China now Latin America’s “privileged” partner

Elite-level partnerships formed at the expense of US and opponents of big infrastructure projects.

The fight against poverty in one of the most unequal regions of the world was the central theme of the 3rd Summit of the Community of Latin American and Caribbean States (CELAC), which was held in Costa Rica on January 28-29. China and Cuba, however, were the stars at the meeting that gathered leaders from 33 countries in the region (all of the Americas except Canada and the United States).

Presidents and ministers cited the strengthening of relations with China as the regional bloc’s main achievement during Costa Rica’s pro tempore leadership, which was transferred to Ecuador last Thursday. Ecuadorean Foreign Minister Ricardo Patiño believes that the growing Chinese presence in the region may have contributed to US President Barack Obama’s historic decision to re-establish relations with Cuba after 50 years.

“It must be worrying for a country like the United States, which is used to almost single-handedly dominating the political, economic, and financial scene in the region, to have to deal with the new reality in which it is no longer our privileged partner. Now Latin America’s privileged partner is China,” stated Patiño.

Shortly before the third CELAC summit, representatives of the regional bloc traveled to Beijing for their first ministerial meeting with the Chinese government. The result was a partnership agreement for the next 10 years. During this period, China committed to investing US$ 250bn in the region, in addition to increasing bilateral trade to US$ 500bn.

“In the last decade, trade between Asia and Latin America grew most quickly on a global level, especially trade between Brazil and China, which increased 56% in 10 years,” said Argentinean political analyst Jorge Castro. “In fact, since 2009 China has been Brazil’s largest trading partner, a role that the United States occupied for 100 years.”

According to Patiño, President Barack Obama decided to normalize American relations with the Cuban communist government specifically because he recognized that while countries such as China are advancing, the U.S. is losing ground. “It’s not just me saying this. Obama himself said it. Last December, when he announced his initiative, he recognized that the policies to isolate Cuba did not just fail, but ultimately isolated the United States,” said the minister.

The economic, commercial, and financial blockade imposed on Cuba by the United States half a century ago is now a “thorn” in Latin America’s relations with the United States, said Patiño. At every regional summit, many Latin American leaders have called for the removal of the embargo, one of the last remnants of the Cold War. That is, until the last Summit of the Americas in Cartagena das Indias in 2012, when they gave an ultimatum to the U.S. government: this would be the last meeting without a Cuban delegation that they would attend.

“Obama’s decision to normalize relations with Cuba was a victory for Cuba, but it was mainly an important political gesture for all of Latin America, which had been demanding inclusion of the country in international forums,” said Castro. “The result? For the first time, Cuba has been invited to participate in the next Summit of the Americas, which will be held in April in Panama.”

But some people question the growing Asian presence in the region, claiming that China may become the new imperialist power, only interested in exploiting the region’s natural resources for its own use, with no concern for the social and environmental consequences in the region.

Before the CELAC Summit, a group of young people tried to deliver a package containing 7,000 letters, 60,000 signatures, 52 resources, and a document describing the 21 demonstrations held by 56,000 rural residents to Nicaraguan President Daniel Ortega, expressing their opposition to the construction of a canal crossing the country and joining the Pacific and Atlantic oceans.

The idea is to have a deeper, wider version of the Panama Canal for larger cargo ships. But opponents of the project say it will destroy nature and displace agricultural communities.

The Latin American governments, however, do not appear to be troubled by the consequences of the Chinese capitalist model.

Ricardo Patiño said it is up to each country and the region as a whole to establish clear standards that protect their interests and the environment, and to monitor their implementation.

Ecuador, for its term as president of CELAC, has in fact specifically proposed defining concrete targets for the region. “Declarations of intent are good, but we can’t stop there. We have to define common policies—as in the case of environmental protection,” explained Patiño.

Analyst Jorge Castro mentioned that China is also changing its environmental policy. “China and the United States, the main emitters of carbon dioxide, have reached an agreement. For the first time, the Chinese have agreed to be on an equal footing with the United States and the developed world with regard to the decision to reduce carbon dioxide emissions, and have set aside the arguments that prevented an accord in the Kyoto meeting,” he said.

Ecuador’s President Rafael Correa went even further, citing China as part of a new financial architecture. “Why do we send the money from our central banks to the banks of developed countries, that give us 1% interest, but when we ask for loans they charge us so much more? Why not keep our reserves in the region?”

In an interview at the end of the CELAC Summit, Rafael Correa said that one option would be to use the Bank of the BRICS, the group composed of Brazil, Russia, China, and South Africa.

Isn’t it dangerous to depend so much on China? According to Jorge Castro, trade between the 12 South American countries and China has grown significantly because the two regions complement each other. “China is the top world economy in terms of domestic purchasing capacity, and South America is one of the main exporters of commodities that China needs so much,” he said.

But this business relationship is evolving. “The Chinese are investing in the manufacturing sector, especially in Brazil,” explained Castro. But Latin America is not the only region that depends on China.

“China is the United States’ main trading partner and leading direct investor in the United States and also in Europe,” he stated.