Less than five years ago, few analysts could have predicted China’s role in the global economy would be as significant as it is today. But the economic recession has helped to catapult China into becoming an engine for global economic growth.
China’s growing influence in the world—and particularly in Latin America and the Caribbean—is currently the source of much debate in Washington. (In fact, a Fall 2009 AQ book review on this very topic has already generated two Letters to the Editor.) Some worry that Beijing is trying to undermine U.S. influence in the region, while others see China’s interest in our hemisphere as merely a reflection of its drive for a bigger piece of the world’s economic pie.
China has quickly become one of the region’s most important trading partners. In 2009, it overtook the United States to become the top trading partner of both Brazil and Chile. Beijing also has free-trade agreements in force with Peru and Chile and is currently in negotiations with Costa Rica. A bilateral investment treaty was signed with Colombia on the sidelines of the 2008 Asia-Pacific Economic Cooperation (APEC) Leaders’ Meeting. Later this month, Bogota will host the third China-Latin America Business Summit, a meeting with more than 1,000 investors expected to attend.
As Latin America actively seeks to diversify its trading partners, China’s growing market presents one of the best opportunities. Politically, its hands-off, non-interventionist approach to engagement has also generated goodwill. But regional leaders should not kid themselves: Beijing’s priorities are with its own domestic development. Engagement with Latin America and the Caribbean is limited to viewing the region as a potential export market for manufactured goods and as a source of natural resources to fuel its own development. For China, economic growth can even trump human rights and environmental concerns, leading to questions as to whether growing ties will actually further the region’s inclusive growth agenda.
China’s focus on economic growth can be tied to communist party leader Deng Xiaoping’s proclamation in 1978 that “to get rich is glorious.” Unlike the United States, most Chinese foreign direct investment comes from state-owned enterprises—entities not constrained by the political or financial risks of a publicly-traded company, including potential transgressions that may occur in the course of doing business. In Africa, for example, China’s dealings have fallen under criticism for undermining human rights and good governance.
Although China provides Latin America with an enticing opportunity to diversify trade beyond a historical focus on the United States, caution should be exerted. Regional development will not be strengthened by merely becoming a source for raw commodity exports to China. Instead, investment terms should include a demand that the Chinese also help to support the development of high-technology, innovative sectors such as telecommunications and infrastructure.
Many Latin American countries have too often allowed development to be tied to the primary needs of more industrialized countries. Now is the time for leaders to step up and insist that China’s engagement in the region ultimately leads to positive economic development for all citizens.
*Michelle Morton is a guest blogger to americasquarterly.org. She is Director of Trade Policy and Public Affairs for the Council of the Americas in Washington DC.