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Expert Commentary

Strengthening America's Adversaries


September 30, 2015 | Dr. Evan Ellis

The Cipher Brief spoke to R. Evan Ellis, a professor


at the U.S. Army War College, who said that while
China does not directly challenge U.S. interests in
Latin America, it in essence underwrites rogue
regimes in the region that are opposed to U.S.
policies.
The Cipher Brief: What are Chinas strategic
interests in Latin America? Does this pose a
threat to U.S. foreign policy objectives in the
region?

Evan Ellis
Professor, U.S. Army War
College

Dr. Evan Ellis: Chinas interests in the region are


primarily economic in nature, but this does not make
them any less strategic, nor any less impactful for
the region or the position of the United
States. These interests include:

Reliable access to primary products, such as petroleum, minerals, and metals to


feed the Chinese demands for industrial production, capital formation, and
urbanization

Access to agricultural goods (principally animal feed such as soybeans and


fishmeal) to help the PRC feed its 1.35 billion people

Markets for Chinese goods and services, particularly as PRC-based companies


move up the value-added chain

Access to technology in order to achieve Chinese industrial competitiveness,


particularly in strategically valuable industries, such as defense, electronics, and
aerospace, and indirectly, to support a strong state with a diversified economic
base

The pattern of Chinese engagement has facilitated an increase in Latin American


commodity exports in recent years while simultaneously undercutting manufacturing in
the region (including competition for exports to traditional markets, such as the United
States and Europe). As a result, Chinese engagement has increased the regions
concentration on low value-added primary product sectors, leaving it more vulnerable to
falling international commodity prices.
While the PRC is careful not to directly challenge U.S. interests in Latin America, its
commodity purchases from, loans to, and investments in the region have sustained the
life of regimes that are opposed to U.S. policy objectivesin areas such as democracy
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and human rights, transparency and good governance, and respect for private property
and contracts.
Indirectly, Chinese money has helped weakened the accountability of populist leaders
of regimes, such as Venezuela, to their institutions and populations, short-circuiting
corrective mechanisms in those countries, where, under normal circumstances, leaders
exercising poor governance and unsustainable policies are reined in by their own
people and institutions. By helping to decouple populist leaders from the short-term
consequences of their policies, Chinese commodity purchases and loans have
increased the risk of profound crises within those regimes. These not only prejudice
their own people, but Chinas willingness to cash in on the desire of such regimes to
escape from Western norms of democratic controls and good governance, contributes
to the insecurity of the neighbors of these regimes, and to insecurity and stability of the
region as a whole. This can be seen by the increasing use of Venezuelan territory as a
drug transit corridor, the border crisis that Venezuela has manufactured with Colombia,
and Venezuelas sending of troops into Guyanese territory.
At the end of the day, it is the United States, whose fate is bound to the region by ties of
geography, economy, and family, which is prejudiced by such hemispheric insecurity,
rather than China, half a world away.
Beyond its underwriting of rogue regimes in the region, Chinas choice to use the
Community of Latin American and Caribbean States (CELAC) as its vehicle of choice
for multilateral engagement with the region, supports efforts by the ALBA states (a Latin
America regional bloc) and independent actors, like Brazil, to disempower multilateral
institutions, such as the Organization of American States (OAS), undercutting the voice
of the U.S. and Canada in regional affairs.
Furthermore, should the current competition between the PRC and the U.S. give rise to
a conflict in the future, it is likely that the PRC would not resign itself to allowing the U.S.
to conduct such a fight as an away game. Rather, it would use its economic leverage
and global assets (including commercial assets in Latin America and the Caribbean) as
part of the struggle.
Such actions might include, but are not limited to: using Chinas economic influence to
block states in the hemisphere from providing diplomatic, intelligence or other support to
a coalition opposing the PRC in Asia; using Chinese commercial assets to introduce
and sustain agents in the region to conduct intelligence or other operations against the
U.S. and its allies; and in extreme cases, combining knowledge gained from its ongoing
military activities in the region with that obtained from Chinese commercial companies
operating in the region for staging or resupply, if invited to do so, in the course of a U.S.China conflict.
TCB: What makes Chinas activities in Latin America different from other outside
actors in the region? How much of an impact have those differences had?

https://www.thecipherbrief.com/article/strengthening-americas-adversaries

REE: While China has not used its presence in the hemisphere to challenge the United
States in the same manner as extra-hemispheric actors, such as Russia and Iran, its
engagement is far larger and more broadly distributed across countries and sectors
than these other actors. Simply put, Latin American and Caribbean politicians and
businesspeople do not dream of access to vast markets in Russia or Iran in the same
way that they hope to gain access to the demand of one billion Chinese consumers, or
to the loans and investment of the Chinese state.
On the other hand, while other actors, such as Japan, South Korea, and the European
Union do have an important trade and investment presence in Latin America and the
Caribbean, these states do not challenge investment and financing norms, or turn a
blind-eye to violations of intellectual property and environmental norms, in the way that
China does with its companies.
TCB: Has China focused on some countries in Latin America more than others?
REE: China has applied a policy of flexible engagement with the region, pursuing
relations with each country according to the opportunities and constraints of its
governments prevailing ideology and the nations institutions.
In general, the PRC has concentrated the majority of its loans in Argentina and the
ALBA countries, because these regimes have had the greatest need and desire to
escape from dependence on Western institutions and replace them with alternate
sources of capital.
Yet China has also focused its manufacturing investment disproportionately in large
mixed-market countries, such as Brazil (which offers an enormous internal market and
access to other countries through MERCOSUR) and Mexico (with both a vibrant internal
market and access to U.S. and Canadian markets through NAFTA).
TCB: How has increased Chinese investment and influence changed the U.S.
relationships with countries in the region? Should the U.S. view this as a zero
sum game?
REE: In the short term, Chinese commodity purchases, loans, and investments have
sustained the lives of the ALBA regimes and, in the process, the continuing hostility of
their governments to the United States.
Yet Chinese money has also provided enhanced economic and political options for
other states in the region, re-orienting that subset of pragmatic political figures in the
region who once supported U.S. policies out of a calculation of interest, and leaving
behind a diminished pool of true believers; those who believe that alignment with the
U.S. and pursuit of the values that it represents--western-style representative
democracy, individual human rights, respect for private property, and a market-based
concept of economic organizationis the best way to achieve broad-based prosperity,
development, and human dignity in their countries.

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Despite the erosion of the U.S. position in the short term, however, the impact of PRC
engagement over the long-term in the region may be more benign. Ironically, even
without a strong U.S. response, accumulating frustration in the region with the behavior
of Chinese companies, the inability to secure access to the Chinese market comparable
to the access gained for Latin American products in the U.S. and Europe, and
increasingly stark examples of China-financed populist socialism, help the region to
temper some of its harsher judgments of U.S. shortcomings.
TCB: How do you see Chinese influence in the region changing in the near
future?
REE: Short of an economic and political collapse in China, the attractiveness of the
PRC as a partner will probably decrease in the coming years.
While Chinese companies will become more adept at doing business in Latin America
and the Caribbean, decelerating demand for primary products from the PRC will lower
international commodity prices and thus decrease the value of Latin American exports
to China, deepening hardship in the region.
Such decelerating Chinese commodity demand will also likely lead to delays in some
investment projects in the petroleum and mining sectors by those Chinese firms who
can do so without losing their concessions, further souring the relationship between the
PRC, and Latin American and Caribbean governments. At the same time, delays in the
take-off of Chinese consumer demand, and the evaporation of opportunities for
construction and other investment projects in the PRC, will likely push Chinese banks,
construction companies, and manufacturing firms to more aggressively pursue markets
in Latin America and the Caribbean, increasing competition with Latin American
counterparts at a time in which the regions economy is stagnant, due in part to other
aspects of the Chinese slowdown.
On top of such factors, to the extent that Chinas aggressive behavior in the South and
East China Seas continues, it may undercut some of the appeal that the PRC has
sought as a benevolent global actor. While fear of offending China, hopes of profiting
from it, and a general lack of knowledge will likely suppress the explosion of negative
sentiments toward China in the region, the disposition of the region towards
China, Latin America, Extractives

The Author is Evan Ellis


Dr. Evan Ellis is a research professor of Latin American Studies at the U.S. Army War
College Strategic Studies Institute with a focus on the regions relationships with China
and other non-Western Hemisphere actors. He has published over 120 works,
including the 2009 book China in Latin America: The Whats and Wherefores, the 2013
book The Strategic Dimension of Chinese Engagement with Latin America, and the
2014 book, China on the Ground in Latin America.