Global Watch | Why China’s growing influence in Latin America should be cause of global concern

Honduras, a Latin American country, has recently announced that it is breaking diplomatic ties with Taiwan as it no longer recognises the latter as an independent country and it supports the controversial ‘One China’ policy. Under the ‘One China’ policy, the Chinese Communist Party (CCP) has been working to increase its sphere of influence massively and gobble up independent countries like Taiwan. It has already ensured that now Taiwan is officially recognised by only 13 countries in the world. Out of these 13 seven are in Latin America. Thus, this is a crucial region for China where it is flexing its economic muscle to compel small and developing nations to break ties with Taiwan and accept Chinese hegemony. Before Honduras, Panama (2017), El Salvador (2018), the Dominican Republic (2018), and Nicaragua (2021) succumbed to the Chinese pressure and severed their diplomatic ties with Taiwan. The recent development should send the alarm bells ringing as Honduras might be a small country but there is a clear indication that China has now a strong presence in Latin America and the United States has failed to counter it. The Chinese market accounted for less than 2 per cent of Latin America’s exports in 2000. From 2000 to 2010 China-Latin America trade grew at an average annual rate of 31 per cent, reaching a value of $180 billion in 2010. By 2021, this trade had touched $450 billion. According to estimates of various experts this figure could exceed $700 billion by 2035. At present China is the second-largest trade partner for Latin America as a whole. The largest trade partner is the United States but it could soon be left behind with China moving towards controlling governments of many countries in the region. The pattern of trade clearly indicates that China is colonising Latin American countries (LAC). The exports from Latin America to China primarily consist of oil, petroleum, copper, soyabeans, minerals and other raw materials to support Chinese industrial development. The Chinese exports to this region consists of manufactured products having a much higher price. The Chinese imports have also destroyed the local industries as Chinese have undercut them with predatory pricing. According to a US Congressional Research Service Report in December 2022, “China’s imports from LAC amounted to $221 billion in 2021, consisting primarily of natural resources, including ores (42%), soybeans (16%), mineral fuels and oils (10%), meat (6%), and copper (5%). China’s exports to the region in 2021 amounted to $227 billion, with major exports including electrical machinery and equipment (21%), machinery and mechanical appliances (15%), and motor vehicles and parts (7%)." China has become the top trading partner of Brazil, Chile, Peru, and Uruguay and the second largest trading partner for many other countries. China has free-trade agreements with Chile, Costa Rica, and Peru and it announced an FTA with Ecuador earlier this year. Next on the block is Uruguay. At least 20 Latin American countries have also signed on to China’s controversial and hegemonic Belt and Road Initiative (BRI). The Chinese presence in Latin America has grave implications for not only world peace but also for global business as Latin America houses some of the biggest oil reserves in the world. The region also has huge iron ore reserves and plenty of other minerals and natural resources which would be monopolised by the Chinese and exploited to the hilt. A number of Latin American countries have already taken huge debts from China and could soon be following in the footsteps of Sri Lanka. The state-owned China Development Bank and the Export-Import Bank of China together loaned around $137 billion to LAC between 2005 and 2020. This debt is given in the garb of funding mega energy and infrastructure projects in this region. Venezuela, which also has some of the biggest oil reserves in the world, is already in the debt trap as it is the biggest borrower with a Chinese debt of more than $62 billion piled up since 2007. China made the first big foray in the region in 2006 when it signed the first FTA with Chile. Since then it has expanded its presence rapidly across the region. According to a Council of Foreign Relations (CFR) report (China’s growing influence in Latin America), “While Chinese loans often have fewer conditions attached, dependence on them can push economically unstable countries such as Venezuela into what critics call “debt traps” that could result in default. Critics also say that Chinese companies bring lower environmental and labour standards, and they warn that China’s growing control over critical infrastructure such as energy grids poses national security risks. There are also fears of economic dependency in countries such as Chile, which sent nearly 39 percent of its total exports to China in 2020.” Incidentally, there is a misconception that the Chinese interests in LAC are limited only to the economic sphere. The Chinese interests go much beyond the economic interests. According to the CFR report, “Venezuela became the region’s top purchaser of Chinese military hardware after the U.S. government prohibited all commercial arms sales to the country beginning in 2006. Between 2009 and 2019, Beijing reportedly sold more than $615 million worth of weapons to Venezuela. Bolivia and Ecuador have also purchased millions of dollars’ worth of Chinese military aircraft, ground vehicles, air defence radars, and assault rifles. Cuba has sought to strengthen military ties with China, hosting the Chinese People’s Liberation Army for several port visits.” According to a Centre for International Maritime Security(CIMSEC) report, “China’s military influence in Latin America is mainly through soft power, not physical presence. China has fostered significant military relationships through arms sales, exchange programs, and training engagements. China has found a fruitful market for arm’s sales in Latin America… Military sales may have started as simply small arms, but China’s expansion in this market now includes ‘aircraft, armoured vehicles, and radars’. But these sales are not simply about the equipment; the sale is just the beginning of a relationship. Opportunities for training and maintenance follow each transaction — leading to greater interaction between these countries, their militaries, and China. As these deals continue to grow, Chinese personnel and military bases in the region could follow. “China has also made major inroads with Latin American militaries through professional military education (PME) programs and exchange officer programs of significant scale. These programs steep Latin American service members in Chinese military and political doctrine and anti-US sentiment, while creating stronger relationships between the respective country and China. To attract military talent to these programs, China has also offered perks to Latin American military personnel. China will pay for business-class travel for exchange students, provide five-star hotels, and pay for other expenses while they live in China.13 Since 2015, China has trained more Latin American military officers than the United States, and the difference has grown every year since.” India and Latin America India, it seems, is also recalibrating its Latin America policy. External Affairs Minister S Jaishankar visited Argentina, Brazil and Paraguay from 22 August to 27 August last year. It was the first trip of an External Affairs minister in the region after 2003. Speaking at an event in Delhi in February 2023, Jaishankar reiterated that LAC is a high priority region for India now. The trade between LAC and India stands at around $50 billion and 15 percent of India’s energy requirements are fulfilled by this region. Under the Modi government, India has strengthened its presence by opening resident missions in Paraguay and Dominican Republic. But much more needs to be done to counter the Chinese influence in the region as the reckless Chinese policies would surely wreck the LAC in the next few years. And this will have grave implications for the rest of the world. At present, it appears that the road ahead for the LAC is full of Chinese potholes. The writer, an author and columnist, has written several books. His latest book is ‘Taliban: War and Religion in Afghanistan’. He tweets @ArunAnandLive. Views expressed are personal Read all the Latest News , Trending News , Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook , Twitter and Instagram .