Author: Jhon Valdiglesias
Centro de Estudios Asiaticos de San Marcos (CEAS)
December, 2018
December, 2018
Abstract
Today Latin America is the region which
receive more Chinese foreign investment; after Asia. Likewise, this investment
is diversified in diverse sector such as minerals, infrastructure and energy
sectors according to the China’s internationalization policy. Moreover, the
Latin American exports are increasing exponentially due to the huge Chinese
demand. It is worth to highlight that this region enjoys a lack of political
suspicious and misperceptions, which exist in other regions such as the Central
Asia and ASEAN and make the relationship slower. Therefore, the relationship
between Latin American and China can focused on the economic sphere
successfully. Furthermore, the Latin American economy is bigger than other
regions as Africa. In consequence, Latin American countries like Peru enjoy of
large potential gains from a policy to promote a deeper relationship with
China.
1. Introduction
Inside the Cold World and an ideological war
between US and Russia; for its part, China decided to focus on the developing
nations, promoting its own agenda. However, after the Cold War and the starting
of the Chinese economic reform or ‘open policy’ at the end of the 1970s; there
was a sharp modification of the Chinese foreign policy. Then, the priority for
China was its relationship with developed countries; meanwhile the relationship
with the developing countries became subordinated Mitchell (2007).
It is worth to note that during the Chinese communist
era, to make a difference with the “imperial relationship”, China designed its
relationship based on an ideology that promoted equality among countries. In
that context, at 1953 the Chinese Premier Zhou Enlai outlined the “Five
Principles of Peaceful Coexistence”[1] as the framework under
which its foreign policy would be conducted:
i. Mutual respect for territorial integrity and sovereignty.
ii. Non-aggression.
iii. Non-interference in internal affairs.
iv. Equality and mutual benefit, and
v. Peaceful coexistence.
Based on those principles, China frequently called
itself as the world’s largest developing country; especially, looking for
appealing a developing world that had felt a negative impact due to the colonialism
by powers. In that line, at 1963, Mao developed another theory so-called as the
“Dual Intermediate Zones” theory. According to this theory there was an intermediate
zone between US and Russia; it means an united countries front against the imperialism.
At the same time, this ‘intermediate zone’ was
divided in two parts. The first one consists in developing countries and
colonies basically in Asia, Africa and Latin America; meanwhile the second one
consists in more developed countries such as Japan, Canada, Oceania and the
capitalism countries of Western Europe. Indeed, the Chinese emphasis, since
then, had been the union against imperialism and in favor of a new world order.
Later, since 1979, some ideological components
of “previous China’s policy” were diminishing. In fact, China started joining international
organizations such as the Work Bank and the International Monetary Fund,
classified as imperialistic tools by this country in the past. However, at the
same time, this Asian country continued to affirm that its policy was based on
the “Five Principles of Peaceful Coexistence”, noted above.
Once China increased its pragmatic international
orientation as well as accentuating its economic development, its relationship
with the US became more important; but, also continued its relations with the
Third World. For a good relationship with the latter China used rhetoric of
mutual benefit of “win-win gain” and South-South cooperation; at the same time,
changing any rhetoric about joining forces against US or other power.
Under only one superpower (US) and the end of
the Cold War, China began to propose a new “recommendation” of World Order based
on regional and global multilateralism; apparently to diminish US power and
increase Chinese one. It is worth to note that the rhetoric was well received,
not only for a lot of countries of the Third World, but also in some
international organization such as United Nations and the World Trade
Organization.
In the economic sphere in the Third World,
China have been very dynamic; signing investment agreements, building public
infrastructure, emphasizing and cultivating soft power, gaining membership in
regional organization around the globe, etc. Smartly, China had realized that
some developing countries are growing faster than the developed ones; therefore
the formers would be potential partners in a future multipolar order.
China has been signing diverse “strategic
partnerships”, among the first most relevant ones could be mentioned from
Heginbotham (2007), with Brazil (1993), Venezuela (2001), Mexico (2003), South
Africa (2004), Argentina (2004), India (2005), Kazakhstan (2005), Indonesia
(2005), Nigeria (2006), Algeria (2006), additionally had signed regional
groupings such as Africa (2000) and ASEAN (2003). As one example of effective
strategies, the partnership with India could be understood as a prevention of
any alliance between India and US against China.
On the other hand, there is another view of relationship
between China and the Third World which could be classified in two groups. In
the first one, there are basically the neighbor countries which are the most
suspicious against China in spite of the latter have made serious efforts in mitigating
concerns about its political and military actions; however these concerns still
more related to the long term; it means when China became stronger.
About the second group there could be
mentioned Africa, Latin America and Middle East, the concerns are basically related
to the economic sphere; for example, about the composition of the trade. Although,
it is worth to note that in most cases China’s imports surpasses its export to
the Third World; however, those imports to China are mainly raw material, while
its exportations to the Third World are largely manufactured products.
On the whole, from the literature it could be
suggested that the image of China in the Third World would be more positive
than negative. According to Kurlantzick (2008) a 2005 BBC survey revealed that,
from a group of 22 countries, 48% thought that China’s role in the world is
positive, while a minority of 30% see China’s role as negative.
At 2013, the president Xi Jinping launched the
project “One Belt, One Route” in Kazakhstan, which involve the construction of
infrastructure to connect China with Europe and Africa based on the old route
between Rome and China used by Marcopolo. Later, that project looks to be
extended to the rest of the world; for example, in Latin America. It is worth
to note that involve the participation of major Chinese companies and banks.
Recently, the US president Trump has started a
trade world between US and China and the latter had replied with similar
measures. Therefore, there is a diminishing in the relationship between these
two powers. However, to face the economic loses the CCP is promoting economic
reforms to fuel the Chinese rural sectors as main strategy instead of promoting
a more worth relationship with the Third World; apparently, the latter would
provide a slower response from the China’s economic measures.
2.
China
and Central Asia
Indeed, after the 11st September 2001, U.S.
and Russia have been more involved in the Central Asia; meanwhile, scholars point
out that China have successfully and creatively achieved better relationship as
well as extended its influence over that region, even achieving a more stable long
term relationship than the other powers. However, it is worth to note that there
are still some suspicious from the Central Asian countries about China’s
intentions.
Analysts argue that the Shanghai Cooperation
Organization (SCO) had provided an effective strategic instrument for the China’s
achievement in the Central Asia. In that framework, China had taken the
opportunity for showing itself as a responsible power as well as its commitment
with multilateral values, in contrast with a US unilateral position.
On the whole, the main achievement of China with
the Central Asia is a better stability with an important part of its periphery.
At the same time, it had been another opportunity for the former to work
together with more actors in analogous interest with other major powers in the
region such as US and Russia; for example, involving the fight against
terrorism.
It is important to highlight that although
China had its own agenda; but in that region it have been shaping by the agenda
of the countries involved in the Central Asia, which had been also the main
points inside the SCO. These points are related to the so-called three evil
forces: (i) terrorism, (ii) separatism, and (iii) extremism. In fact, China has
a general treatment and also different ones with each country individually.
Thus, one relevant point of that relation,
which also is a foundation, is the demarcation and demilitarization of the
border between China and its Central Asian neighbors, including between China
and Russia. Unbelievably, China ceded disputed territories in favor of its
neighbors Kyrgyzstan and Tajikistan, which initially were claimed as Chinese
territories. Furthermore, there were established agreements of military-to
military exchange.
Due to the energy potential of the Central
Asian countries, there is a big interest of China in exploiting those natural resources.
Specifically, since the enormous energy resources, the China National Petroleum
Corporation (CNPC) has invested in many oil fields and the construction of the
pipeline from the Caspian Sea area to China. Moreover, the Chinese diplomacy
toward that region had increase economic assistance, credits, loans and so on.
As already noted, the SCO represent the main
vehicle trough China have driven its relationship with Central Asian countries.
Although the main achievement had been in the security and counterterrorism
areas, there are signs of more promotion of the economic areas as well as
economic reforms, accompanied with the modernization of the public
infrastructure of these countries. Even the extension is covering more areas
such as education, science, technology, tourism, culture, sports, media and so
on.
Indeed, China would extend its influence, meanwhile
the SCO increase as international organization. In that line, at the 2004
Mongolia became the first SCO observer. Later, at 2005, India, Pakistan and
Iran became observer states as well. Later, India and Pakistan became state
members at 2017. Additionally, the SCO had signed Memoranda of Understanding
with ASEAN and the Commonwealth of Independent States (CIS).
Table
1: Membership of the Shanghai Cooperation Organization
Also, there had been proposals about the inclusion of the US as an observer member, but it is thought that it would be hampered by China, while the latter need to be sure of the use of the region as an instrument to get the consolidation of a power, unless near its territory. However, it is also important for China to have a good relationship with US in the region, given the existence of common interests such as the fight against terrorism, religious extremism, drug trafficking and so on.
Finally, scholars affirm that in the Central
Asia, China is developing its pragmatic policy in order to reach its interests,
it is clear unless in the cases of security and the extraction of natural
resources, such as hydrocarbons. As already noted, the extension to other areas
such as education, tourism, etc. displays the strengthening of the SCO and the
China’s international relations with an important area.
3.
China
and the Southeast Asia
In the Third World, the Southeast Asia region
is the area which shows the most suspicious against China. This fact has as
foundation the long historical reclamation of territories by the latter. Recently;
perhaps being the most relevant case: the claiming for the South China Sea. In
the economic area, the China’s neighbor countries of the region have accumulated
strong concerns about the fact the Chinese economic growth would have caused a
considerable deviation of foreign investment from their countries to China.
However, China presents some achievements.
During the 1997 Asian financial crisis, while US and Japan delayed response,
China refuse to devaluate its currency and stepped forward with aid for the
countries affected, for example an aid package of US$ 1 billion for Thailand.
The secretary general of the Association of Southeast Asian Countries (ASEAN)
qualified the China’s cooperation during the crisis as exemplary.
After that, the Chinese soft power have
improved considerably in the region, according to one survey of the National
Defense University, at 2003, the Chinese aid had vastly outstripped US aid in
Laos, Philippines, Indonesia, Cambodia. That trend suggests that, to date,
China would have become the first supporter of aid inside the Southeast Asia
Kurlantzick (2008). It is expected that this trend continue in the long term.
China is also applying in that region its
rhetoric of mutual benefit under the approach of South-South relations with the
respect of sovereignty, government, political culture, etc. Not necessarily
contradictory, China also is promoting its model of successful economic growth
with a strong government, involving the using top-down method as a pattern to
sustain the economic development. That kind of government would focus on the
internal stability instead of external confrontations.
According to Kurlantzick (2008) in Vietnam and
Laos younger policymakers study the Chinese model, particularly the aspects of
gradualism for an open of the economy. According to that model it would be possible
to retain control of the political system in favor of an stable elite without
political reforms or the implementation of a democratic system.
For some scholars, China has achieved success
in isolating Taiwan around the ASEAN countries. In that context, Cambodia was
the first country inside that region to break informal ties with Taiwan, once eliminated
informal embassy. Later, the other Southeast Asian countries took similar
measures in favor of the China’s international position about Taiwan.
At the 1990s, it was created the ASEAN Plus
Three; adding in the regional block China, Japan and South Korea as a proposal
of a better integration in the whole East Asia-Pacific region. It is worth to
note that previously the US had discourage that proposal to avoid to lose
influence inside in that region. Later, following similar criteria of regional
integration is was created ASEAN Plus Six with Australia, New Zealand and
India. There are proposal to include Russia and US.
In spite of all the Chinese efforts; the
literature points out that the Southeast countries remain suspicious,
especially about an ambiguous future. As already noted, these concerns are
related on China’s territorial claiming, these countries are very worry on the
behavior and way to solve territorial disputes; especially when China will
become more and more stronger. According to Kurlantzick (2008) these anxieties
come mainly from Philippines and Vietnam.
4. China and African
The main interest of China in the African
continent is the existence of natural resources in the latter, particularly the
Chinese demand for energy. In this sector, China’s main energy presence is in
Angola and Sudan Alden (2008). Apart from the energy sector, the increase of
prices of other commodities such as nickel, copper, gold, titanium, etc. had
benefited South African and foreign companies, accompanied with the attraction
of Chinese investment in that continent.
According to Alden (2008) 10 years ago there
was a small relationship between China and Africa; in contrast, now there are a
lot of Chinese companies, laborers, retails, tourists and so on. As it is expected,
China has promoted a friendly relationship based on sovereign equality, non-intervention,
mutual beneficial development and international cooperation.
In the African continent, China, through its
companies, had quickly built a lot of physical infrastructure, including roads,
railroads, telecommunications and so on. Even, in “higher levels” had provided
of nuclear reactor in Algeria and modern telecommunications equipment in Ethiopia
and Djibouti, accompanied with the proper training for the maintaining of this
equipment.
At 2003, inside the China-Africa Cooperation
Forum it was announced debt forgiveness for 31 African countries along with important
amounts of aid donations. To improve the flow of tourism, furthermore, the
Chinese government approved as travel destinations some countries such as South
Africa and Zimbabwe. Moreover, for some scholars, China has offered an important
source of stability in that continent.
The proposal of multilateralism as world order
is very attractive for Africa. Moreover, the position of China as permanent
member of the UN Security Council is perceived for them as an important
guarantee in favor of the protection for the interests of African countries;
for example for South Africa and its aspiration to get a permanent seat.
For analysts, the China’s cost of the
relationship with Africa would be low, in comparison with the secure position achieved
in multilateral organizations, thanks to that the African states provide a lot
of votes in the international organizations. But, beyond that low cost for the support,
there are additional critics related to African disadvantages basically in terms
of economic results highlighted by Western scholars about “real” political intensions
such as neo-colonialism.
Indeed, although in general the African
continent had responded enthusiastic about its relationship with China, there
are specific African sectors such as few businessmen, trade unionists,
nongovernmental organization, who claim some negative effects related to economic
interests. On the other hand, the Western analysts criticize the Chinese
support to regimes with poor human rights records.
Indeed, in the economic sphere; for example,
trade unions highlight that around 60 000 workers have lost their jobs as
consequence of the removal tariffs on textiles Alden (2008). Also, inside
African countries, a lot of Chinese companies operating basically with Chinese
laborers. Meanwhile, China justifies this fact in terms of their cost,
productivity and cultural affinity.
In the political sphere, the Chinese model of
noninterference and no challenging single party rule is very attractive for
some African countries. However, for some scholars this no-conditionality is
encouraging pariah regimes and neglecting the human rights. At the same time
that would be undermining Western efforts to inculcate democratic principles in
Africa.
In spite of all these critics, China shows a
good capacity of flexibility to sustain a proper relationship with Africa in
positive terms. For instance, in the case of trade a lot of job in the textile
sector, Chinese government had introduced voluntary restraints on export.
Additionally, Chinese government had offered compensation in case of any of its
companies would make inappropriate conduct.
The new policy proposed by the president Xi
Jinping about ‘One Route, One Belt’ includes the planning of diverse
infrastructure projects in Africa proposed by China. The latter is transforming
the relationship with Africa to avoid concerns such as ‘debt traps’. Thus, the
new adjustment in the relationship and projects aim to generate better economic
result for the African continent, minimizing previous political and economic
concerns in a framework of trade war between China and US.
5.
China
and Latin America
Latin America is among the regions with less
suspicious toward China as well as highest potential of economic development for
the China’s relations. According to Teng (2007), there is now a virtuous cycle
of economic growth in Latin America fed and started by China. Moreover, there
is a “natural feeling”, since both belong to the Third World and had suffered
colonial interventions.
Indeed, as in all previous studied cases, the
relationship between China and Latin America is under principles of peace and
development established by Deng Xiaoping and Jiang Zemin and promoted widely by
Hu Jintao; specifically how China must assure a peaceful global environment in
order to develop its economy, avoiding political confrontation.
Indeed, the political relation is very narrow
between China and Latin America. Thre are, basically, Sino-Cuban military
cooperation, the employment of the United Nation to foster relation with the
Latin America countries through the sending the peacekeeping forces to Haiti at
2004 and so on. According to some American scholars, a main objective of
promotion of China would be the isolation of Taiwan in the Latin American region.
On the other hand, China has sought to improve
its relationship with Latin America, since the latter is considered a
resource-rich source. Thus, it could guarantee itself the access to raw
materials and food stuffs for China. Indeed, currently, that Asian country is
the first consumer of minerals such as copper, tin, zinc, platinum, iron and so
on, and has strong necessity for energy resources.
In general for the Asian country view in Latin
America, Venezuela is regarded as supplier of energy, Peru of mineral such as
copper, while Brazil and Argentina of foodstuffs such as soybean and beef. In
fact, a third of Chinese agriculture imports come from Latin America, explained
almost mainly by Brazil and Argentina Teng (2007). It is worth to note that in the
described relationship China also offers a model of win-win gains.
The Brazilian case would be more advanced. Indeed,
the cooperation between both countries has extended to trade, resources,
technology, and even international foros. In fact, Brazil is China’s largest
trade partner in Latin America. Indeed, the Latin American country is taking
some opportunities such as wider of its steel industry due to the Chinese
demand, aeronautic and satellites projects, and the possibility of construction
of nuclear plants in China.
In general, the Chinese investment in the Latin
American region has depicted a increasing some evolution, but with
heterogeneity among countries. China started its practically single focus in
raw material at the beginning of the 1992, when invested US$ 120 million is
Peru’s largest iron mine, which actually is also the largest in South America.
Later, at the beginning of the 21th century,
there was started a different kind of intervention of the Chinese government
with a new kind of investment, which beyond of looking for raw materials, also
includes the construction of public infrastructure; for example, railway system
in Argentina, and announcement of energy infrastructure, agriculture
development and telecommunication in Venezuela. For that, the Chinese state
banks play a key role.
According to statistic of The Economic
Commission for Latin America and the Caribbean, Peru, Colombia and Argentine were
the countries who received the major amount of Chinese investment which is
basically concentrated in the natural resources sectors. It is worth to note
that from 2010 the situation changed with greater amounts in favor of Brazil
and Argentina, where the major flows of investment are explained by the new
kind of investment in public infrastructure mentioned above (see table 2).
Graphic
1: Chinese investment in Selected Latin American Countries 2005-oct. 2017
(US$
billions)
Meanwhile, China has maintained the majorities
amount of investment in Brazil and Peru. That reflects that China maintain its
new policy to invest in the security of access of natural resources and at the
same time promoting investment in other sphere related to the public
infrastructure as well as cooperation in areas of industry and satellites.
It is expected that for the case of Peru,
China basically still focusing on the extraction of natural resources,
contrasting with the case of Brazil, where the areas of China’s interest are
more diversified. This decision would come from Chinese government and its
general strategy for the world and specific strategies for the Third World and
Latin America; respectively.
The majority of Chinese foreign investment in
concentrated more in the developed countries than the developing ones.
Concerning Latin America there still the trend on diversification on economics
sector, where the most benefited have been the Brazil and Argentine who has
attracted more investment in the infrastructure and energy sectors. In
contrast, in Peru still sharply concentrated in the production f natural
resources by Chinese international companies.
On the other hand, the trade between China and
Latin America has grown rapidly, at the same time China is interested in
fostering the commercial relationship through the promotion of Free Trade
Agreement (FTA). As an example, in the following graphic it could be seen as
trade between China and Peru have grown exponentially since the beginning of XX
century, also because Peru is one of the first Latin American countries which
have signed a FTA with China. It is expected that the trade still growing;
however the majority of products exported to China belong also to the primary
sector such as minerals and natural gas.
Graphic
2: Peruvian exports to China (US$ billions)
From the most successful lessons such as
Brazil, it is useful to get some lesson for the rest of Latin American
countries such as Peru, with strong concentration of exploitation of natural
resources. At the same time it is useful to analyze some Chinese factor to diversify
to other economic sectors apart from extractive sector. Indeed, the Chinese necessity
also offer opportunities for the Latin American countries; especially
considering that there are practically not political concerns between the
region and China which exists in other regions.
6. Conclusion
China has not a general international
strategy; instead this country has a diversified strategy. In that framework,
there are two differentiated strategies between the developed world and the
developing word. Concerning the latter, there also are strategic for different
regions such as Central Asia, ASEAN, Africa and Latin America. The Central Asia
and ASEAN are the two regions with more suspicious about the China’s
intentions; especially on territorial demands. China has successfully
diminished those suspicious for the Central Asia and found common interests
such as fight against the terrorism. Meanwhile, for the ASEAN still those
suspicious, given a long history of territorial conflicts between that region
and China.
On the other hand, due to the distance with
Africa and Latin America, the relationship between these regions and China lacks
of political suspicious or misperception. As consequence, they can focus more
directly on the economic area such as investment and trade. For the Latin
American case, today, it is the region on the world which receives more Chinese
foreign investment, after Asia. Likewise, the most important economies such as
Brazil, Argentine, and Peru have this Asian country as their first commercial
partner. In that framework, Latin American countries such as Peru can export to
a huge potential demand of a rising Chinese economy as well as attract foreign
investment facing a China’s internationalization policy.
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[1]
The formalization and legal codification of these principles started in the
relationship between China and India.
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