The new face of China in Latin America
Yet as countries in the region make official statements in favor of the BRI, there has been some confusion about what it really means to ‘join’ or be part of the initiative.
“This is how China brings order and coherence to its foreign policy. It represents its strategy towards the world,” said Ricardo Barrios, researcher in the Asia and Latin America program of the Inter-American Dialogue. “For China, Latin America is an indispensable participant in the Belt and Road.”
During the II Ministerial Meeting of the China-Community Forum of Latin American and Caribbean States (CELAC), held in January 2018 in Santiago, Chile, the group approved a special statement on the BRI. The move marked a diplomatic victory for China in the region.
It was one thing when it was limited to Europe and Asia, now that it includes Latin America, it’s different
However, challenges for China’s foreign policy in Latin America remain. The biggest economies – Argentina, Brazil and Mexico – have yet to sign any BRI deals, which the Chinese government will find “boring,” according to Barrios.
“Chile is the only one of the biggest economies to have signed,” said Barrios. The reason, he added, is that the United States has discouraged Latin American countries from cooperating more closely with China, saying it is not transparent about its loans and burdens recipients with unmanageable debt.
“It was one thing when it was limited to Europe and Asia, now that it includes Latin America, it’s different,” Barrios said of US concerns about the BIS.
Looking for funding
Latin American countries that have already signed BRI agreements hope this will provide funding for energy, roads and ports, among other benefits. However, countries like Venezuela and Ecuador have borrowed heavily from China and, mired in economic turmoil, serve as a warning to others.
China also seems wary of lending to Latin America indefinitely. Chinese state-owned banks have lent the region US $ 140 billion since 2005, according to the Inter-American Dialogue and Boston University. However, funds have fallen consecutively over the past three years.
Over the next 20 years, Latin America will invest US $ 2 trillion in transport and energy, according to the Inter-American Development Bank. The region expects China to continue investing through the BRI.
“China’s economic power is linked to its financing capacity and the importance of its companies, which are gaining a lot of experience in Latin America,” said Sergio Cesarín, coordinator of the Center for Asia Pacific Studies and India at Tres of Febrero University (UNTREF).
“China’s link with the region will be strengthened under this project,” he added.
the estimated number of jobs in Latin America generated by Chinese trade and investment
China is currently the second trading partner and the third largest investor in Latin America. Researchers estimate that over the past decade, more than 2,000 Chinese companies have established themselves in the region, generating more than 1.8 million local jobs.
However, today Latin America has a trade deficit with China of over US $ 60 billion. Soybeans, metals, minerals and hydrocarbons account for 70% of the region’s exports, which means that the love relationship is unequal.
Social and environmental concerns
While Brazil and Argentina, for example, have not signed BRI agreements, both have full bilateral cooperation agreements with China and host large Chinese infrastructure projects. This raises questions about which can be classified as BRI projects in the middle concerns the initiative supports projects that degrade the environment.
Given the confusion, Xi said he clarify the scope of the initiative.
“There are still no criteria for Belt and Road projects, but China is thinking about it. As the main host, much of the weight falls on China to explicitly define certain standards,” he said. declared Barrios.
Non-governmental organizations have challenged various Chinese projects in Latin America for violation of human rights and non-compliance with environmental standards.
A clearer definition of the BRI offers the possibility of including environmental sustainability and human rights standards in its projects. For the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), this is an opportunity not to be missed.
Alicia Bárcena, Executive Secretary of ECLAC, said:
“The Belt and Road can attract investment in infrastructure, industry and services in Latin America and the Caribbean, giving an economic boost to the region on the basis of environmental sustainability. “