As China endeavors to set the terms of global governance, it is important for the country to preserve its economic stability as well as maintain robust ties with Third world nations. It is in this context that Latin America is of great significance to China. Although China’s relations with this region date back to the fourteenth century, it was only in the last decade that the country has projected proactive diplomacy towards the region. Within this framework, this paper attempts to identify the key drivers that have motivated China to make deep inroads into Latin America.
China’s dramatic rise in world politics over the last few decades can be marked as one of the principal developments in international relations. The country’s brisk economic growth and rapid integration into the global economy has had varying political and economic implications across the globe. Particularly, China’s rise has had some cumbersome implications on Latin America. Beijing’s foreign policy towards the region has been defined by the values of equality, common development, mutual benefit, and the principle of a win-win relationship. Interestingly, although China’s ties with Latin America date back to the fourteenth century, it was only in the last decade that the country has projected a proactive stance towards the region. The heightened interest is due to a number of key factors. It is in this context that this paper seeks to identify the factors that have driven China to make deep inroads into the region of Latin America.
China’s relations with Latin America can be traced back to the Ming dynasty of 1368 to 1644. This was an era characterized by thriving trade ties between the two locations across the Pacific. Whereas China shipped porcelain, silk, and cotton yarn to Peru and Mexico, Latin America shipped agricultural products like sunflower, tobacco, tomato, and corn to China. There is even an assertion that some 600 years ago, Chinese sailor Zheng He and his fleet had discovered the Americas approximately 70 years before Columbus. Initial official ties between China and Latin America was established between 1870s and 1900s, when the Qing dynasty fostered diplomatic ties with Peru, Brazil, Mexico, Cuba, and Panama.
Relations did not develop between the two countries from 1900 to 1949 because China was largely unacquainted with Latin American culture and viewed the region as an integral component within the U.S. sphere of influence. On the other hand, the Latin American countries (LAC) were apprehensive of Chinese endeavours and sought to maintain distance. This was due to geographical distance, ideological hostility, cultural ignorance, economic incompatibility, and the necessity to focus on the issue of internal security.
Soon after its formal establishment in 1949 and during the country’s initial engagement with the region, the People’s Republic of China (PRC) desired to promulgate the Chinese model in Latin America. This involved escalating the anti-American sentiment, thereby destabilising the U.S position in the region and enhancing the image of China. This was to secure the support of Latin Americans, in order to Chinese foreign policy objectives in the future. In 1959, Fidel Castro’s victory in the Cuban Revolution attracted political and moral support from China. On September 28, 1960, Cuba became the first Latin American country to establish formal diplomatic relations with China. 
In the 1970s and 1980s, following Sino-American rapprochement, Nixon’s momentous sojourn to Beijing, the PRC’s assumption of a permanent seat in the United Nations Security Council (UNSC), and the deepening of Deng Xiaoping’s “reform and opening up” of China, Latin American countries began to expand their relations with China. Relations between China and LAC have increased most rapidly in the last 15 years, after the PRC’s accession to the World Trade Organization (WTO) in 2001 and the country’s adoption of the “going out” strategy. Additionally, the aspiration of some Latin American countries to diversify their political and commercial relations paved the way for the Chinese to offer closer ties as an alternative to Latin America’s reliance on the United States. At this stage, China’s principal goal was to facilitate a greater exchange of trade and refurbish domestic industrialization.
Post-Tiananmen crisis, from 1989 to 1991, China adhered to an inward-looking policy. Three factors governed Sino-Latin American relations during the 1990s. First, with its ties with the West at an all-time low due to the Tiananmen incident, China sought to shore up its ties with Third World nations by advancing its position as a leader of the Third World. The second factor was China’s emphasis on economic diplomacy. China had grown increasingly dependent on U.S. capital and markets, making it vulnerable to American economic and political pressures. The third factor was the Taiwan issue. Since the 1950s China’s approach towards the region was constructed to challenge Taiwan’s influence in Latin America. Although Taiwan had lost considerable ground in the region since its expulsion from the UN in 1971, yet Taiwan’s position witnessed considerable improvement from 1989 onward. Therefore pressed by the challenge of Taiwan’s drive to retrieve influence in the region, China courted closer ties with the Latin American countries.
At the beginning of the twenty first century, PRC began to practice active diplomacy towards Latin America. The two sides maintained robust political and economic ties, frequent high-level visits, collaboration in trade, culture, science and technology, and educational exchanges.
Latin America evolved into a region of emerging priorities for the Chinese leadership. This is evident from four key milestones in Sino-Latin American relations in the last eight years: 1) the White Paper on China and the Caribbean released by the Chinese government in November 2008; 2) the proposal of the “1+3+6” framework for 2015-2019 by President Xi Jinping at the first Summit of Leaders of China and Latin America and the Caribbean; 3) the 2014 adoption of the China-CELAC (China-Community of Latin American and Caribbean States) Cooperation Plan 2015-19; 4) and the release of China’s Policy Paper on Latin America and the Caribbean on November24, 2016. Essentially, China’s interest in making its inroads into Latin America is founded upon the country’s geopolitical and economic interests.
Starting from its establishment in 1949, the PRC identified itself as a member of what was then known as the Third World America. Although the PRC engaged intensively with Asia and Africa, the country’s engagement with Latin America remained limited. In the 1950s and 1960s, China sought to consolidate the support of the developing nations, including Latin American countries, to safeguard national sovereignty and economic development within the framework of anti-imperialism. For instance, in 1959, Fidel Castro’s victory in Cuba drew immediate political support from China. Further, in the 1960s, China extended its support to the other Latin American nations in their endeavours to reduce U.S. influence.
It is interesting to note that at the turn of the century, China’s active engagement with Latin America corresponded with a period when the LACs were undergoing a tumultuous transition to the political left. Left-leaning governments ascended in countries such as Brazil, Argentina, Bolivia, Nicaragua, El Salvador, Ecuador, Peru, Paraguay, Venezuela, and Uruguay. Many were largely anti-American in their approach. Their critical position vis-à-vis the U.S. worked in China’s favour during a period of rapidly expanding ties.
To address the question of whether China has any strategic interest in Latin America, it is firstly important to understand that Latin America appears within Beijing’s larger framework of advocating its version of “democratizing international relations”. China’s endeavours hope to create a multipolar economic and political international order wherein the Middle Kingdom revives its customary position at the core of international affairs.
Geo-politically, China’s interest toward Latin America and the Caribbean is profoundly influenced by broader policy concerns. For several decades, China had aspired to perform a leading role in the developing world, and had adopted an approach to act independently on behalf of developing nations. As China moves away from the idea of “Third World-ism” to that of multilateralism, it is attempting to strengthen its global network of alliances within the prism of South-South cooperation. Consequently, China has ventured into amplifying its strategic synergy with Latin American nations.
Further, China also recognizes the fact that several of these nations have offered support to ward off resolutions by the West condemning Beijing for its human rights record. Especially after a decisive victory in what could have been China’s first official censure by the UN Human Rights Council in 1995, Beijing has sought the votes of the Latin American nations at the UN and other international forums to counterbalance U.S. influence. China seeks the support of the region on issues such as climate change, energy security, economic governance, and cybersecurity.
Thus, in the recently published “Policy Paper on Latin America and the Caribbean,” China made a clear declaration it seeks to cooperate with the LACs on matters of social and economic governance. In order to attain a more equitable world order, China hopes to cooperate at various multilateral forums such as the Asia-Pacific Economic Community (APEC), G20, International Monetary Fund, Bank of International Settlements, World Bank, WTO, Financial Stability Board, Basel Committee on Banking Supervision, and the UNSC. China cooperates with Latin America and the Caribbean through various multilateral platforms: the China-Community of Latin American and Caribbean States (CELAC) Forum, United Nations, Organization of American States (OAS), G5 group, Brazil-Russia-India-China-South Africa (BRICS), and the BASIC group (Brazil, South Africa, India, China).
Lastly, and most importantly, the U.S. pivot to Asia has possibly driven China into the American “backyard.” These two events must not be observed separately. China’s increasing penetration into the Latin American region is largely to counterbalance the U.S. presence in Asia. However, China is currently testing the waters and seeks to avoid directly antagonizing U.S. hegemony.
There is another strategic consideration: Taiwan. China’s White Paper on Latin America and the Caribbean (2008) and Policy Paper on Latin America and the Caribbean (2016) both mention that “the one China principle is an important political foundation” for Beijing to develop its relations with LAC. Currently, out of a total number of 33 nations, Paraguay, Haiti, Dominican Republic, El Salvador, Republic of Guatemala, Nicaragua, and Panama continue to maintain diplomatic ties with the Taiwanese government.
As scholar Jiang Shixue has identified, in the present-day globalization, politics is inclined to be economic in nature. Thus, to consolidate robust bilateral ties with the region, economics remains a cornerstone of China’s foreign policy towards Latin America. Trade ties between the two sides have grown from $200 million in 1975 to $236.5 billion in 2015. At present, China is Latin America’s second-largest trading partner and its most important source of investment.
The first bilateral trade agreement concluded between China and Chile was in October 1952. With a GDP of $10.87 trillion and foreign exchange reserves of $3.22 trillion in 2016, China is one of the principle economic players in international politics today. As its economic clout grows, Beijing strives to fulfill three major objectives: to secure acknowledgement of full market status, to obtain the raw materials it needs and diversify the source of such imports in order to minimise China’s vulnerability, and to sustain its access to markets and export its manufactured commodities.  In this context, Latin America plays a significant role in fulfilling the aforementioned objectives. Although China’s ties with the continent may have significant security and political aspects, yet at present, the most salient dimension is economic.
In 2000, under the leadership of Premier Zhu Rongji and President Jiang Zemin, China launched the going-out (zouchuqu zhanlue) strategy to secure access over stable supplies of natural resources and raw materials. This was an essential measure to sustain the country’s brisk economic development. Further, with regard to the country’s going-out strategy for energy security, the Chinese Ministry of Commerce has identified Latin America along with the Middle East, Africa, Russia, and Central Asia as the four chief areas that are likely to become net energy suppliers for Beijing. Beijing also wants to sustain its access to overseas markets, in order to secure the exports of Chinese manufactured products. Bilateral trade between China and Latin America stood at $263.6 billion in 2014.
Interestingly, a number of factors have accounted for the promising appearance of Sino-Latin American commercial engagement. First, Latin America possesses a wealth of natural resources that is key to China’s brisk economic development. Second, there is an adequate economic complementarity between the two sides. Third, as both Latin America and China experience economic reforms, markets are opening up and investment policies are becoming more liberal. Fourth, in this era of globalization, both China and Latin America have shared interests on matters of South-South cooperation. Fifth, it is imperative on Latin America’s part to identify and appreciate China’s huge market potential, especially after China’s entry into the WTO.
However, there has been a visible slackening of the economic growth in Latin America. Given the sluggishness of the global economic growth in general and the slowing down of the Chinese economy, there has been a fall in commodity prices and a weakening of foreign investment.  This is primarily due to the slowing of the Chinese economy, as China is a key consumer of the Latin American commodities. Corruption and economic mismanagement were liable for this economic slump. In this context, there has been a surge of right-wing governments in Argentina, Venezuela, and Guatemala. However, despite the slender rise of right-wing governments, with a development fund worth $35 billion and a more cordial bilateral discourse with China, Beijing seems to be the more desirable alternative. Beijing has significantly increased its influence in the region through the incorporation of its twin drivers of investment and financial cooperation. Further, the extension of Chinese projects such as 1) One Belt One Road (OBOR) through the proposed 19,000 kilometer trans-Pacific fiber-optic Internet cable from People’s Republic of China to Chile and 2) the incorporation of several Latin American nations into the Asian Investment and Infrastructure Bank (AIIB) has enhanced Lain America’s connectivity with the rest of world. These factors are defining the trajectory of Sino-Latin American ties in the present times.
Recent trends in the amplification of trade volume as well as a super commodities cycle have endorsed the argument that Beijing is economically important to the countries of the continent. Robust economic ties with Beijing have been viewed by the Latin American nations as a positive development that had enabled them to overcome the financial crisis of 2008. According to statistics from the Inter-American Dialogue (IAD), China had evolved as the region’s leading banker with $22 billion in 2014. Indeed, owing to the challenges in their domestic growth, the chief objective of Brazil, Argentina and Venezuela in their engagement with China is to procure financial investment and assistance from the country. Further, the IAD report suggested that China offered loans that exceeded the combined worth of those by the Inter-American Development Bank (IADB) and the World Bank.
Furthermore, while United States is shifting towards the traditional notion of protectionism, China appears to be one of the last mainstays against protectionism. A report by Credit Suisse on globalization drew data from the Global Trade Alert to establish that the United States is the country that imposes most number of protectionist measures than other countries such as China, Japan and Mexico. Under the administration of President Donald Trump, the aggressive anti-free trade stance could encompass the abandoning of the Trans-Pacific Partnership (TPP) and the renegotiation of North American Free Trade Agreement (NAFTA). The TPP comprises of five West Hemisphere nations, of which three states (Mexico, Chile and Peru) are LACs. Essentially, the TPP would augment LAC participation in Asian markets. This would consequently amplify their exports, improve their capacity to lure foreign direct investment and bolster engagement in global value chains. However, with Trump pledging to pull out from the 12-nation TPP, referring to the agreement as “a potential disaster for our country,” there is now ample space for China to embrace leadership in trade. Subsequently, Beijing has pushed for the Regional Comprehensive Economic Partnership (RCEP), which is the Chinese rendition of an Asia-Pacific trade pact. Unlike the TPP, which merely lays down environmental and labour standards, the RCEP excludes the U.S. and includes the reduction of tariffs. Thus, several countries including Peru and Chile now seek to join the RCEP to counter protectionism from the US. 
China’s recent engagements with LACs reflect the increasing importance that the region holds for the country. Given the fact that the international order is in a state of flux and China is a power to reckon with, LACs also seek to forge robust ties with Beijing. Owing to its pursuit to set the terms of global governance, it is important for China to both sustain its economic stability and maintain flourishing ties with developing nations. It is in this context that Latin America continues to be of great significance for China.
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Shaheli Das is a Doctoral candidate at Centre for East Asian Studies, Jawaharlal Nehru University and a Junior Fellow at Observer Research Foundation
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