By Dr Aparaajita Pandey
The recent wave of Free Trade Agreements or FTAs are more than just a sum total of the past few years, one should see these as a manifestation of the constant endeavour by China to create a larger presence in Latin America and the Caribbean (LAC). In the recent past China has signed a slew of FTAs with Latin American and Caribbean nations with the most recent one being an FTA signed with Ecuador. The doors that these FTAs open for the already burgeoning trade between China and the LAC would lead not only to even more robust paths of financial transactions between the two regions, it would also indicate a deeper cementing of the relationship between LAC and China, as well as greater Chinese presence in not just the economic facets but also the political and gradually social realm of the of the Latin America and the Caribbean.
It is also important to note that while commonsensical notions about the geographical distance between Latin American and the Caribbean, and China would suggest that deep historical ties between the two are unlikely, the truth could not be farther away. The links between the two regions date back to the sixteenth century, these linkages were also of an economic nature. The Manila Galleon Trade Route which is based on the exchange of porcelain, silk, and spices among other sought after luxuries. This is the part of the ancient trade routes that China is attempting to revive once again including the silk route across Europe and Asia, and the maritime trade route around the proverbial old world. This is bolstered by the strong people-to-people connection between the Chinese people and their descendants as well as diaspora in the LAC region. At the moment, the largest number of Chinese immigrants live in Peru and a significant number have also settled in Brazil, Cuba, and Mexico. While these migrations started with the Chinese ‘coolies’ or indentured labour, they are now a significant part of the Latin American society. The present day Chinese administration is also trying to strengthen these cultural ties by endeavors like the Confucius Centres.
While the Chinese share in the LAC market was just 2 per cent in the early 2000s, by 2010 it had increased to about 180 million USD which was a 31 per cent jump and by 2021 it was 450 million USD and is estimated to touch 750 million USD by 2035. This trend is supported by the extremely deep pockets that China offers to most LAC nations, which also come with minimal regulations and prerequisites. Such lucrative offers on key infrastructural projects are neither easy to procure for countries of the LAC region nor are they easy to refuse. It has been opined by LAC states that the perception of China is not less than predatory, and the debt trap is often apparent with a business deal with the Chinese, it is often ignored due to the ready availability of the enormous cash flow. This can be seen as one of the reasons behind no less than 20 nations of the region becoming a part of the BRI, and with Lula supporting the Belt and Road Initiative, it is not unreasonable to believe that more nations would join in the future.
At the moment China has outwardly shown very little interest in the domestic politics of the Latin American nations, which is quite a departure from the usual American way that LAC is most familiar with when it comes to relations with powerful countries. The LAC nations gravitating towards China are also reminded of the commodity boom that was initiated by China and resulted in significant economic growth for LAC nations. However, the growing Chinese control over key sectors is concerning for anyone who has been keeping track. Energy, Infrastructure, and Space are all sectors that see an overwhelming presence of China and Chinese corporations. China has invested about 73 million USD in the Latin American raw material sector including traditional oil and gas, and the new age Lithium. It’s a pattern that is akin to the Chinese investments in Cobalt in Africa. Infrastructural projects like electricity grids and dams across LAC have the Chinese stamps over them. Such dependence on China is a national security threat to any country and the same is true for LAC nations.
A very clear ramification of this extreme dependence on China is the Chinese coercion of LAC nations to shun their support to Taiwan and adopt a one – China policy and this coercion has already started to work in some countries. Growing Chinese presence has also been irksome for the US and the US is reacting using rhetoric, as well making its presence felt in the Indian Ocean.
In spite of the obvious pitfalls, it seems like the trend of more China in LAC will continue for the foreseeable future. It will be interesting to see if LAC can defend its political and economic independence.
The author is an independent political analyst and has a PhD in Latin American Studies from Jawaharlal Nehru University.
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