-Import Bank of China are among the region’s leading lenders; between 2005 and 2020, they together loaned some $137 billion to Latin American governments, often in exchange for oil and used to fund energy and infrastructure projects. Venezuela is the biggest borrower; it’s taken on loans worth $62 billion since 2007. China is also a voting member of the Inter-American Development Bank and the Caribbean Development Bank.
However, these ties have raised some concerns, particularly among regional governments. While Chinese loans often have fewer conditions attached, dependence on them can push economically unstable countries such as Venezuela into what critics call “debt traps” that could result in default. Critics also say that Chinese companies bring lower environmental and labor standards, and they warn that China’s growing control over critical infrastructure such as energy grids poses national security risks. There are also fears of economic dependency in countries such as Chile, which sent nearly 39 percent of its total exports to China in 2020.