Prior to the market-oriented reforms launched by Deng Xiaoping in 1978, Chinese presence in Latin America was minimal. Since the beginning of the twenty-first century, however, political, economic, and cultural exchanges between China and Latin America have seen a dramatic rise. China has become the third largest trading partner of Latin America and a significant presence in the region.
Contacts between China and Latin America can be traced back to the 1560s, when Spanish galleons (known as “Manila galleons”) sailed the Pacific Ocean between the Philippine port of Manila and Mexico, then called New Spain. Chinese and other Asian merchants developed a thriving trade with New Spain, exporting mainly silks, porcelains, fabric, and jewelry. China imported from the region such goods as silver, shoes, hats, wine, olive oil, and soap.
From 1847 to 1874 about 225,000 Chinese coolies (Chinese indentured laborers), under eight-year contracts, almost all male, were sent to Cuba (to labor in sugar plantations) and Peru (to work in the deadly guano fields). Chinese immigrants began entering Mexico at exactly the same time the United States enacted Chinese exclusion and Mexico promoted immigration. Numbering over twenty-four thousand, the Chinese became one of the largest immigrant communities in Mexico by 1927. Apart from the Manila galleon trade, early contact between China and Latin America arose from emigration.
From the 1870s to the early twentieth century, the Qing (1644–1912) government of China established diplomatic relations with Peru, Brazil, Mexico, Cuba, and Panama. The diplomatic missions not only helped protect the rights of the indentured laborers from China but also promoted trade between the two regions.
During the pre-Cuban Revolution period no Latin American state recognized China. Chinese involvement in the Korean War and domestic problems meant that less attention could be devoted to low-priority area such as Latin America. China’s history of sponsoring Communist revolution in the developing world alienated a large number of governments in Latin America. The Cuban Revolution in 1959 provided the People’s Republic of China (PRC) an opportunity to break the U.S. policy of “containing China” and to establish its diplomatic links in Latin America. Latin America was seen as a tool that could be used against the U.S. interests. Fidel Castro’s victory in 1959, for example, attracted immediate political support from China. In the 1960s China also voiced support for other Latin American countries’ efforts against the United States. When the United States sent troops to deal with the political crisis in the Dominican Republic in April 1965, PRC leader Mao Zedong denounced the United States in strong terms. Except for Cuba, China made no diplomatic breakthroughs in the Western Hemisphere in the 1960s. By the 1970s most of the trade and cultural exchanges between China and Latin America were concentrated on Cuba. China’s trade with the rest of Latin America was minuscule.
In 1970 Chile, under Salvador Allende, became the first South American country to establish diplomatic relations with the PRC. On 11 September 1973, the Allende administration was overthrown by a military coup. China and Chile maintained their diplomatic relations, although exchanges and contacts between them were limited. After the PRC’s admittance to the United Nations and the U.S.-China rapprochement, Chinese diplomatic representation in Latin America increased, and by 1980 the number of Chinese embassies had risen to twelve. Yet China was not a major aid donor and did not participate in Latin America’s multilateral institutions.
The late 1970s marked a turning point in Sino–Latin American relations. After nearly thirty years of Maoist rule, China embarked on a more pragmatic and outward-looking program of economic development that focused primarily on exports, foreign investment, technology and closer ties with the West. Chinese support for Communist parties, revolutionary movements, and radical governments was disappearing. Normal and often friendly relations are being conducted with many governments in the region. Economic interactions have intensified, and financial, commercial, investment, and technical ties have been formed where, in general, few existed before. A fast-growing overseas Chinese community exists in Latin America, and the overseas Chinese are taking an important role in bridging the business interests of China and countries in which they reside.
China views Latin America as a strategic battlefield in its fight against Taiwan. Latin America has long been a stronghold for Taiwan’s diplomacy. Taiwan maintains diplomatic ties with twelve of the thirty-five countries in the region. Both Taipei (capital of Taiwan) and Beijing have been consistent providers of financial assistance to those countries that maintained official relations. Both have set up trade offices in the countries with which they don’t have a diplomatic relationship, often the first step toward switching recognition.
Before the 1990s Chinese leaders seldom visited Latin America, but in recent years more frequent exchanges of high-level visits have occurred between China and Latin America. Chinese leaders are spending more time visiting and hosting counterparts from Latin American countries to build personal relationships and to discuss cooperation in areas of mutual trust. In addition to state visits, China has increased its participation in regional international organizations in Latin America and the Caribbean. In 2004 China achieved observer status at the Organization of American States (OAS) and since 1993 has sought to become a full member of the Inter-American Development Bank (IDB).
Meanwhile China increased exchanges with representatives of congressional, military, and nongovernmental organizations in Latin America. Even the Chinese Communist Party has established relations with many political parties in the region. An increasing number of Latin American countries were designated as “tourist destinations,” a status that allows Chinese tour groups to travel to these countries without travel restrictions, thus promoting further bilateral interaction. With booming trade relations China became the number-three user of the Panama Canal, behind only the United States and Japan. In September 2004 China sent a peacekeeping contingent to Haiti, marking Beijing’s first deployment of forces ever in the Western Hemisphere.
China’s trade and investment in Latin America have soared since the late 1990s. In 2006 bilateral trade hit $70 billion, an all-time high, compared with only $7 billion in 2000. China has become second only to the United States as an importer of commodities and goods from Latin America. Enormous changes also took place in the composition of Chinese exports to Latin America. Prior to the 1980s China’s exports to the region were confined to textiles and some raw materials. In recent years, alongside sustained increases in exports of textiles, those of automobiles, tractors, motorcycles, TVs, computers, electrical appliances, and farm machinery rose rapidly. Under the Chinese policy of modernization, imports from Latin America, such as crude oil, copper, tin, bauxite, iron ore, zinc, and manganese, are of prime importance. Latin American agricultural exports of wheat and soybeans are important items for Chinese consumption. In the going-out strategy (acquisition of exploration and operation rights in overseas oil and gas fields) for energy security, Latin America was identified as one of the three major regions (with Russia / Central Asia and the M
iddle East / Africa) that may become China’s emerging energy suppliers.
China’s growing presence in the manufacturing sector in Latin America presents enormous challenge for countries (such as Brazil) that export manufactured products to other countries in the region. Several Latin American countries such as Mexico and Argentina began to levy high antidumping taxes against China in the 1990s. Fierce competition exists between China and Mexico and Central America for the U.S. market as China replaced Mexico and Central America as the biggest exporter of textiles and clothing to the United States.
Chinese investment in Latin America grew rapidly in the early twenty-first century. The cumulative stock of China’s foreign direct investment (FDI) in Latin America was $4.6 billion in 2003. By 2006 the figure had grown to $19.7 billion. That was about half of the country’s total investments abroad that year. Almost 96 percent of that FDI went to tax havens such as the Cayman Islands and the British Virgin Islands. Excluding the tax havens, Chinese FDI in the southwestern hemisphere concentrated most heavily in Brazil ($130 million), followed by Peru, Mexico, Venezuela, and Cuba. Chinese direct investments in Latin America are concentrated in the energy and mining sectors.
China’s most important relationship in the region is with Brazil, with which China shares goals of seeking a leading role in international affairs and constraining U.S. power. China supported Brazil’s bid for permanent membership on the U.N. Security Council. Brazil is China’s largest trade partner in Latin America, and China is Brazil’s third-largest trading partner in the world. The two have teamed up in trade talks to demand better terms for developing countries. In 2006 Brazil’s exports to China totaled $12.9 billion, up from $676 million in 1999. Its trade surplus with China that year stood at $5.5 billion. China and Brazil have been cooperating in the development of satellites for surveying the Earth’s resources. Satellites were launched in 1999 and 2003; agreement has also been reached on the launch of third and fourth satellites. In addition, the two sides have cooperated in energy and infrastructure development and aircraft manufacturing.
In 2005 China signed its first-ever free trade agreement (FTA) with a non-Asian country, Chile. The FTA immediately eliminates tariffs on 92 percent of Chile’s exports to China and 50 percent of the products that China sends to Chile. Bilateral trade, now around $8.8 billion annually, grew 24 percent in 2006, making China Chile’s second-most important trading partner after the United States. Now the world’s largest consumer of copper, China receives about 20 percent of its copper imports from Chile.
China has also placed particular emphasis on its relations with Venezuela, intending to make the country China’s major energy supplier. While on his fourth visit to China in 2006, President Hugo Chávez announced plans for a six-fold increase in sales to China over the next decade. In 2005 Venezuela signed a deal for China to build and launch a satellite for Venezuela in 2008. Chinese-Venezuelan trade was $4.34 billion in 2006, a record level and up 102.5 percent from a year earlier.
China’s relations with Cuba have undergone significant evolution since the late 1980s. The two countries had been adversaries, given Sino-Soviet tensions from the early 1960s until the end of the Cold War. Since the early 1990s the two countries have cooperated closely on many international issues. China supports Cuba’s right to determine its own political system and its protests against U.S. sanctions. In return, Cuba endorses China’s positions on human rights and the Taiwan issue. China promised to invest in a Cuban nickel operation, which could bring millions of dollars to Cuba in taxes and royalties. This investment could boost production in one of Cuba’s most important industries and pump badly needed funds into Cuba’s weak and heavily indebted economy. China emerged as Cuba’s second-largest trading partner, fueled by China’s interest in Cuba’s nickel reserves, the third largest in the world. China is now second only to Venezuela as Cuba’s largest trade partner. Trade between Cuba and China ballooned to $1.8 billion in 2006, double the amount of the previous year, as China rose from fourth to second place among Cuba’s most important trading partners, displacing Spain and Canada.
Latin America has become a vital source of energy, natural resources, and foodstuffs for China. Latin American countries have given increasing priority to their relations with China and view investments by and trade with China in their countries as an alternative to their reliance on the United States. Countries such as Cuba and Venezuela view China as a new ally as they distance themselves from traditional partners such as Europe and the United States and carry out a new, multipolar foreign policy. A vibrant commercial relationship elevates China’s political posture in Latin America. Through a mixture of development aid, trade ties, direct investment, and high-level political exchange, China has developed into a new but increasingly important player in Latin America. In the foreseeable future Chinese influence in Latin America is likely to grow. Yet, to date commercial interaction has been the mainspring of Sino–Latin American relations, and China has moved cautiously from a radical to a more pragmatic approach to achieve its goals in Latin America.
Source: Li, He. (2009). Latin America–China Relations. In Linsun Cheng, et al. (Eds.), Berkshire Encyclopedia of China, pp. 1272–1275. Great Barrington, MA: Berkshire Publishing.
Latin America–China Relations (L?d?ngm?izh?u hé Zh?ngguó de wàiji?o gu?nxì ????????????)|L?d?ngm?izh?u hé Zh?ngguó de wàiji?o gu?nxì ???????????? (Latin America–China Relations)