In a speech this week at his alma matter, the University of Texas at Austin, Secretary of State Rex Tillerson spoke out strongly against the expanding presence of the People’s Republic of China to the Western Hemisphere, arguing that “China’s offers always come at a price,” and arguing that “Latin America does not need new imperial powers that seek only to benefit their own people.”
It is time to face a disturbing, but inescapable truth: the world that the People’s Republic of China is working to build is not one that Latin Americans and others (including most Chinese), would find desirable.
Admittedly, for Latin America and other regions as well, the post-World War II world order, dominated by the U.S. and Western institutions, was far from perfect. Terms of trade, institutional frameworks and decisions about where to locate high-value added production and well-paying jobs often favored those in the U.S. and Europe who controlled most of the capital. The U.S., in advancing its concept of democracy, security and human rights in the region, periodically abused its economic, and occasionally military, power to impose solutions on its neighbors. While over the years, the U.S. political system, economic model, freedom, and the spirit of the American people have also inspired many positive feelings within the region, the perception of U.S. errors and arrogance have also sewn resentment and distrust.
Yet while the “U.S.-led” order in the region had its flaws, some alternatives are worse than others.
Chinese Engagement in Latin America
The objectives of the PRC in Latin America and the Caribbean are arguably principally economic in nature, yet that does not make them any the less strategic, nor does it diminish their negative effects on the Western Hemisphere, or the position of the U.S. within it. Those objectives, reflected in President Xi’s “Chinese Dream” of a being a global leader in terms of comprehensive national strength and influence by 2050, have arguably been the same since ancient China’s efforts to bring the Han people together, protect them from the Mongols and other invaders, and collect tribute from the surrounding “barbarian” kingdoms: A prosperous, unified nation, safe from external threats, and benefitting from the flow of tribute to the imperial center.
China’s objectives toward Latin America, as elaborated in its 2008 and 2016 policy papers toward the region, and the China-CELAC 5-year plan appear benign, particularly when compared to efforts by the Soviet Union to fund communist insurgencies and establish anti-U.S. client states in the region during the cold war. Yet the change in political and economic orientation of the region implied by PRC success in achieving its goals, and its potential effect on the strategic position of the United States, are both more threatening, and more achievable in the mid-term.
In the economic domain, China’s economic rise has been built on an industrial policy which actively seeks, to the extent possible, to realize the most lucrative part of the activities of the value chain in the PRC itself, for the benefit of the Chinese people. As a compliment, as the Chinese economy has matured and its enterprises have “gone out” to Latin America and the rest of the world, that engagement has taken on a notably predatory character that has contributed to the increased dependence of the region on primary product exports, expanding the leverage of the PRC vis-à-vis the U.S. through those relationships. In cases such as Venezuela, Cuba, and Bolivia, Chinese funding has also helped to indirectly empower and sustain anti-U.S. actors which behave as PRC client states on select issues.
While China has greatly expanded both its loans to and investments in Latin America and the Caribbean in recent years, such activities have not so much promoted development in the region, as they have benefitted the commercial goals of PRC-based companies and advanced Chinese strategic interests in extracting needed commodities and securing access to the region’s markets. Since 2005, PRC-based banks have lent approximately $141 billion to Latin America and the Caribbean, and since 2001, Chinese companies have invested an estimated $113.6 billion there. Yet the loans have almost exclusively financed infrastructure projects performed by PRC-based companies (often with a heavy component of Chinese workers), the completion of which facilitates PRC access to the region’s resources and markets. Some 65% of Chinese investment in Latin America has been in the mining and petroleum sector, furthering Chinese extraction of the region’s commodity resources. Other projects, such as smaller investments in final assembly facilities for autos and heavy machinery, or sales and service network for telecommunications companies such as Huawei, expand Chinese access to the region’s markets, often at the expense of established Western companies.
What is occurring in Latin America is not the development of the region, but the passing of ownership, and the associated benefits and decisions about commercial activities there, from Western managers, to often less benevolent Chinese ones. Moreover, as PRC-based companies learn to more effectively use the influence that accompanies that expanding ownership as employers, key generators of revenue for governments, and members of the local community, Chinese political influence over host governments regarding their commercial interests and other issues will expand.
Across the region, the influence of such economic calculations on political expression is already remarkable, with both governments and private institutions self-censuring criticism about the PRC for fear of losing business with or investment from the country. In official engagements as well, governments continue to repeat the Chinese mantra about “one China,” and avoid provoking the PRC through questioning Chinese policy on, or public engagement with the representatives of Taiwan or Tibet. While the “obedience” secured by Chinese money and pressure is more selective and subtle than the political control exerted by the Soviet Union over its client states during the Cold War, the political implications for the region, and its future relationship with the United States, are chilling.
As the PRC has grown in its power and confidence, it has also advanced its political presence in the region in increasingly bold ways. With the 2016 election of Taiwanese president Tsai Ing-wen, the PRC put an end to an informal truce that had prevailed while it previously sought to improve ties with the country, establishing formal diplomatic relations with the African states of Gambia and São Tome and Principe. The PRC subsequently established relations with the strategically important Latin American financial, commercial and logistics hub, Panama, with the risk that the 11 nations in the region that still recognize Taiwan could follow suit. While Panama’s President Juan Carlos Varela has emphasized the commercial logic behind his decision, the Chinese consortium Landbridge already has a $1 billion port investment in the works; in the coming years, the expansion of the already significant Chinese commercial presence will arguably give the PRC significant leverage over the Panamanian government, further eroding once significant U.S. influence over the Central America’s principal commercial hub and strategic chokepoint.
In advancing its economic, as well as political objectives in Latin America, the PRC has relied upon the institution of “strategic partnerships.” It has eight such partners in Latin America and the Caribbean: Argentina, Brazil, Mexico, Venezuela, Ecuador, Chile, Peru, and Uruguay, and upgraded its relationship with almost all of them in the second half of 2016, while Washington was distracted with the Presidential election. Such partnerships are more than just a diplomatic designation, but rather, are generally accompanied by a ministerial-level body that meets at least once a year, with different topically-focused working groups which allow the PRC to facilitate coordination and advance its objectives with respect to trade, investment projects, and sometimes political issues.
With respect to multilateral diplomacy, the PRC has chosen the Community of Latin America and Caribbean States (CELAC) as its primary vehicle for engaging the region. The relatively new organization includes all of the independent countries of the region with the exception of the United States and Canada. Yet not only does the strategic choice to engage with the Latin America and the Caribbean through CELAC exclude the U.S. from the discussion, but the very institutional weakness of the organization assists the PRC in defining the agenda, rather than permitting the region to formulate a common posture and negotiating position toward the PRC.
With respect to military affairs, the Chinese have not yet established bases in the region, as they have in Djibouti, and as they are in the process of doing in Pakistan. But they have maintained and expanded a military presence through participation in the (recently terminated) MINUSTAH Peacekeeping force in Haiti, bilateral exercises and exchanges, periodic visits by their hospital ship Peace Ark, regular sponsorship of Latin American officers to attend Chinese training and professional military education institutions, and participation in select Latin American institutions, such as the demining and special operations (“Lanceros”) courses in the Colombian base in Tolemaida, and the Brazilian jungle warfare school in Manaus. Similarly, Chinese arms sales to the region have expanded greatly in terms of volume, the number of client countries, and the breadth and sophistication of the offering. From prior sales and donations of military clothing and small arms, PRC-based arms conglomerates such as NORINCO and AVIC now sell goods from radars to armored personnel carriers and multiple rocket launch vehicles to combat aircraft and military ships, to clients from Venezuela to Peru and Brazil. Such engagement with foreign militaries, which is promoted as a strategic priority in China’s May 2015 Defense Strategy White Paper, not only supports the development of its defense technology and industrial base, but also strengthens the modest but growing institutional bond with Latin American security forces as well as their dependence on Chinese equipment and training. Moreover, such defense relationships often come at least partly at the expense of similar relationships with the United States; China-Latin America military-to-military engagement further expands the PRC’s working relationship with counterpart militaries in Latin America, and knowledge of both their Armed Forces and supporting logistics infrastructures. Such knowledge would be valuable in the remote but not unthinkable eventuality that the PRC seeks to operate from the region in the context of a serious military conflict with the United States.
It is true that in Latin America, where the PRC perceives itself to be relatively weak vis-à-vis the United States, Chinese behavior has been relatively deferential. Even there, however, the PRC has precedent for discretely using a heavy hand, such as its 2010 cut-off of soy oil imports from Argentina, as a tacit quid pro quo for the nation’s protectionist measures against it.
In anticipating how the PRC will leverage its growing economic and military leverage in Latin America in the future, it is also instructive to examine its behavior in areas such as the South and East China Seas, where it perceives itself to be strong. There, China has utterly disregarded principles of international law, including a July 2016 ruling against it by the United Nations Commission on the Law of the Sea (UNCLOS), as it established and militarized islands in the area, even while presenting a benevolent discourse alternatively denying and justifying what it is doing. Such behavior suggests what Latin America and the rest of the world can expect from a “China-led” international order as its confidence and sphere of influence grows.
The Broader Global Perspective
Experts sometimes refer to the surpassing of Great Britain by the United States in the first half of the 20th century as an example of how power transitions do not imply disaster for the country being overtaken. In that case, however, Great Britain and the United States shared a common history and similar concepts regarding a range of values, from democracy to the principles that should govern the international political and economic system. The United States and China do not.
Chinese engagement in Latin America is but one subset of the “soft” challenge that the PRC presents to the United States globally. Never before has a state attained the capability to so extensively transform the world order to its own benefit as has the PRC, in an international system whose structures (global trade) were so well oriented to support its expansion. Arguably never before have the dominant actors in that system been so impaired in their ability and willingness to respond. Not only has the United States been distracted in its response by the war on terrorism and internal political struggles, but in a global environment filled with more immediate threats to U.S. security it has often stumbled in its response to a rival which does not seek to overtly control geography, but rather, to create a global environment which will ultimately subordinate others to its benefit, likely ultimately rendering the United States marginalized as well.
During the Cold War, the declared intentions of the Soviet Union, and their actions in support of leftist revolution in Cuba, Nicaragua, El Salvador and elsewhere, provided a certain clarity with respect to the challenge that they presented to the United States. Yet in its response, U.S. strategy had to accommodate the reality that the struggle had shifted from traditional armed struggle between rival states to proxy warfare, which in Latin America played out in an array of insurgencies in Nicaragua, El Salvador and Guatemala, among others. In the same way, the U.S. strategic response to the PRC must take into consideration the shift from the challenge of proxy war (which was still fundamentally about political subversion, military action, and alliances) to a struggle that uses economic engagement as the principal tool to selectively dominate political and institutional spaces, re-defining in the process who benefits from global interdependence. While the PRC may insist that it’s “just about commerce,” the implications for the liberty, rights, and prosperity of the world’s citizens are every bit as great as those at stake during the struggle with the Soviet Union.
Recommendations
Responding effectively to the challenge of the PRC, both in Latin America and globally, requires an integrated strategy that makes effective use of strategic communication and the private sector, respectful collaboration with partner nations, the strengthening of governance across the region, with a focus on defining to our favor the institutional, economic, and legal regime in which Western nations and the PRC interact.
Recognition of the PRC as the principal global competitor to the U.S. in the recently released US National Security Strategy and National Defense Strategy documents is a step in the right direction with respect to establishing priorities.
With respect to strategic communication, the United States must be an effective advocate for the values of democracy, human rights, free markets, and rule of law which underlie the system of global governance that we are fighting to preserve. While not denying China’s right to participate in that system, the U.S. must clearly enunciate the dangers of China’s attempt to leverage and subvert that system it to its own ends through its engagement in the region.
In the struggle for U.S. position in the Western Hemisphere, close relationships and coordination with our partners is vital. While such partnership does not require “charity,” it is strengthened by working together in a respectful fashion in areas such as security, finance and commerce, and demonstrating reliability in those areas where we do make funding commitments, such as Plan Merida, or the Alliance for Prosperity. By contrast, it is undermined by disparaging remarks about those partners and their people, or the protectionist revisiting of trade deals.
While the resources of the U.S. government for persuading our partners to work with the U.S. rather than the Chinese are limited, there is much potential to use U.S. laws and regulations to incentivize the private sector to invest and work more with states of the region to dissuade them from turning to the PRC, and to help our companies win deals in the region that displace Chinese alternatives.
The U.S. must also pay more attention to strengthening the regime of institutions and laws in Latin America and the Caribbean, to obligate the PRC to engage in the hemisphere on a level playing field. In the political space, doing so implies working to support the Organization of American States (where the U.S. has a voice) and overcome the institution’s organizational and political limitations, while resisting the attempts to substitute alternatives from which the U.S. is excluded, such as the Union of South American Nations (UNASUR) and CELAC. In the economic realm, the U.S. must honor treaties such as the North American Free Trade Agreement (NAFTA), which bind the United States to strategically important allies such as Mexico. Similarly, U.S. re-engagement with the Transpacific Partnership (TPP) is important for ensuring that trade across the Pacific occurs in a framework that protects intellectual property, and provides remedies against non-tariff barriers, reducing opportunities for the PRC to use the size of its markets and resources, and government-private sector coordination, to obligate others to put their markets and intellectual property at risk as the price for doing business with the PRC.
While military engagement is not the most prominent aspect of PRC activities in the Americas, the U.S. military has multiple direct and indirect roles to play in addressing the challenge presented by China.
While the near-term prospect for a war between the PRC and the United States is remote, the China would almost certainly engage the U.S. globally during any serious conflict between the two, including taking the fight to the Western Hemisphere. Correspondingly, the U.S. should develop contingencies for PRC attempts to leverage its commercial presence in and knowledge of the region to conduct operations there, including possible attacks against ports of embarkation and attempt to cut sea lines of communication (as the Germans attempted to do during World War II), as well as potential attacks against soft targets in the hemisphere, possibly to cut flows of food and manufacturing products to the U.S. from its partners in the region. In the case of a prolonged conflict, the U.S. military should be further prepared for the PRC to leverage its political influence and military relationships in the region to secure access to ports and airfields from one or more countries in the region for use against the United States.
Beyond preparing for the spillover of a military conflict into the Western Hemisphere, The United States should also more extensively use military engagement to reduce PRC influence through security cooperation. Certain forms of support, such as in the area of cybersecurity, would directly expand partner defenses against attempts at political and commercial espionage by the PRC or other actors. With respect to arms, the U.S. is often the preferred vendor of military goods and systems for the region, but it’s often a difficult partner. Administrative and legal reforms to increase the agility of the U.S. foreign military sales system in responding to partner needs would counter some inroads by Chinese arms manufacturers in the region. Although at the moment Chinese arms are primarily displacing sales by Russia and other mid-tier competitors, as in autos and consumer electronics, it is only a matter of time before the PRC products attain the level of quality and sophistication so as to present a real challenge to those of the U.S.
Beyond security cooperation, the U.S. should also expand State Department programs for strengthening partner institutions of government, particularly those focused on combatting corruption. Through such support, the U.S. can also bring greater capacity and transparency to judicial institutions and public procurement. Doing so will contribute importantly, albeit indirectly, to making our partner nations more resistant to particularistic deals between PRC-based companies and local elites at the expense of broader populations, and thus to the expansion of both Chinese business and influence over partner governments in the region.
Conclusion
Stepping up to the China challenge in Latin America and globally is a matter that requires resources and strategic attention. Whether the United States responds effectively to the rise of the PRC in the 21st Century or not, its expanding economic leverage and associated self-confidence and military capability will continue to re-shape the global order and the position of the U.S. within it. Historians will likely mark the present as the time when the United States recognized the fundamental challenge posed by China’s expanding global engagement. The result will likely play out through the rest of this century, although the outcome is yet to be determined.
R. Evan Ellis is Latin America research professor with the U.S. Army War College Strategic Studies Institute. The views expressed in this work are solely of the author.
