My review of China in Latin America: the Whats and Wherefores

212 China Review International: Vol. 17, No. 2, 2010 R. Evan Ellis. China in Latin America: he Whats and Wherefores. Boulder, CO: Lynne Rienner Publishers, 2009. 329 pp. Paperback $24.50, ISBN 978-1-58826-650-7 © 2011 by University of Hawai‘i Press (CS4) (Ha–USA) (7×10”) Minion PMU: IDP 16/08/2011 In spite of having a not very promising subtitle, China in Latin America: he Whats and Wherefores is an impressive work of research on the widespread economic and political inluence of the People’s Republic of China (PRC) in Latin America and the Caribbean. Parts of the book, and especially the last chapter, which works as a sort of conclusion, read as a recommendation to the U.S. government to wake up and counteract the invasion of China in Latin America, the backyard of the United States. his last chapter, titled “Considering Latin America’s Future,” is perhaps the most original and interesting part of the book. R. Evan Ellis, a professor at the Center for Hemispheric Defense Studies, predicts both the positive and the negative outcomes that will result from the new partnership between China and Latin America, with a particular focus on how this partnership will afect U.S. security. Each chapter includes a brief but well-informed study of the local Chinese community in each country and its ability to help in the trade with China, as well as a summary of the historical context of each country’s relationship with China. he chapters also explore military relations between China and Latin American countries as well as the intellectual infrastructure of each country to establish commercial connections with China. he irst chapter, “China’s Expanding Ties with Latin America,” can be conceived of as an introduction to the rapidly expanding commercial and political inluence of China in the region. It addresses the way in which many in Latin America see China as both a key market and an important new source of investment, but also as a sometimes unfair source of competition through both legal and contraband products. In the political realm, Ellis adds, some see the Chinese presence as a potential alternative to the traditional political inluence of the United States in the region. Others fear they might be exchanging one type of dependency for another. Several chapters also study the ongoing struggle for diplomatic recognition between China and Taiwan, particularly in Central America and the Caribbean. he author describes how the PRC has dramatically expanded its exports of low-end manufactures, such as toys, textiles, and footwear, and has also begun to compete in the market of more sophisticated goods, such as automobiles, telephones, domestic appliances, and computers. In turn, Latin American countries have increased their exports to China, especially of primary products, including ishing and agricultural products (e.g., soy), petroleum, metals (e.g., copper), and other minerals. he new Chinese relevance is relected in the increase in sister-city relationships, Chinese-language programs, Confucian institutes, and Chinaoriented business programs throughout Latin America. Chinese corporations, J-2478 China Review International, 17:2 2478_17-2_02_Reviews pp. 212–279 (p. 212) 24 August 2011 1:53 PM Reviews 213 banks, and state enterprises are investing heavily, sometimes through joint ventures, to secure reliable sources of primary products. In some cases, this investment has partially contributed to sustain governments with well-known anti-U.S. foreign policies, such as those in Venezuela, Ecuador, and Bolivia, or to change some countries’ diplomatic relations with Taiwan, as was the case of Costa Rica. he increase in exchange of oicial visits of diplomats between China and Latin America has also been impressive. One of the negative impacts of the new Chinese presence in Latin America, argues Ellis, is that it has turned the region away from its development of manufacturing industries and back toward primary product sectors: “Although Latin America is currently experiencing a period of unprecedented growth, this structural shit will have important long-term implications for both the development and the political stability of the region” (p. 4). Latin America’s deindustrialization and reliance on exports of primary products is, according to several experts, detrimental to its development, and it may have negative sociopolitical consequences in the future. By contrast, and still in the realm of the issue of comparative advantage, the author also points out how some experts have argued that Latin America must continue to capitalize on its abundant natural resources and available land. Ellis emphasizes China’s multidimensional relationship with Latin American countries, which depends on their economic weight (resources, markets, size) and their political orientation (strategic advantage, location, historical relationship with China, relationship with Taiwan and the United States). Other important factors are the presence of ethnic Chinese communities in each country, which can help to build links between both countries, and the ability of local companies to do business with China. Ellis also addresses, albeit briely, military exchanges between China and Latin America, through oicer exchanges, military visits, and sales or donations of military goods. Chapter 2 explores Chinese interests in Latin America. he dramatic growth of China’s export-oriented and industrial economy requires the acquisition of huge amounts of primary products that are oten available in Latin America. In addition, its agriculture is increasingly unable to feed its people and, as a result, the country needs to import food products from Latin America and other regions. By the same token, the constant construction of new buildings requires importing cement, steel, and wood. he consumption of petroleum in China has increased so much that the country needs new providers. For these reasons, China Minmetals and China National Petroleum Corporation are pursuing cooperative relationships and joint ventures with foreign companies as well as acquisitions throughout the world. Venezuela, Brazil, and Ecuador can export more oil to the PRC; Chile currently exports copper; Brazil and Bolivia, iron; Peru, other metals and minerals; Chile and Peru export ishmeal (to feed people, as well as poultry and livestock); Brazil and Argentina, soybeans and associated vegetable oils; Chile, wine; Mexico, (CS4) (Ha–USA) (7×10”) Minion PMU: IDP 16/08/2011 J-2478 China Review International, 17:2 2478_17-2_02_Reviews pp. 213–279 (p. 213) 24 August 2011 1:53 PM 214 China Review International: Vol. 17, No. 2, 2010 beer; and Colombia and Costa Rica, cofee. China also sees Latin America as a new market for Chinese products. In 2007, “China sold $51.5 billion in goods to Latin America, an amount slightly greater than the $51,1 billion that it purchased from the region during that year” (p. 13). In many cases, the author reveals, Chinese exports are damaging local manufacturers. In Central America and the Caribbean, China is also pursuing the diplomatic isolation of Taiwan. Currently, twelve of the twenty-three countries in the world that recognize the Republic of China (ROC) are in this region: Panama, Nicaragua, El Salvador, Honduras, Guatemala, Belize, Dominican Republic, Haiti, St. Kitts and Nevis, St. Vincent and the Grenadines, and St. Lucia. (Paraguay is the only country in South America that recognizes Taiwan.) For this reason, these countries have become strategic targets and, as a result, Dominica and Costa Rica have switched their diplomatic recognition to the PRC. Ellis argues that as China emerges as a superpower, it is also trying to secure strategic alliances in competition with the United States. In this context, it has recognized four powerbrokers as strategic partners: Brazil, Argentina, Mexico, and Venezuela. Brazil and Argentina have traditionally been the political and economic powers in South America. In turn, Mexico inluences the countries of Central America, and Venezuela inluences several Caribbean countries. China has also supported the populist regimes in Venezuela, Ecuador, and Bolivia because of their opposition to the United States presence in the region. Chapter 3 analyzes Latin America’s interest in China. Many Latin Americans hope that export sales to the 1.3 billion-person market in China, with an ever increasing middle class, will develop the economies of these countries. Many also hope that Chinese investment will ofset the lack of investment from Western lending institutions in recent years and the diicult conditions attached to it. In 2004, when Chinese president Hu Jintao promised to invest $100 billion in Latin America over the following decade, China began to be seen as a driver of development in the region. Ellis also reveals that China has invested in inal-assembly facilities and automobile manufacturing in Mexico, in mines in Peru, in oil ields in Venezuela and Ecuador, and in telecommunications networks throughout Latin America. Others see the Chinese inluence as a way to ofset the traditional political, economic, and institutional dominance of the United States. According to the author, the PRC has helped support anti-U.S. regimes by buying their petroleum and providing technology, such as telecommunications satellites. In addition, “China has important symbolic appeal to a group of Latin American leaders on the let side of the political spectrum, though what may be termed ‘nostalgic radicalism’ ” (p. 30). Chapters 4 through 6 provide speciic studies of Latin American countries divided in three subregions. Chapter 4 focuses on Argentina, Brazil, Chile, Paraguay, and Uruguay. China’s relationship with these countries is driven by economic concerns. China regards these countries, with the exception of Paraguay, as mar- (CS4) (Ha–USA) (7×10”) Minion PMU: IDP 16/08/2011 J-2478 China Review International, 17:2 2478_17-2_02_Reviews pp. 214–279 (p. 214) 24 August 2011 1:53 PM Reviews 215 kets for Chinese manufactured goods and as suppliers of food imports, mainly soy products. As the author explains, while the other countries have to surmount the great obstacle represented by the Andes, Chile has the advantage of counting on ports in the Paciic. It also has one of the best commercial and bureaucratic infrastructures for doing business with Asia in the region. In addition, Chile is one of the three nations in Latin America that are members of the Asia Paciic Economic Cooperation (APEC) forum and was the irst country in the world to sign a freetrade accord with the PRC. In 1971, this country became the irst in South America to establish formal diplomatic relations with China. China is interested in importing Chilean copper, potassium nitrate, and other mining-sector products, as well as agricultural and ishing products. In fact, Chile and Peru supply 80 percent of Chinese ishmeal imports. Chile also sells wine to the new Chinese middle class. In turn, China exports clothing, automobiles, and motorcycles to Chile, and the Chinese telecommunication giants Huawei and ZTE have a major presence in the country, as they do in the rest of Latin America. China is also exploring cooperation in the nuclear industry and conceives of Chile as a commercial nexus between Asia, Latin America, and the United States. Finally, it is also an attractive market for China, because it is one of the wealthiest nations in Latin America in per capita income. Ellis emphasizes the fact that Brazil is the region’s largest exporter to China (mainly of soy products, iron, steel, and petroleum) and the second-largest importer of Chinese products. Brazil also has the largest Chinese community in Latin America, with 300,000 members who live mostly in the state of São Paolo. he country is an increasingly important market for Chinese products, including sophisticated items such as consumer appliances, cars, and motorcycles. As is the case in the rest of Latin America, the Chinese telecommunication companies Huawei and ZTE have a strong presence in Brazil. China plans to cooperate in the improvement of Brazil’s deicient infrastructure. In addition, there is cooperation between the two countries in deepwater exploration and drilling technology, the aircrat and nuclear industries, and space technology. Argentina, like Brazil, is a supplier-and-market country for China. It is the ith-largest market for Chinese manufactured products in Latin America, behind Mexico, Brazil, Chile, and Panama. In turn, it exports soy products (87 percent of all Argentina’s exports to China and 23 percent of the PRC’s soy imports) and sunlower oil, and it accounted for 12.4 percent of all Latin American exports to the PRC in 2007. In 2005, a Chinese company purchased an Argentine mine, making it one of two countries only, along with Peru, to have sold mines to China. Argentina also sells modest amounts of oil and natural gas and, recently, it has begun to sell wine to China. he Chinese are interested in infrastructure projects and in technology cooperation. he fourth chapter ends with the modest economic relations between China and Uruguay (which exports agricultural products, wool, leather goods, and frozen ish, while importing manufactured products) and (CS4) (Ha–USA) (7×10”) Minion PMU: IDP 16/08/2011 J-2478 China Review International, 17:2 2478_17-2_02_Reviews pp. 215–279 (p. 215) 24 August 2011 1:53 PM 216 China Review International: Vol. 17, No. 2, 2010 Paraguay, which recognizes the Republic of China instead of the PRC, a limiting factor in its potential ability to export its products (mainly soy) to China. Chapter 5 is dedicated to the Andean region (Bolivia, Colombia, Ecuador, Peru, and Venezuela), focusing in particular on the export of ishmeal and oil, as well as on the “tenuous alliances” (p. 107) between China and some of the populist governments in these countries, as it seeks access to their oil reserves. Strategic and ideological issues are important in China’s relationship with Venezuela, Bolivia, and Ecuador. Venezuela is China’s most recent strategic partner, and it is an economically relevant country because of its petroleum reserves. President Hugo Chávez’s anti-U.S. rhetoric has contributed to the expansion of Venezuela’s relationship with China. However, Ellis argues, political chaos may end up hurting Chinese companies in that country. China is also interested in Venezuelan iron and gold and sees the country as a good market for its products and services. As mentioned, the two countries have cooperated in the creation of a telecommunications satellite as well as in infrastructure and social projects. Venezuela also has one of the largest Chinese communities in Latin America, with 130,000 people of Chinese ancestry. Ecuador is the largest recipient of Chinese capital in Latin America thanks to the purchase of Ecuadorian assets by Chinese oil companies in 2005. However, as is the case of Venezuela, institutional instability may damage the cooperation between both countries. he Chinese Ecuadorian community has approximately 50,000 people. Chinese Ecuadorian companies, such as Grupo Wong, own a big share of the banana industry, the country’s traditional export. he Ecuadorian banana industry, however, is not competitive enough to be able to export to China. China is interested in Ecuadorian petroleum, but Chinese companies have come into conlict with local populations, including indigenous communities, leading in some cases to violence. China, according to the author, may also be interested in Ecuador’s copper and uranium. In addition, Ecuador’s Paciic ports of Manta and Guayaquil are emerging as a strategic gateway for Chinese products destined for Brazil and other countries. he Manta-Manaus-Belén corridor will also be vital for Chinese-Brazil economic relations. Bolivian president Evo Morales’s anti-U.S. policies are welcome by China, according to the author, but political unrest is also a source of concern. China has shown some interest in the Bolivian hydrocarbons sector, but the nationalization of the gas and oil industries has made investments diicult. In reality, China is more interested in Bolivian iron. Peru is also of interest to China because of its Paciic ports, natural gas, oil, and mining sector. In fact, China is Peru’s largest commercial partner. Peru signed a free-trade agreement with China in 2008 and has a trade surplus with respect to China. As in the case of Argentina, Chinese companies own Peruvian mines, but they have been harshly criticized for their violations of environmental laws and their failure to invest in the improvement of the mines. China imports Peruvian ishmeal and is also interested in the ishing (CS4) (Ha–USA) (7×10”) Minion PMU: IDP 16/08/2011 J-2478 China Review International, 17:2 2478_17-2_02_Reviews pp. 216–279 (p. 216) 24 August 2011 1:53 PM Reviews 217 sector. In addition, Peru’s strategic geographic position in the middle of the Paciic coast of Latin America has generated interest in the interoceanic highway project. Peru, like Chile, is a member of the Asia-Paciic Economic Cooperation forum and is very efective in its trade-promotion activities in China. As regards Colombia, its relationship with China is relatively limited compared to the other Andean countries, mainly because of its close strategic relationship with the United States. Its current exports to the PRC are dominated by nickel, coal, and uranium. Chapter 6 studies China’s relationship with Mexico, Central America, and the Caribbean, with an emphasis on the strategic position of these countries (their proximity to the United States for commercial and potential military purposes) and their recognition of Taiwan. As previously noted, half of the nations that recognize the government of Taiwan as the legitimate government of China are in this region. However, only Mexico, a strategic partner, is a signiicant market for Chinese manufactured good. Ellis points out that “Mexico’s economic relationship with the PRC has begun to evolve from competition to partnership. In part, the evolution is rooted in Mexico’s competitive advantages, which include a combination of technological knowledge in high value-added manufacturing sectors, such as autos; physical proximity to the United States; and tarif-free access to the US market” (p. 201). In this context, Chinese car companies are planning to build plants in Mexico, and Mexico has been successful exporting its beer to China. Costa Rica switched diplomatic recognition from Taiwan to China in 2007, and it has a trade surplus with the PRC thanks to the sales of computer chips made by Costa Rica’s Intel plant. In addition, China is Costa Rica’s number two export market ater the United States. In 2007, China recognized Costa Rica as a recommended destination for Chinese tourism, and Costa Rica also sells luxury cofee to China. As to Panama, China’s interest rests on the importance of the Panama Canal for trade as well as in the fact that Panama continues to recognize Taiwan. he Chinese logistics irm Hutchison Whampoa operates key Canal Zone facilities, and a Chinese company is trying to expand and modernize the canal. As the author explains, “an estimated 40 percent of all traic going through the canal is tied to China in one way or another” (p. 227). Panama has a large community of 150,000 persons of Chinese ancestry, one of the largest in Latin America, and is the third-largest customer of Chinese products in Latin America. Cuba is a unique case. Its value to China is based on its proximity to the United States, since Chinese facilities could be used for intelligence collection. In addition, Cuba’s relationship with China mirrors that of Taiwan with the United States. Perhaps more important, Cuba is a source of ideological legitimization because it continues to be “an important ideological point of reference for the Latin American let, and thus its good will is useful for the PRC in diferentiating itself from established capitalist states such as the United States and the European Union” (p. 236). China is also interested in Cuban nickel, sugar, and petroleum. (CS4) (Ha–USA) (7×10”) Minion PMU: IDP 16/08/2011 J-2478 China Review International, 17:2 2478_17-2_02_Reviews pp. 217–279 (p. 217) 24 August 2011 1:53 PM 218 China Review International: Vol. 17, No. 2, 2010 he inal chapter draws from evidence presented in previous chapters to discuss the main implications of Latin America’s increased relationship with China. he author foretells that Latin America’s economy will be increasingly tied to China. Furthermore, Chinese communities and corporations will participate more intensely in local politics. Latin American Paciic ports will be expanded and modernized, which will have a big impact on nearby cities. his increased economic exchange could also lead to a new interaction between Chinese and Latin American organized crime. he Chinese presence will make U.S. activities in the region diicult, and the U.S. military will have to take it into account in case of war between the two countries. While this is an outstanding and eye-opening study, which can be an important resource in several disciplines, the book has few errors including misspellings. For example, the president of Paraguay is once called “Ferdinand Lugo” (p. 82) and later, correctly, “Fernando Lugo.” he author also writes “Universidad Privado de Santa Cruz” (instead of “Privada,” p. 146) and “Callo” (instead of “Callao,” p. 279). Likewise, Telefónica, a Spanish corporation, is given a diferent nationality in one of the chapters, and Mexico is considered a nation a few centuries before it became one: “Mexico was arguably one of the irst nations in the Americas to establish trade relations with China, in the sixteenth century” (p. 201). In any case, Ellis’s book is an intelligent, informative, and entertaining study, which is highly recommended for anyone interested in the topic. Ignacio López-Calvo Ignacio López-Calvo is a professor of Latin American literature at the University of California, Merced. He specializes in cultural production by and about Asians in Latin America and is the author of ive books on Latin American and U.S. Latino literature and culture: Written in Exile. Chilean Fiction from 1973-Present (Routledge, 2001); Religión y militarismo en la obra de Marcos Aguinis 1963–2000 (Mellen, 2002); “Trujillo and God”: Literary and Cultural Representations of the Dominican Dictator (University Press of Florida, 2005); Imaging the Chinese in Cuban Literature and Culture (University Press of Florida, 2007); and “Latino Los Angeles in Film and Fiction: he Cultural Production of Social Anxiety” (University of Arizona Press 2011). (CS4) (Ha–USA) (7×10”) Minion PMU: IDP 16/08/2011 J-2478 China Review International, 17:2 2478_17-2_02_Reviews pp. 218–279 (p. 218) 24 August 2011 1:53 PM