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usip.org/publications/2022/08/chinas-engagement-latin-america-views-region
China’s economic and political engagement in Latin America grew significantly in the first
part of the 21st century. And yet, Latin American reporting on China has not grown apace.
Too few Latin American journalists cover Chinese activities in the region and even fewer
foreign correspondents from Latin America report on developments in China. This
knowledge gap means journalists struggle to provide proper context for major trade and
investment deals and are unprepared to investigate when scandals erupt. Latin American
media outlets often lack the capacity or resources to cover foreign affairs in general, much
less the geo-political repercussions of China-Latin American relations.
An aerial view of the Coca Codo Sinclair project near Reventador, Ecuador, Nov. 25, 2018. China financed
and built the dam; the project has become a national scandal. (Federico Rios Escobar/The New York
Times)
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The reality is that in the Americas — as elsewhere — all politics is ultimately local. The
following presents the perspectives of one academic and four journalists on the challenges of
understanding and responding to China’s increasingly complex relationships in the region.
The establishment of formal diplomatic relations has been of critical importance for building
the appropriate grounds to move toward the development of other ties.
This created the conditions for China and Latin American to start trading with each other
and then, in some cases, in the establishment of free trade agreements like the ones with
Chile (2005), Peru (2009) and Costa Rica (2010). Based on World Economic Forum’s
figures, trade between China and Latin America grew 26-fold between 2000-2020 (going
from $12 billion to $315 billion); and is expected to more than double by 2035, reaching
more than $700 billion.
The contracts are so complex that they involve four or five parts: the Chinese bank, the
Chinese petroleum company, the Finance Ministry of Ecuador, the Ecuadorian petroleum
company and, eventually, the Central Bank of Ecuador. To comprehend this structure, not
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only is a background in finance needed, but in international trade of crude also, as it is a very
technical issue. Finally, the lack of knowledge on China is generalized in Latin America, as we
do not know how that state works, how its control institutions operate, how the decision
makers approve their operations, and so forth. All these difficulties must be overcome to
ensure that the relationship between China and Latin America develops in a strict democratic
environment.
More specifically, Sino-Brazilian relations have become more complex over the last decade,
entering a new phase with the election of President Jair Bolsonaro and the onset of the trade
war between China and the United States. China has deepened sub-national level relations
through parliamentary exchanges and building relationships directly with governors and
mayors. State-level connections with China ended up playing a crucial role in negotiating
medical supplies and Chinese vaccines during the pandemic, despite opposition at the federal
level.
China has published two policy papers on Latin America, which identify areas of potential
cooperation with the region, with public health being the most relevant one amid the
pandemic. A dozen countries in Latin America have signed vaccine contracts with China,
which also distributed medical equipment. Another key factor in understanding the
relationship centers on financing. In recent years, Chinese banks have increased lending to
Latin American governments. Up to 2020, the China Development Bank and the China
Export-Import Bank had granted 94 loans in the region to the tune of $137 billion, for
example. Looking ahead, China will continue to have a strong role as an investor and trade
partner to Latin America. It will be interesting to see how the relationship shapes up amid
climate change and biodiversity commitments, with China already discussing approaches on
how to green its BRI investments.
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Nicaragua: Javier Meléndez, Expediente Público
In the last 10 years, the presence of China in Latin America has increased exponentially. For
some countries, Chinese influence has meant opportunities to diversify markets and increase
exports. However, for other countries, such as Bolivia and Ecuador, China has left in its wake
a legacy of excessive debt and losses of tens of billions of dollars that have favored corrupt
elites and left countries at the mercy of their Chinese creditors. In Central America, the
presence of China presents a credible security threat for the region and the United States in
the form of a platform that exacerbates corruption and works against the overall prosperity of
countries.
Costa Rica (2007) and Panama (2017) were the first Central American countries to break
diplomatic relations with Taiwan to establish themselves as partners of the Chinese. Later, El
Salvador (2018) and Nicaragua (2021) joined Panama and Costa Rica in breaking ties with
Taiwan. For Costa Rica, Panama, and, at the beginning, El Salvador, the goal of relations with
the Chinese was to improve trade relations and expand traditional markets. But Nicaragua is
another story. Chinese relations are an explicit effort to increase ideological pressures and
confrontations with the United States. Since 2019 with the rise of Nayib Bukele as president,
El Salvador has followed a similar path.
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