Document created: 21 september 2006
Air & Space Power Journal - Español Tercer Trimestre 2006
R. Evan Ellis
Chinese initiatives in Latin America have increasingly become a phenomenon of interest to US policymakers and the national security community. Although Chinese trade and investment in Latin America has been expanding exponentially for the past six years, the issue received little attention until November 2004, when Chinese president Hu Jintao made a high-profile visit to the region in conjunction with Chinese participation in the 2004 Asia Pacific Economic Cooperation summit in Santiago, Chile. Hu’s trip included visits to 5 Latin American nations, the signing of 39 commercial agreements, and a commitment to invest $100 billion over the next 10 years. China’s aggressive new economic diplomacy captured the attention of the world press, and the imagination of Latin American elites in a region long suffering from the flight of global capital to Asia and other foreign destinations. In the months that followed, Hu’s visit to Chile, Argentina, Brazil, Venezuela and Cuba was quickly followed by a similarly high-profile trip by Chinese vice-president Zeng Quinghong in conjunction with the January-February 2005 China-Caribbean Trade & Economic Cooperation Forum, including stops in Mexico, Peru, Venezuela, Trinidad and Tobago. In the months that followed, Hu Jintao made individual trips to Venezuela and Mexico, while numerous Latin American leaders visited China in search of trade and investment--including President Álvaro Uribe of Colombia, Alejandro Toledo of Peru, and most recently, Evo Morales of Bolivia.
Reflecting the new US attention to the issue, a number of conferences and policy forums included the issue of China in Latin America in their agenda. Moreover, both the House International Relations Committee and the Senate Committee on Foreign Relations held hearings on the topic in 2005.
Many different perspectives exist on the nature and significance of Chinese initiatives in Latin America. US analysts and policymakers, as a whole, tend to view Chinese engagement in a more skeptical manner than business and political elites in Latin America. Within the region, the prospect of China as an export market and a source of investment is viewed as an important opportunity—particularly by nations of South America whose primary exports are primary products and foodstuffs. While some Latin American nations increasingly worry about competition with Chinese manufactures in domestic and developed country markets, others view China as a counterweight to the historical US dominance of the economic, financial, and political structures of the region. Within the US, Chinese initiatives in Latin America are viewed with varying degrees of skepticism or indifference. Some view Chinese engagement with Latin America as part of an orchestrated plan to lock-up key assets in an emerging global struggle for energy and other resources. Others in the believe that Chinese interest presents an opportunity for the United States to work together with China to advance the economic and social development of the region.
The purpose of this paper is to examine the nature of Chinese initiatives in Latin America, and their implications for the region. The principal conclusion of this article is that, while Chinese interest in Latin America is driven by that country’s resource needs, the nature of this engagement, in the unique context of Latin America, may augment sociopolitical instability, with externalized costs and crises that profoundly impact the US national interest.
Although China is a large and resource-rich nation, rapid and sustained Chinese economic growth over the past 27 years has generated levels of demand for raw materials that exceed what it can produce domestically or obtain within Asia. Since 1979, the Chinese economy has grown at an average rate of 9.6%, including a 10.1% rate of growth in 2004, and a forecast rate of 9.9% in 2006. Moreover, the current (11th) Chinese 5-Year Plan concentrates resources on extending industrialization to the nation’s interior. The resulting dedication of resources on fixed capital formation further augments Chinese resource consumption. Although China only accounts for 4.4% of global GNP, for example, the nation consumes 7.4% of the world’s oil, 31% of the world’s coal, 30% of the world’s iron, 27% of the world’s rolled steel, and 40% of the world’s cement.
On the supply side, China has simply been unable to keep up with demand in key sectors such as petroleum and selected metals, despite ambitious exploration efforts and investment in capacity expansion. Chinese agriculture has been limited, for example, by inefficiency, limits in suitable terrain, and encroachment by developers on traditional agricultural lands. From 2001 to 2005, for example, Chinese demand for soybean oil doubled. While the story is slightly different in each sector, the combination of demand growth and supply limitations has been an explosive growth in Chinese imports of a wide range of global commodities. In the first 11 months of 2005, for example, China reported that it imported $133.7 billion in primary products, representing a 26.2% increase over the same period in 2004. Within this category, Chinese imports of fuel products increased by 35%, while minerals and metal imports increased by 26.1%.
China’s increasingly acute need to import the resources that it requires to sustain its high rates of economic growth not only has increased its demands on its current network of suppliers, but has prompted it to engage in an ever-broader search to secure future sources of supply. This quest has led China not only into new forms of economic and political engagement with Latin America, but also in Africa, the Middle East, and other parts of the world. Although China’s other global initiatives are also important, it has a particularly strong interest in Latin America because the region is oriented to export significant quantities of a broad range of primary products that China needs to sustain its economic growth.
In understanding China’s interest in Latin America, it is also important to take into account the impact of the new generation of Chinese leadership and the political sea-change that has taken place in Latin America. On the Chinese side, Hu Jintao, and to a lesser extent, his predecessor Jiang Zemin which came of age in a China much stronger and stable in both political and economic terms…a China with an established and expanding role in the global community, and no longer struggling to ideologically define itself vis-à-vis the Communism of its former rival, the Soviet Union. Hu Jintao and his leadership team arguably feel less constrained by the boundaries which prevailed during the cold war period, such as the Monroe Doctrine and the presumption of U.S. hegemony in the Western Hemisphere.
The confidence of the new generation of Chinese leadership is complimented by the political sea change that took place in Latin America following the terrorist attacks of September 11, 2001. Following 9-11, US attention and resources turned inward to focus on homeland security, and also toward the Middle East, where Afghanistan and Iraq became the focal point abroad of the Global War on Terror. The perception by Latin American leaders that the region was no longer a US priority was reinforced by their perception that their positions were not taken into consideration on a wide range of international issues from the Iraq war to immigration policy. Meanwhile, within Latin America itself, a series of elections brought left-of-center governments to power, from pragmatic socialists such as Ricardo Lagos in Chile, Ignacio “Lula” de la Silva in Brazil and Tabaré Vasquez in Uruguay--to radical populists, such as Hugo Chávez in Venezuela, and most recently, Evo Morales in Bolivia. The new Latin American leadership was less willing to accept the neo-liberal economic orthodoxy represented by the “Washington Consensus,” and more disposed to explore new types of relationships that could give their nations alternatives to the traditional US domination of the regional economy. For these leaders, regional trade blocks such as MERCOSUR, and the building of relationships with non-traditional economic partners such as China, India, and the European Union, represented new sources of leverage in the increasingly globalized economy. In short, a new generation of Chinese leaders with acute resource needs, and willing to take risks, encountered a new Latin American leadership, looking for new opportunities and economic partners.
The magnitude and sustained nature of the expanding Chinese trade relationship is impressive. The total trade volume between China and Latin America rose from a level of $200 million/year in 1975 to $40 billion per year in 2004. From 1993 to 2003 alone, the trade volume increased by 600%, causing China to surpass Japan in trade volume with Latin America. During both 2004 and 2005, this expansion of bilateral trade further accelerated to an annual rate of 65.7%. According to the Economic Commission for Latin America, imports by the People’s Republic of China (PRC) from the region increased an average of 42% per year from 2000 through 2004, by contrast to an increase of 26% per year in Chinese imports globally. In other words, not only did China increase its purchases from Latin America to meet its resource needs, but it did so more rapidly than it increased its purchases from other regions. Moreover, virtually all South American nations experienced a significant increase in exports to China--although in some cases, this advance was more rapid than in others. Over the period 2000-2003, for example, Brazilian exports to China increased by 503%, while Argentine exports to China increased by 363%, and Chilean exports increased 238%. Peru, which was the laggard, saw its exports to China rise by 50% during this period—although in 2005 alone, Peruvian trade with China increased by another 50%.
Latin America’s trade balance with China in primary products is dramatically different from its balance in manufactured goods. According to statistics from the Economic Commission for Latin America and the Caribbean, in 2003, Latin America had a $3.8 billion surplus with China in primary product trade, but a $9.9 billion deficit in the trade of manufactured goods. In other words, Latin America as a whole is generally selling China primary products and buying manufactured goods. Whether a specific Latin American country is a net winner or looser in its relationship with China depends greatly on whether its economy is based on primary products or manufactures. Countries with fewer raw material exports and larger manufacturing sectors have seen fewer benefits from access to the Chinese market, while manufacturing sectors in those countries such as textiles have been hurt as Chinese products undercut them in their principal export markets and penetrate their domestic markets. On the other hand, countries with a smaller manufacturing sector, and an export structure oriented toward the sale of primary products, have been the biggest winners in the new economic engagement with China. These include Venezuela, Peru, and Chile.
The list of commodities purchased by China from Latin America is diverse and varies by country. Venezuela, which has the largest hydrocarbon reserves in the world if extra heavy crude products such as ormulsion are included, is currently exporting 160,000 barrels of oil per day to China, with a target of 300,000 bbl/day. Chile, which is the world’s largest copper producer, sold 50% of its copper to the PRC in 2004. Argentina, with its substantial agricultural region, supplied 61% of PRC imports of soy products, and saw the volume of its soy exports to China increase by 34% from 2004-2005. From Brazil, China purchased significant quantities of petroleum products, iron and steel, soy products, and other foodstuffs. With respect to Peru, 63% of Chinese purchases in 2005 were from the mining sector, while 32% were from the fishing sector—although China also manifested significant preliminary interest in Peruvian agriculture.
While China has dramatically expanded its purchases of primary products from Latin America, the promised Chinese investment has not followed suit. In general terms, China has increased its foreign direct investment in parallel with its recognition of the need to look overseas to secure resources. The new Chinese “Go Out” strategy, recognized in the 10th Chinese 5-Year plan (2000-2005), authorized and encouraged major state-owned enterprises to acquire assets an expand their operations abroad in support of their primary supply chains. In keeping with this guidance, firms such as China Minmetals and China National Petroleum Corporation transformed themselves from domestic companies to major players in international markets. The overall quantity of Chinese non-financial FDI, however--$6.92 billion the first 11 months of 2005—is relatively modest compared to overall global flows. Moreover, the fraction of that modest sum that has gone to Latin America has not been consistent. As shown by the diagram below, for example, although Latin America was the number one destination of Chinese non-financial FDI in 2003 and 2004, it fell to a distant second behind Asia in 2005.
Even in those years when the fraction of Chinese non-financial FDI going to Latin America has been high, the absolute quantity has been relatively small compared to overall global FDI flows into the region. The $659 million of Chinese non-financial FDI that went into the region in 2005, for example, was less than 2% of the $41 billion that the region received as a whole. Moreover, an analysis of the destinations of Chinese FDI within the region suggest that a sizeable portion of the investment in Latin America may have been “pass through” investment, with the three principal destinations in 2004 and 2005 being the Caymans, the British Virgin Islands, and Venezuela.
|Figure 1 – Distribution of Chinese Non-Financial FDI by Region|
The nature of PRC investment in Latin America suggests a pragmatic approach in which the modest quantities going into Latin America are concentrated on securing and facilitating Chinese access to the region’s primary products. This can be seen in the major projects and deals recently completed, or currently under consideration.
Venezuela. The PRC has long had a close relationship with the populist regime of Venezuelan president Hugo Chávez, including China National Petroleum Corporation (CNPC), which has been operating Venezuelan oil fields in Zulia and Anzoategui provinces for several years. The Chinese presence was important in helping the Venezuelan state oil company Petroleos de Venezuela Sociedad Anónima (PdVSA) to recover from the 2003 strike, when the Venezuelan president fired half of the PdVSA workforce. During 2005, CNPC signed additional agreements to develop the oilfields Zumano and the Junín 4 block in Orinoco, as part of collaboration with PdVSA to boost the nation’s petroleum output.
Colombia. China has been mentioned as a potential partner in a pipeline currently under discussion that would carry Venezuelan oil from the Lake Maracaibo region to the Colombian port of Tribugal, for ultimate export to China and other destinations in Asia. Such a pipeline would allow Venezuela to more economically export oil to China, without incurring the delays involved in loading Venezuelan oil at Atlantic ports then transiting the Panama Canal. China may also play a future role in Colombia’s own hydrocarbon sector. When Alvaro Uribe visited China in April 2005 both PRC participation the pipeline, and PRC exploration for oil in Colombia more generally, were key points of discussion.
Peru. On February 27, 2006, the Peruvian congress approved a massive project in which the Chinese consortium Shandong Luneng would invest $2 billion to significantly upgrade the port facility at Tacna, and another $8 billion to build new highway and rail links connecting Tacna to the El Mutún mineral field in eastern Bolivia. Shandong Luneng is also one of the major bidders for the El Mutún concession, which has been repeatedly delayed by the Bolivian government. Securing both projects would thus give a major PRC firm an integrated supply network for extracting iron from the region. In addition to Tacna, another $300 million in smaller PRC investment projects are also contemplated for the Peruvian mining, petroleum and fishing industries. In the hydrocarbon sector Chinese position in Peru was also bolstered by the China National Offshore Development Corporation (CNODC) purchase of a 45% interest in PlusPetrol Norte, a subsidiary of the Argentine firm PlusPetrol. The acquisition has given China a presence in the Camisea gas fields--a project that has recently come on-line and is significantly boosting Peru’s natural gas output, and rapidly making Peru a significant player in the the region’s natural gas supply.
Ecuador. In March 2006, Andes Petroleum, a joint venture of Chinese oil companies, finalized the purchase of the Ecuadorian assets of the Canadian firm EnCana. The $1.42 billion deal gives CNPC 75,000 barrels per day of petroleum output, plus control over Ecuador’s new OCP petroleum pipeline. Although Ecuador is only the fifth largest producer of oil in Latin America, the majority of its 550,000 barrels per day of output are destined for export. In exporting this oil, Ecuador’s location on the Pacific coast of Latin America makes the logistics costs of shipping to China relatively lower than the costs to export oil to China from Venezuela, Brazil or Argentina.
Bolivia. China has expressed strong interest in helping the new Bolivian government of Evo Morales nationalize that country’s hydrocarbon sector. Bolivia currently has the second-largest natural gas reserves in Latin America, behind Venezuela. Even before the 2-day trip to China by the newly-elected Bolivian president, in February 2005, the Chinese firm Shengli was proposing to invest between $1.5 and $3.5 billion in Bolivia over 40 years to develop the country’s gas reserves. Meanwhile, the Chinese firm Huangi is exploring the construction of a $600 million facility that would convert Bolivian gas into liquid hydrocarbons such as diesel. General statements to the press suggest that both projects were discussed when Evo Morales met with Chinese president Hu Jintao during the Bolivian president-elect’s visit to Beijing in January 2006.
Brazil. In Brazil, Chinese deals and acquisition activity have focused on Brazil’s iron and steel and petroleum sectors. With respect to the former, the Chinese firm Baosteel and the Brazilian firm Companhia Vale do Rio Doce (CVRD) began talks in July 2004 to construct an iron ore production facility in Brazil. CVRD was subsequently rumored to be in joint venture talks with the Chinese firm Minmetals, although no concrete deals have emerged as of the time that this article went to press. In February 2006, Metals and the Metallurgical Construction Group of China finalized a deal providing Gerdau S.A. $235 million to increase its steelmaking capacity in Brazil. With respect to petroleum, in November 2004, the Brazilian state firm Petrobras signed a $10 billion commitment to cooperate with the Chinese firm Sinopec in prospecting for oil, refining, and constructing pipelines in Brazil. Subsequently, in July 2005, Petrobras signed a long-term contract to sell 12 million barrels of oil per day to the PRC firm Sinochem for $600 million. In addition to these commitments, China has proposed $4.8 billion in investments to modernize the Brazilian railway system--facilitating Brazil’s ability to get its iron ore, steel, and other products to market for export to destinations such as the PRC.
Chile. In February 2006, China Minmetals and China Development Bank finalized a deal providing the Chilean state copper company Codelco with up to $2 billion in financing through advance commodity purchases so that Codelco could increase its mining capacity for export to China. Codelco is the world’s largest copper supplier, while the PRC is Chile’s number one export customer. The deal also included an option to sell Minmetals a 25-49% interest in the new Gaby mineral field for an additional $900 million.
Argentina. In February 2006, the periodical Business News Americas announced that Chinese steel trading company Sinosteel corporation was considering an undisclosed but significant investment in the Argentine iron ore miner Hiparsa with the express purpose of increasing iron ore production to meet Chinese demand. Separately, in the transportation sector, the Chinese have discussed participation in improving the Cristo Redentor and Aguas Negras passes. The passes are key chokepoints on highways used to ship Argentine products over the Andes mountains for ultimate export via Chile’s Pacific ports. In the winter, snows routinely close the passes, delaying the transit of Argentine products to destinations such as China.
Cuba. In July 2004, the Chinese firm Minmetals signed an accord to invest $500 million in the Cuban nickel industry to expand its capacity. The Castro regime has estimated that the Chinese investment will double Cuban nickel output. Beyond the nickel industry China has also provided $700 million in lines of credit to the Castro regime in general.
Panama. The PRC firm Cosco Pacific is currently a key bidder for the construction of a mega port on the Pacific coast of a Panama canal. If the bidding is awarded to Cosco Pacific, the project would complement China’s property-holdings on both sides of the canal at Cristobal, Balboa, and Rodman Point. The PRC is also a potential participant in the project currently promoted by Venezuelan president Hugo Chavez to increase the capacity of the Trans-Panama pipeline and reverse its flow, facilitating the shipment of Venezuelan oil to Pacific destinations such as China.
Canada. Chinese oil firms CNODC and PetroChina have both made major investments in the Alberta oil sands, and have both established offices in the Canadian province of Alberta. In 2005, PetroChina further signed a Memorandum of Understanding with the Canadian firm EnBridge for a joint venture that would construct a pipeline to carry heavy petroleum products from the Alberta Oil Sands to the Pacific coast.
Chinese motives for its trade and investment initiatives in Latin America must be separated from the direct and indirect impacts that they are having on the region. Moreover, these impacts not only arise directly from trade and investment activities, but also through expectations and perceptions, and through the transformation of socioeconomic structures and institutions.
In the short term, the most profound impact of China on Latin America is its symbolic impact on the popular imagination and the calculations of the region’s political actors. For Latin America, China represents an alternative in a part of the world that has long perceived itself as economically, politically, and culturally dominated by the United States—a perception that strengthened following the disappearance of the Soviet as a counterweight to the United States. The symbolic existence of China as a market, or a source of investment, or an ally, creates expectations in the region that cause its elites to behave differently in their dealings with each other, with the United States, and with the rest of the world.
The degree to which China captures the imagination of Latin America has less to do with the reality of trade and investment flows, and more to do with its unique combination of attributes. Like the role played by the former Soviet Union, China is increasingly a political counterweight to the United States in the global political and economic system, and--at least superficially in its rhetoric--a proponent of an ideological alternative to neoliberal capitalism. But unlike the Soviet Union, China is also rapidly transforming itself from an underdeveloped country to a large and dynamic modern economy. The nations of Latin America can identify with China’s underdeveloped roots, while being inspired by the magnitude and rapidity of its transformation. The often-mentioned size of the Chinese population and the “otherness” of its culture further add to the almost romantic appeal that China engenders.
For Latin American populists such as Hugo Chavez or Evo Morales, China has become a substitute for the loss of the Soviet Union, empowering them to act more boldly, and more defiantly against the United States than would have otherwise been the case. When Chávez threatens to sell Venezuela’s oil to China instead of to the United States, for example, he is re-creating a distorted version of the tactic adopted by third-world leaders during the cold war, attempting to playing off one superpower against the other. It is important to recognize that this empowerment flows primarily from the symbolism and expectations raised by China, and not whether engagement with China will actually be beneficial to the country, or whether promised Chinese investment will actually occur.
Aside from the intangible political dimension, China also represents a real alternative market for primary product exports, and to some degree, an alternative source of investment capital. China’s willingness to invest in the Bolivian hydrocarbon sector, for example, provides the new government of Evo Morales with another way of obtaining needed resources and technical expertise without having to make concessions to the 26 oil companies currently operating in the country. Chinese engagement with Bolivia thus gives Morales more latitude to proceed with the nationalization of that nation’s hydrocarbon sector. Similarly, the prospect of China as an alternative market for Latin American commodity exports has also introduced a new dimension to the question of trade integration with the United States, such as the Free Trade Area of the Americas.
A more tangible, economic impact of China in Latin America has been the economic damage caused to the manufacturing sector. According to the International Monetary Fund, 90% of total PRC exports are manufactured goods where the PRC has an enormous advantage in labor costs. The result of lower PRC labor costs under increasingly open global trade regimes is that the PRC has been able to underprice Latin American manufacturers and displace them from their traditional export markets such as the United States and the countries of the European Union. As shown in the figure below, for example, with the expiration of the Multi-Fiber agreement maintaining quotas in textiles, the Chinese share of the US clothing market rose from 25% to 56%, while the share held by Latin American manufacturers fell from 26% to 8%.
Figure 2: Share of the U.S. Clothing Market, 2003 and in the Post-MFA Era
In Latin American domestic markets, evidence of the growing penetration of Chinese merchandise is everywhere. In 2005, for example, a Peruvian cultural preservation group complained when “traditional Peruvian artifacts” for sale in Lima’s international airport were found to have been manufactured in China. Chinese goods also dominate the street vendors and informal markets in most Latin American cities. One author notes, for example, that the Mexican flags and Virgin of Guadalupe icons for sale to tourists in Mexico City’s central square, the Zocalo, are generally made in China.
The penetration of Latin American markets by Chinese goods has accelerated as countries of the region have lowered trade barriers in the hopes of gaining reciprocal access to Chinese markets and PRC investment. Since 2004, Brazil, Chile, Venezuela, Peru and Argentina have each formally recognized the PRC as a “market economy,” making it much more difficult to bring anti-dumping charges against the nation in the World Trade Organization. Chile went even further, signing a Free Trade Agreement with the PRC in November 2005.
In general, the impacts of expanded trade with China have been most adverse in those countries with substantial manufacturing sectors and relatively modest primary product exports. Such countries face strong competition from the PRC in manufacturing, while not realizing the benefit of selling it significant quantities of commodities. In these countries, engagement with China has begun to generate a political backlash as Chinese goods have rapidly penetrated domestic markets, while at the same time, sales to and investment from China have failed to live up to expectations.
Brazil is a prime example. While the country saw its exports to China grow by 6% in 2004, imports from China expanded by 48% in the same period, leading Brazil’s foreign minister, Celso Amorim to remark that Brazil felt “deceived” and is now considering restrictions against the import of Chinese manufactures. Similarly, in Argentina, imports from the PRC grew by 70% in the first 7 months of 2005, while exports only increased by 22%, leading Argentina to begin to impose new trade restrictions, such as the imposition of a requirement for licenses for importing Chinese footwear and toys. In Colombia, textile imports from China expanded by 56% in the first half of 2005 following the termination of the Multi-Fiber agreement, leading the nation to impose textile tariffs of 61-95%. Colombia’s trade deficit with China for all of 2005 came in at $1.288 million.
Not only has the level of Chinese investments in Latin America fallen short of the promises made by Hu Jintao in November 2004, but Chinese investments are often perceived as “bad deals,” tied to the use of Chinese labor and companies.
Another source of friction with Chinese investments has been tension between Chinese management practices and the expectations of the local labor force. One example is Shougang, owner of the largest Chinese-owned mining operation in Latin America. Since Shougang purchased Hierro Peru from the Peruvian government in 1992, the operation has been beset by repeated strikes and complaints that the company pays its workers significantly less than the wages for miners prevailing in Peru. The company is further accused of having failed to live up to its obligations for the upkeep of the infrastructure in the nearby town where the workers live.
Yet another serious issue that is only beginning to make itself felt is that reliance on primary product exports makes the economies of Latin America increasingly vulnerable to market risk. This is a particularly serious problem in that China is not only a major global commodities customer, but also retains a largely coordinated and planned economy in which its production and investment decisions across an entire sector can profoundly impact global demand, and thus commodity prices. The global steel price experienced a dramatic decline during the second half of 2005, for example, when the expansion of domestic Chinese capacity created a massive global surplus. Reciprocally in the petroleum industry, Chinese imports increased by 34.8% in 2004, but only 5% in 2005, helping prices to stabilize after the aftermath of hurricane Katrina. In the copper industry, Chinese demand played a key role in driving global copper prices up 61% in 2004, yet prices are projected to fall up to 25% in 2006 as capacity growth catches up Chinese demand.
Long Term Consequences
Over the long-term, Chinese engagement in Latin America has the potential to transform the region. While the dynamics are complex and difficult to forecast, several trends can be highlighted.
Transformation of Pacific Ports. First, commerce with China will increase the importance of Pacific ports and the nations that have them. As suggested by Chinese “mega-port” projects in Tacna and the Panama Canal, Latin America’s expanding commerce with the PRC will serve as an impetus for the development of Pacific ports, as well as the rail and road infrastructures that transport products to them. Increased volumes into and out of such coastal zones will also drive secondary development and the migration of populations.
The transformation of coastal zones surrounding Pacific ports will also impact the bureaucratic and administrative structures of these areas. Local customs and port authorities, police and other government entities in the effected areas will be called upon to take on more and broader responsibilities, and will pressure central governments to shift more resources to these areas. Even national navies and coast guards will take note of the new trade flows with importance to the well-being of the nation. The new or expanded responsibilities which accompany this commerce will begin to take on more a more prominent role in the planning, training and doctrine of these organizations and perhaps even in their politics.
At the political level commercial groups located in the new areas will similarly put new demands on governments for greater infrastructure spending to match the growing requirements of these areas and the their growing contributions to national economies. New economic actors in the port zones will also begin to introduce pressures to revise regulations that impair the new commerce, and restructure administrative institutions whose size and style no longer appears suitable to meet the needs of these zones. In short, the new commerce will transform not only the economics, but also the politics of Pacific coastal zones in a manner that will impact the governments at a national level.
Shift in Regional Centers of Gravity. Related to the transformation of coastal zones tied to Pacific ports, changing patterns of trade will also shift the relative importance of Latin American cities as hubs of business and cultural influence. Urban centers such as Santiago and Lima will likely increase in importance due their triple roles as national capitals, centers of commerce, and major ports in the increasingly important trade with China. Such cities will increasingly attract the physical presence of Latin American companies and organizations pursuing or engaged in business with China, while simultaneously serving as logical regional headquarters for Chinese corporations pursuing business with or overseeing operations in Latin America. To the extent that pacific coast trade with China approaches levels comparable with the region’s Atlantic-coast trade with the United States and the European Union, the growth in influence of cities such as Lima and Santiago may come at the expense of traditional centers of gravity for Latin American commerce and culture, such as Miami.
Changes to Economic Structure. As suggested by the previous paragraphs, Chinese engagement with Latin America is likely to alter the structures of Latin American economies in general--and in the process, put serious pressures on Latin American political systems. To the extent that Chinese competition hurts the sales of Latin American manufacturers, for example, it displaces workers from the very sectors which have historically served as the cornerstone for the middle class, and a stepping stone for economic diversification. The manufacturing sector has also traditionally been the source of labor organization, and when displaced, a conduit of labor unrest. While it is possible that Latin American manufacturing jobs lost to Chinese competition will be compensated by growth in the primary products sectors, the sociopolitical impact of such a change is likely to be traumatic. It is not clear, for example, that workers unemployed because of the closure of a factory in the city, for example, will readily relocate to remote areas to work lower-paying jobs in the mines or in the agricultural sector. Moreover, since sectors such as mining are relatively more capital intensive than labor intensive, it is not clear that the number of jobs created by expanded primary product exports will compensate for the number of jobs lost in manufacturing.
Greater activity in extractive sectors such as mining will also heighten emphasis on negotiations with politicians and bureaucrats over natural resources administered by the State. The recently completed Minmetals-Codelco deal, and the associated controversy over selling Minmetals rights in the Gaby mine, illustrates how increasing Chinese demand, and associated Chinese investment activity will repeatedly raise the question of how far Latin American governments are willing to cede control over natural resources in exchange for needed investment and revenue streams.
More China-Orientation in Business and Popular Culture. In a broader sense, expanding economic interactions with China will also impact the business and popular culture of Latin America. The promise of China as a source of commercial opportunity has already led to a boom in schools teaching mandarin Chinese. Moreover, with expanding commerce, the number of Chinese nationals in the region will continue to increase, including not only businessmen, but also tourists and long-term immigrants. This demographic trend is likely to have a variety of repercussions. On one hand, it is likely to expand the presence of Chinese culture in the region, from entertainment to foods to style. Although Latin America may continue to be dominated by US culture, the degree of that domination is likely to wane in the decades to come. On the other hand, such human and cultural intermingling is also likely to foster new social tensions. Throughout the world, in places such as Malaysia and Indonesia, differences in customs and levels of economic prosperity between Chinese immigrant communities and established ethnic groups have been a source of societal tension and ethnic violence. The violence against the Chinese ethnic community in the Venezuelan state of Carabobo during the 2004 recall referendum serves as a reminder that Chinese communities in Latin America will have social and political repercussions for the countries in which they are found.
As was recognized during the cold war period, the United States has a stake in the outcome of the socioeconomic and political evolution of Latin America. Not only is the United States intimately tied to the region’s economy, but it is also connected in physical and human terms. When the region is beset by social crisis and ungovernability, the United States is affected through heightened drug flows, gang violence, and even terrorism. When Latin American economies cannot generate jobs and prosperity, the United States is the primary destination of its economic refugees. Reciprocally, those impacted in Latin America are increasingly, in literal terms, the families of persons living here. It is not possible, and perhaps not desirable, for the United States to stop the economic rise of China that is driving the Asian giant into Latin America. The United States can, however, work China and with those countries with which it shares this hemisphere to manage that change in the interest of the prosperity and wellbeing of its citizens and the region as a whole.
1. The promise was made by Hu Jintao during a speech in front of the Brazilian congress. See Sam Logan and Ben Bain, “China’s Entrance into Latin America: A Cause for Worry?” Americas Program, International Relations Center. 24 August 2005. See also Saul Landau, ”China’s tango in Latin America.” Asia Times Online. www.atimes.com. July 8, 2005.
2. As Peter Hakim puts it, “The White House could not have missed the warm welcome he received in the five Latin American countries he visited, the concessions the host governments offered him (such as the granting of “market-economy status” to China), and the enormous expectations his presence created…” “Is Washington Losing Latin America?” Foreign Affairs. January / February 2006. Vol. 85, No. 1. p. 46.
3. A study by the Economic Commission for Latin America and the Caribbean, for example, notes that from 2000-2003, foreign investment in the region fell from $78 billion to $36 billion. Foreign Investment in Latin America and the Caribbean, 2003. May 2004, p. 13. See also Sam Logan and Ben Bain, “China’s Entrance into Latin America: A Cause for Worry?” International Relations Center. Americas.irc-online.org. August 24, 2005.
4. Kerry Dumbaugh and Mark P. Sullivan. “China’s Growing Interest in Latin America.” CRS Report for Congress. Report RS22119. April 20, 2005.
5. For descriptions of the content of the Bolivian leader’s trip to China, see “Chinese president calls for stronger China-Bolivia links.” People’s Daily Online. Beijing, China. January 10, 2006. See also “Chinese state councilor, Bolivian president-elect vow to enhance economic cooperation.” People’s Daily Online. Beijing, China. January 9, 2006. “Bolivia invites China to develop gas reserves.” LatinPetroleum. www.latinpetroleum.com. January 10, 2006.”Evo destaca lazo ideológico con China y Hu ofrece inversiones.” El Mercurio.com. Santiago, Chile. January 10, 2006.
6. “Challenge or Opportunity: China’s Role in Latin America.” Hearing Before the Committee on Foreign Relations, United States Senate. 109th Congress, 1st Session. September 20, 2005. See also, “China’s Influence in the Western Hemisphere.” Committee on International Relations. U.S. House of Representatives. 109th Congress. 1st Session. April 6, 2005.
7. See, for example, Steven Johnson, “Balancing China’s Growing Influence in Latin America.” The Heritage Foundation. No. 1888. October 24, 2005. For a broader discussion of U.S. policy views with regard to Chinese initiatives in Latin America, see Kerry Dumbaugh and Mark P. Sullivan. “China’s Growing Interest in Latin America.” CRS Report for Congress. Report RS22119. April 20, 2005.
8.& 9 David Zweig and Bi Jianhai, writing in the September/October 2005 issue of Foreign Affairs, for example, see a war between the US and China driven by energy competition as almost inevitable. “China’s Global Hunt for Energy.” Foreign Affairs. September/October 2005.
9. 10. “China reporta 9,9% de crecimiento de su PIB en el 2005.” El Comercio.com. Lima, Peru. January 25 2006.
11. “China remains developing nation despite GDP hike.” Business China. www.businesschina.com. January 3, 2006.
12. Zheng Bijian, writing in the September/October 2005 issue of Foreign Affairs, for example, notes that the amount of cultivatable farmland per capita is 40% of the world average, while its per capita water resources are one-fourth of the world average. “China’s ‘Peaceful Rise’ to Great-Power Status.” Foreign Affairs. September/October 2005.
13. “Alarma en China por situación en el campo.” El Tiempo.com. Bogotá, Colombia. 20 January 2006.
14. “Soybean oil demand.” China Economic Net. http://en.ce.cn. February 22, 2006.
15. Ministry of Commerce of the People’s Republic of China. Import and Export Mix (2005/01-11). February 8, 2006.
16. Ministry of Commerce of the People’s Republic of China. Import and Export Mix (2005/01-11). February 8, 2006.
17. See “China diversifica sus fuentes de abastecimiento.” El Universal. Caracas, Venezuela. 19 March 2005. In January 2006, for example, CNODC purchased a 45% stake in a major Nigerian oilfield for $2.268 billion dollars, while Chinese chancellor Li Zhaoxing made a 6-nation African tour, focused on China’s interest on the petroleum and minerals of the continent. See “China avanza para abastecerse de energía.” El Universal.com. Caracas, Venezuela. 16 January 2006.
18. For an excellent analysis of the economic complementarity between Chinese and Latin American export structures, see Jorge Blázquez-Lidoy, Javier Rodríguez, Javier Santiso, “Angel or Devil: Chinese Trade Impact on Latin American Emerging Markets.” BBVA. November 2004. See also R. Evan Ellis, “U.S. National Security Implications of Chinese Involvement in Latin America.” U.S. Army War Collage Strategic Studies Institute. Carlisle Barracks, PA. June 2005. See also Eduardo Lora. Should Latin America Fear China? Inter-American Development Bank. May 2005.
19. The final step of thus power transition occurred in March 2005, when Hu Jintao was named as head of the Chinese State Military Commission, making him titular head of the Chinese armed forces. See “Hu Jintao asume mando militar chino.” El Universal.com. Caracas, Venezuela. March 14, 2005. See also Murria Scot Tanner, “Hu Jintao as China’s Emerging National Security Leader.” In Civil-Military Change in China: Elites, Institutes, and Ideas After the 16th Party Congress. Andrew Scobell and Larry Wortzel, eds. Carlisle Barracks, PA: U.S. Army War College Strategic Studies Institute. September 2004. p. 59.
20. See Andrew Scobell and Larry Wortzel. “Introduction.” In Civil-Military Change in China: Elites, Institutes and Ideas after the 16th Party Congress. Andrew Scobell and Larry Wortzel, Eds. Strategic Studies Institute. Carlisle Barracks, PA. September, 2004.
21. For a good, concise account of elements of U.S. foreign policy that have alienated Latin American elites in recent years, see Peter Hakim, “Is Washington Losing Latin America?” Foreign Affairs. January/February 2006. Vol. 85, No. 1. p. 45.
22. “China to strengthen cooperation with Mercosur – envoy.” China Economic Net. http://en.ce.cn. December 10 2005.
23. Peter Hakim, “Is Washington Losing Latin America?” Foreign Affairs. January/February 2006. Vol. 85, No. 1. p. 45.
24. “China to strengthen cooperation with Mercosur – envoy.” China Economic Net. http://en.ce.cn. December 10, 2005.
25. Jane Bussey, “China’s New World trade coveted, feared.” The Miami Herald.com. September 26, 2005.
26. “Peru courts Chinese investment.” www.financemarkets.co.uk. May 30, 2005.
27 “Exportaciones peruanas a China crecen un 50 por ciento.” El Comercio.com. Lima, Peru. January 26, 2006.
28. “Table I.1B. Latina America and the Caribbean: Structure of Merchandise Trade by Destination and Origin, by Category, 2003.” Economic Commission for Latin America and the Caribbean.
29. A November 2004 analysis by the Argentine bank BBVA, for example, calculates the degree of complementarity or competitiveness between China and specific Latin American countries, based on each country’s economic structure by SIC code industry. The report finds that countries such as Brazil and Mexico face significant trade competition with China, while countries such as Venezuela, Peru and Chile have more complimentary relationships with China. Jorge Blázquez-Lidoy, Javier Rodríguez, Javier Santiso, “Angel or Devil: Chinese Trade Impact on Latin American Emerging Markets.” BBVA. November 2004.
30. “Venezuela begins to measure its high-density oil reserves.” People’s Daily Online. Beijing, China. November 9, 2005.
31. “Venezuela To Boost Oil Shipments to China.” LatinPetroleum. www.latinpetroleum.com. No. 7. 2006. See also “Venezuela hopes to increase oil exports to China.” www.chinaview.cn. February 9, 2006.
32. “Crecieron un 9% las exportaciones de cereales y oleaginosas en 05” La
Nacion.com. Buenos Aires, Argentina. January 25, 2006.
33. “Soybean oil demand.” China Economic Net. http://en.ce.cn. February 22, 2006.
34. “Exportaciones peruanas a China crecen un 50 por ciento.” El Comercio.com. Lima, Peru. January 26, 2006.
35. Some experts believe that because of ideal climatic conditions, and with the help of genetic hybrids, the agroindustry of Peru has the potential to surpass that of Chile, although it is currently relatively underdeveloped. On January 10, 2006, a Chinese delegation visited Ica, the current showcase of the newly expanding Peruvian agro-industry, to explore possibilities to export Peruvian agricultural products to China. “Empresarios chinos Llegan a Ica para entablar nuevos negocios.” El Comercio.com. Lima, Peru. January 10, 2006.
36. See, for example, “State of the Market” China Economic Net. http://en.ce.cn. 24 February 2006.
37. In 2005, for instance, CNPC purchased the Canadian firm PetroKazajstan for 4.180 billion , and plans to double its business abroad by 2010. “Petrolera china CNPC duplicará su presencia en el extranjero.” El Universal. Caracas, Venezuela. January 17, 2006.
38. “China’s non-financial direct investment overseas grew 25.8% in 2005. ” People’s Daily Online. Beijing, China. February 13, 2006. See also “China makes more overseas investment in 2005, mainly in Asia.” People’s Daily Online. Beijing, China. February 10, 2006.
39. “State of the Market” China Economic Net. http://en.ce.cn. February 24, 2006.
40. "Niveles de inversión extranjera directa se estancan en
Latinoamérica.” Nacion.com. San José, Costa Rica. January 19, 2006.
41. “State of the Market.” China Economic Net. http://en.ce.cn. February 27, 2006.
42. “CNPC in Venezuela.” CNPC Website. www.cnpc.com. See also Wang Ying, “China, Venezuela firms to co-develop oilfields.” China Daily. August 27, 2005.
43. Venezuelan national oil production dropped from 3.3 million barrels per day in November 2002 to 700,000 barrels/day in January 2003. “Country Analysis Briefs: Venezuela.” Energy Information Administration. www.eia.doe.gov. September 2005.
44. Marianna Parraga. “$1.500 millones en envíos a China.” El Universal.com.
Caracas, Venezuela. August 24, 2005. See also “China mantendría acuerdos
Petroleos con Venezuela en bajo perfil.” El Universal. Caracas, Venezuela. August 28, 2005.
45. EcoPetrol and PdVSA are also jointly exploring the construction of a pipeline that would take Colombian gas from Guajira to Maracaibo, with the option of reversing the flow at a later point in time.
46. In addition to the costs and time delays involved in using the Panama Canal, size limitations of the canal’s locks require the use of tankers of limited size, which are ultimately less economical in the long transit across the Pacific Ocean.
47. See “Uribe visita Pekín.” BBCMUNDO.com. January 27, 2006. Progress on realizing the pipeline project was put on hold in 2005 when Colombian agents allegedly violated Venezuelan sovereignty by kidnapping a sought-after figure in the Fuerzas Armadas Revolucionarios de Colombia (FARC) in Caracas and returning him to Colombia.
48. “Congress passes hill to build Tacna megaport – Bolivia, Peru.” Business News Americas. February 27, 2006. The discusión of Chinese investment in Peruvian port infrastructure was one of the objectives of Peruvian president Alejandro Toledo when he visited China in May 2005. El Comercio.com. Lima. Peru. January 26, 2006.
49. Entities which are currently “pre-qualified” to bid on the El Mutún concession: the Argentine group Techint, the British-Holland group Mittal Steel Group, the
50. Brazilian EBX Siderurgica, the Indian group Jindall Still and Power, and the Chinese firm Luneng Shandong. See “Techint, en espera de un yacimiento en Bolivia.” La Nacion.com. February 20, 2006. See also “Bolivia, Seeking to Process Ore, Shelves Mine Auction (Update 1). Bloomberg.com. February 17, 2006. See also “El Mutún desata polémica por licitación postergada.” El Diario. January 8, 2006.. “Petrolera China Compra 45% de PlusPetrol. Red Latinoamérica Sobre Industrias Extractivas y Desarrollo Sostenible. http://biblioteca.unmsm.edu.pe/Redlieds/. February 2, 2004.
51. Peruvian natural gas production rose 76% over 2005, and another 32% in January 2006, principally due to the contributions of PlusPetrol and production from Camisea, which came on-line in August 2004. See “Producción de petróleo y gas subieron durante enero.” El Comercio.com. February 16, 2006. PlusPetrol has a 26% participation in Camisea. “Petrolera China Compra 45% de Pluspetrol.” Red Latinoamericana sobre Industrias Extractivas y Desarrollo Sostenible.” http://biblioteca.unmsm.edu.pe/redlieds. February 4, 2006.
52. “EnCana closes US$1.42bn asset sale to Andes Petroleum – Ecuador.” Business News Americas. February 28, 2006.
53. “China oil firm buys EnCana assets in Ecuador.” China Daily. September 15, 2005.
54. “Hidrocarburos en América Latina.” BBCMUNDO.com. January 27, 2006.
55. See “Evo destaca lazo ideológico con China y Hu ofrece inversiones.” El Mercurio.com. Santiago, Chile. January 10, 2006. See also “Chinese state councilor, Bolivian president-elect vow to enhance economic cooperation.” People’s Daily Online. Beijing, China. January 10, 2006.
56. In initial talks with former Bolivian president Carlos Mesa, a “minimum” figure of $3.5 billion over 40 years was promised. In September 2004, Shengli International and
57. “Huangi planea construcción de planta de conversión de gas a combustibles
líquidos para $600 mil.” El Universal. Caracas, Venezuela. January 10,
58. ”Bolivia invites China to develop gas reserves.” LatinPetroleum. www.LatinPetroleum.com. January 10, 2006.
59. “Minmetals Deals With Chile.” Finance Markets. Financemarkets.co.uk. May 31, 2005. See also Financemarkets.co.uk. May 31, 2005. See also Paul Denlinger, “Baosteel Moves To Secure Brazilian Iron Ore Sources.” China Business Strategy. February 2004.
60.“China Minmetals Seeks Iron Ore JV with CVRD.” Skillings Mining Review. September 30, 2005.
61. “Brazil steel company eyes China deal.” China Economic Net. http://en.ce.cn. January 10, 2006.The agreement included a $1 billion joint venture for the construction of a gas pipeline linking southern and northeastern Brazil. John Price. “Latin America Plays the 62. China Card: Is it Holding a Winning Hand? Tendencias. No. 58. December 12, 2005.
63. Sam Logan and Ben Bain, “China’s Entrance into Latin America: A Cause for Worry?” Americas Program, International Relations Center. August 24, 2005.
64. China’s recent contract for the shipment of diesel electric locomotives to Cuba, including participation of the Chinese logistics firm Sinotrans, was seen as a launching point for the future Chinese participation in the upgrade of Latin America’s railway networks. “China logistics firm enters Latin America.” China Economic Net. http://en.ce.cn.work. February 15, 2006.
65. Rodrigo Cárdenas. “Codelco-Minmetals: se sella pacto con cambios en el precio.” El Mercurio.com. Santiago, Chile. February 23, 2006.
66. “Chile y China sellan acuerdo cuprífero.” AméricaEconomía.com. February 23, 2006.
67. See Rodrigo Cárdenas. “Licitación de Gaby estará lista a inicios de 2008.” El Mercurio.com. Santiago, Chile. February 23, 2006. The option to purchase an interest in Gaby was controversial because Chilean law generally does not permit foreign ownership in domestic mining operations. The option to sell China an interest in Gaby was taken off the table for some time, although it was ultimately included. See “Opción a licitar el 25% del deposito Gaby a Minmetals se encuentra en revisión.” El Mercurio.com. Santiago, Chile. 12 February 2006. See also “Chile y China sellan acuerdo cuprífero.” AméricaEconomía.com. 23 February 2006.
68. Hisparsa’s holdings include the Sierra Grande iron ore mine in the southern part of the country with 250-300 million tons of estimated reserves. The contemplated Sinosteel investment World be made in cooperation with the company A Grade Trading. “Sinosteel, A Grade Trading mull joint Hiparsa investments – Argentina.” Business News Americas. February 27, 2006.
69. John Price. “Latin America Plays the China Card: Is it Holding a Winning Hand? Tendencias. No. 58. 12 December 2005.
70. Jane Bussey, “China’s New World trade coveted, feared.” The Miami Herald.com. September 26, 2005.
71. The investment will ultimately duplicate production of nickel and cobalt from Cuban mines in the next four years. “Cuba entre China y Venezuela” BBC Mundo. January 27, 2006. See also “Transnacional minera china busca alianza de largo plazo con Cuba.” Cubanet. Havana, Cuba. November 29, 2004.
72. “China Seeks More Influence in Latin America, Stat’s Noriega Says.” U.S. Department of State. http://usinfo.state.gov. April 6, 2005.
73. See “China seguirá buscando lazos con Centroamérica.” El Universal.com. Caracas, Venezuela. December 29, 2006.
74. PRC Panama Canal properties are owned by the Chinese firm Hutchison-Whampoa, which allegedly has ties to the People’s Liberation Army (PLA). See Guillermo R Delamer., Jorge Eduardo Malena Goldstein. And Gabriela E. Porn, "Chinese Interests in Latin America." In Latin American Security Challenges: A Collaborative Inquiry from North to South. Newport Papers #21. Paul D. Taylor, Ed. Newport, RI: U.S. Naval War College. Newport, RI, 2004. p. 88.
75. The project would increase the capacity of the pipeline from 100,000 to 800,000 barrels per day. See Yolanda Ojeda Reyes “Aspiran Abaratar Envío de Crudo a China.” El Universal.com. Caracas, Venezuela. December 30, 2004.
76. CNPC-Alberta Petroleum Center. Official Website. http://www.capcbj.com.cn/capc/index.htm. March 1, 2006.
77. “CNPC trains its Sights on Canada pair.” Upstream Online.com. February 24, 2006.
78. As Evo Morales put it in defending his visit to China, “Today, the world is characterized by a triad--the United States, the European Union, and Asia…and the only thing that we are doing is read the reality and have contact with those different countries.” Antonio Broto. “Evo Morales Elogia a Mao y pide a China que invierta en Bolivia.” Nacion.com. San José, Costa Rica. January 8, 2006.
79. Indeed, the relationship with China may be understood as part of a highly symbolic leftist discourse that legitimizes their power. Statements by Hugo Chavez such as that “Simon Bolivar was a Maoist,” or the admiration expressed by Evo Morales for Mao Zedong during his January 2006 trip to China, must be understood in this context. See Antonio Broto. “Evo Morales Elogia a Mao y pide a China que invierta en Bolivia.” Nacion.com. San José, Costa Rica. January 8, 2006. Morales further declared “China is a political, ideological, and programmatic ally of Bolivia.” “Morales: Bolivia y China son aliados ideológicos” El Universal.com. January 10, 2006. See also “Evo destaca lazo ideológico con China y Hu ofrece inversiones.” El Mercurio.com. Santiago, Chile. January 10, 2006.
80. See, for example, José Toro Hardy, “Ni un barril más para EEUU.” El Universal.com. Caracas, Venezuela. May 10, 2005.
81. Toro Hardy, the former director of the Venezuelan oil refining and distribution company Citgo, points out that if Venezuela were to stop selling oil to the United States, as it has threatened, it would simply be destroying its own company. Greg Flakus, “China Looks to Latin America for Potential Oil Supplies.” Energy Bulletin. Epoch Times. October 3, 2004.
82. “Sector energía es una de las ambiciones de China en Bolivia.” El Universal. Caracas, Venezuela. January 10, 2006.
83. This advantage is unlikely to disappear for two reasons. On one hand, although labor costs in China’s coastal provinces are rising, the country retains a vast untapped pool of low-cost labor in the interior. At the same time PRC labor productivity is growing, due to high rates of capital investment. Eduardo Lora. Should Latin America Fear China? Inter-American Development Bank. May 2005.
84. “Detectan en Lima artesanía peruana clonada en China.” El Comercio.com. November 4, 2005.
85. Jane Bussey, “China’s New World trade coveted, feared.” The Miami Herald.com. September 26, 2005.
86. The agreement, which was formally signed at the 2005 APEC summit in Pusan, Korea, will initiate a gradual tariff reduction process on July 1, 2006. “President Hu calls for removal of trade barriers.” China Economic Net. http://en.ce.cn. November 19, 2005.
87. A November 2004 study by researchers from the Argentine bank BBVA, for example, found that Mexico and Brazil had export structures that put them in acute competition with the Chinese across a range of sectors. See Jorge Blazquez-Lidoy, Javier Rodriguez, and Javier Santiso. “Angel or Devil? Chinese Trade Impact on Latin American Emerging Markets.” BBVA. November 2004.
88. See Peter Hakim, “Is Washington Losing Latin America?” Foreign Affairs. January/February 2006. Vol. 85, Number 1. p. 46.
89. “Gobierno impuso salvaguardia temporal a las importaciones de ropa interior china.” El Tiempo.com. Bogotá, Colombia. February 10, 2006.
90. “Exportaciones crecieron 26.6% durante el año 2005 alcanzaron US $21.187,2 millones.” El Tiempo.com. Bogotá, Colombia. February 15, 2006.
91. See, for example, “Magic, or Realism?” The Economist. January 1, 2005. p. 26.
92. China Shougang International Trade and Investment Corporation website. http://www.zs.com.cn/en/abroad/peru.htm. March 1, 2006.
93. Robin Emmott. “Peru miners feel oppressed by China’s Shougang.” Reuters. July 21, 2005.
94. “China steel prices finally showing signs of recovery.” Business China.com. January 24, 2006.
95. “China avanza para abastecerse de energía.” El Universal. Caracas, Venezuela. January 16, 2006.
96. “Demanda del Cobre Crecería un Moderado 4.2% en 2005.” Red Latinoamericana sobre Industrias Extractivas y Desarrollo Sostenible.” http://biblioteca.unmsm.edu.pe/redlieds. January 2, 2005.
97. “Copper Bubble Feared.” Behre Dolbear Global Mining News. November 7, 2005. Issue 70.
Dr. Evan Ellis is an Associate with Booz Allen Hamilton, Inc., with an
emphasis on Latin American security issues, wargaming, and military and
business simulation. Dr. Ellis’ work includes studies of the strategic
implications of Chinese trade and investment initiatives in the region, as
well as system dynamics-based studies of democratic security in Colombia,
political mobilization in Venezuela, and the business processes of various
public and private organizations in the region. Dr. Ellis has also
performed tool-supported seminar games for a number of business and
military clients, including National Defense University, the Office of the
Secretary of Defense for Net Assessment, the Naval Undersea Warfare
Center, and the Federal Aviation Administration.
The conclusions and opinions expressed in this document are those of the author cultivated in the freedom of expression, academic environment of Air University. They do not reflect the official position of the U.S. Government, Department of Defense, the United States Air Force or the Air University
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