Andres Oppenheimer: China is flexing its muscle in Latin America

07/19/2014 12:00 PM

07/20/2014 10:32 AM

On his visit to Latin America, Chinese President Xi Jinping promised new trade and investment deals that he said will lift China’s booming economic ties with the region to new heights. Many Latin American leaders hailed it as great news amid their countries’ economic slowdowns.

But the latest trade figures tell a different story, and suggest that the biggest news about Xi’s visit may be political, rather than economic.

The latest trade figures show that, while China has already surpassed the United States as the No. 1 trade partner of several Latin American countries, bilateral trade between China and Latin America is beginning to slow after a decade of phenomenal growth.

Latin America’s exports to China soared from 2.4 percent of the region’s worldwide exports in 2002 to 11.7 percent of the region’s worldwide exports in 2012, according to International Monetary Fund figures. But the percentage fell to 11.6 percent in 2013, and most economists expect that it will grow at a slower pace than in recent years.

Part of the reason is that China’s economy is no longer growing at the 10 percent annual rates of the past decade. It is expected to grow by 7.5 percent this year, and by a similar rate in the next few years.

And many economists doubt that we’ll see a continuation of last decade’s phenomenal growth in bilateral trade because Latin America is not high on China’s agenda. While China is special to Latin America, Latin America is not special to China.

R. Evan Ellis, an author of several books on China-Latin American ties, who is just back from a one-month teaching trip to China, confirmed to me something that I noticed in several trips to China: The Chinese know very little about Latin America.

While teaching at a top Chinese business school last month, Ellis found in a survey of his 36 Chinese students that nine believed that Machu Picchu was the father of Bolivia’s independence, and seven identified Pancho Villa as the current president of Mexico.

More important, China’s foreign policy continues to be much more focused on the rest of Asia and Africa than on Latin America. Many Latin American diplomats say it often takes them years to get an appointment with senior Chinese officials.

Former Mexican ambassador to China Jorge Guajardo, who served in Beijing from 2007 to 20013, told me a very illustrative story. After many Latin American ambassadors had failed in their individual efforts to get an appointment with China’s trade minister, they decided to send the minister a joint letter requesting a meeting with all Latin American ambassadors.

“We got a response saying that they regretted to inform us that it wouldn’t be possible for time reasons. The meeting never happened,” Guajardo recalls.

During his ongoing visit to the region, Xi signed a deal with Brazil, Russia, India and South Africa — the fellow members of the so-called BRICS group — to create a New Development Bank for emerging countries. He also proposed to build a trans-Amazonic railroad that would link Peru with Brazil, and announced dozens of other bilateral trade and investment agreements.

Less noticed, but equally or more important in the long run, was that he held talks with Latin American leaders that may lead to the first summit of China with members of the Community of Latin American and Caribbean States (CELAC) — a group that excludes the United States — later this year in Beijing.

My opinion: The big news about Xi’s visit to Latin America was not the economic projects he announced — they may or may not happen and will be affected by the slower growth in all emerging countries — but China’s decision to step up its political ties with the region.

For the first time, China is openly moving from dealing with Latin American countries bilaterally to dealing with them regionally, as it does with Africa. Also, during his visit to the region 13 months ago, Xi avoided countries that had bad relations with Washington. On this trip, he has had no qualms about visiting Cuba, Venezuela and Argentina.

It may be China’s way of telling the United States, “You move into my neighborhood, I’ll move into yours,” following U.S. talks with Japan and Southeast Asian nations to create a joint economic bloc. Or it may be a Chinese effort to upgrade its ties with Latin America to guarantee long-term sources of oil, minerals and soybeans. Whatever it is, Xi’s visit may turn out to be more important for political than economic reasons.

About Andres Oppenheimer

Andres Oppenheimer

@oppenheimera

Andres Oppenheimer is a syndicated columnist, and anchor of the TV Show "Oppenheimer Presenta." He is a member of the Miami Herald team that won the 1987 Pulitzer Prize.

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