Myers: “China is focusing activity in a few strategic sectors”

In this interview with BBC’s The Real Story, Margaret Myers considers prospects for US-China-Latin America relations in the coming years, taking into account global trends and the Biden administration’s likely view of China’s growing global role. 

COMMENTS BY MARGARET MYERS:

“Since the genesis of the Belt and Road Initiative in 2013, we haven’t really seen an explosion of activity [in Latin America], but a real focusing of activity on a few strategic sectors in which the US, European, and other countries tend to be heavily invested. And this suggests to me a sort of maturing of the relationship. It’s also suggestive of China’s own growth and economic upgrading. We are indeed seeing some very competitive activity in technology and financial services, for example, and on a wide range of infrastructure projects.”

“The China-Latin America relationship is long-standing, dating back many decades. There have been trade relations and all sorts of exchanges between countries for a number of years. The sort of enhanced economic relationship that we are referring to really started around the mid-1990s when a couple of mining and oil state-owned enterprises invested in Venezuela and Peru. And since then, often with the assistance of China’s policy banks, China Development Bank and China Export-Import Bank, a range of Chinese companies, operating often in the extractive sectors but also in a number of other industries, have entered the region and established a growing footprint.”

“The fundamentals of the trade relationship, in particular, haven’t changed all that significantly. You still have a situation in which Latin American countries are exporting primarily commodities—soy from Brazil, copper from Chile and Peru, oil from a number of oil-producing countries—and importing higher-valued-added goods. And these goods are indeed of increasingly high value. We aren’t talking just textiles or the sort of things that China was exporting a couple of decades ago, but increasingly high-tech equipment—Lenovo computers, ultra-high-voltage transmission lines, high-speed trains, construction equipment, Huawei headsets, you name it. This asymmetry is ever-present and is in many ways exacerbating.”

“The investment relationship really took off after the global financial crisis. And a lot of what we saw in that post-2008 period were mergers and acquisitions—buying of international assets or Latin American company assets in a wide range of sectors. Again, as I noted, there continues to be a focus on extractive sectors and construction, but increasingly, since the Belt and Road got going in 2013, we’ve seen growing interest in a much wider range of sectors, reflective of China’s capacity in all of these industries. We’ve seen rapid growth in the tech industry in China, rapid growth in technologies in terms of electricity transmission and distribution. And a lot of these technologies are being used, obviously, at home in China but are also transferring to the Latin American context and to other regions across the world.”

“I think Taiwan, as in other regions, figures quite prominently in terms of China’s interest in engaging. Interestingly, the Latin American and Caribbean has been something of a stronghold for Taiwan, with upwards of 12 or more allies at times, with most of those focused in Central American and the Caribbean. But over time, initially around 2010, we saw Costa Rica cut ties with Taiwan and establish them with mainland China. And then, more recently, around 2017 and 2018, we saw three other countries—first Panama, then Dominican Republic, then El Salvador cut ties with Taiwan. The countries that align diplomatically with China may very well support China’s agenda in international organizations, whether on human rights, Hong Kong, internet governance, or any other number of issues. But at least historically, there hasn’t been clear alignment in terms of voting between countries in which China is engaged or even engage extensively economically. More recently, though, we have seen some Caribbean activity in support of the Hong Kong Security Law.”

“I think there are going to be continued incentives—an effort to work together with countries that are like-minded in this respect, to work together to incentivize choices on 5G and on Huawei’s participation in 5G auctions. And we’ve seen this play out very clearly in the case of Brazil. But I think this has been largely a losing battle. The US and Japan and Brazil have worked together on a trilateral initiative to try to ensure cooperation in tech and other areas, potentially at the expense of Chinese involvement. And yet we still see Bolsonaro suggesting that Huawei will be able to participate in upcoming 5G auctions, perhaps using that as something of a political bargaining tool in anticipation of a more contentious Biden-Bolsonaro relationship.”

“Looking ahead, economic interests in Latin America are likely to supersede values-based ones. Although there may be sort of an awakening, and growing concern about some of the activity that China is doing in Latin America, there is so much need for infrastructure and a wide range of services, technology-based and otherwise. And often China is the only bidder for these projects. Whether the projects should advance or not is another question, but often they are the only ones there.”

Listen to the full interview here

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