China’s courting of Latin America and the Caribbean – signaled anew this week by a visit by its president – is prodding the United States to step up its outreach to the rapidly emerging economies, which are showing greater global clout.
President Xi Jinping’s weeklong trip to Trinidad and Tobago, Costa Rica and Mexico starting Friday comes in the wake of President Barack Obama’s recent trip to Mexico and Costa Rica, and follows by just a day Vice President Joe Biden’s three-nation tour of the region. Xi will meet with Obama at the close of his trip, June 7-8 in California.
China has eclipsed the United States as Brazil and Chile’s largest trading partner, purchasing soybeans, iron ore and oil to fuel its rapidly expanding economy. Latin American exports to China accounted for just $5 billion in 2000; by 2012, they topped $104 billion.
The global giant’s rising influence in the hemisphere hasn’t gone unnoticed in Washington, in part prompting what Biden dubbed the “most active stretch of high-level engagement” in Latin America and the Caribbean in a “long, long time.”
In addition to Obama’s and Biden’s trips, the White House will host Peru’s President Ollanta Humala and Chile’s President Sebastian Pinera next month. And in October, Obama will hold a rare state dinner for President Dilma Rousseff of Brazil.
“Nothing motivates Washington faster than competition,” said Eric Farnsworth, the vice president of the Council of the Americas and the Americas Society, noting that trade deals with Colombia and Chile were accelerated when it became apparent that Canada and China were moving in.
“There is recognition in Washington that we need to begin to contend more actively for the Americas, that Latin America is not a region we can take for granted anymore – if we ever did – because the region does have options,” Farnsworth said. “We are still in many ways the preferred partner but we’re not the guaranteed partner, and we’ve got to fight for the region in a way that maybe we haven’t had to traditionally.”
White House officials downplayed the Chinese presence, saying the U.S. doesn’t view itself as competing for trade in Latin America. Biden, in remarks in Rio de Janeiro, said the U.S. welcomed investment by all. He said he’d talked to Xi about pursuing bilateral investment treaties with China, as well as India.
“For those who are accustomed to the world before it changed, some of this is frightening,” Biden said. “Some of this is threatening, but all of it’s necessary.”
In addition to his three-country tour, Xi will meet with officials from Antigua and Barbuda, the Bahamas, Dominica, Grenada, Guyana, Suriname and Jamaica, China’s Assistant Foreign Minister Zhang Kunsheng said.
His visit comes as China’s largest pork producer, Shuanghui Group, looks to purchase the U.S.’s biggest pork processor, Virginia-based Smithfield Foods. The $4.7 billion deal will trigger a review by the Committee on Foreign Investment in the United States, which reviews mergers between the U.S. and foreign companies to ensure that national security isn’t put at risk.
Though Chinese involvement in the hemisphere has raised geopolitical questions, analysts say Xi’s trip to Latin America and the Caribbean is more about its economy and ensuring that it has access to markets in order to purchase raw materials and sell its manufactured goods. China also has a massive presence in Africa, and Xi traveled to Tanzania, South Africa and Congo shortly after he took office in March.
“China does have some special relationships, but its interests in Latin America appear to be largely, if not overwhelmingly, economic,” said Lynne Walker, the vice president of the Institute of the Americas in La Jolla, Calif. “China has to have the raw materials to keep its economy and its businesses going.”
Trinidad and Tobago, for example, seeks new markets for the natural gas it once supplied to the U.S., which has discovered its own natural gas supplies. Analysts note that with the improvement of the Panama Canal, Asia could be a new market.
China’s spending includes loans to local governments, including some that the U.S. isn’t friendly with, such as Venezuela. But the loans are tightly structured to guarantee a return on investment, said Mauricio Mesquita Moreira, principal economist, trade and investment sector, at the Inter-American Development Bank.
“These are not sweetheart deals,” Moreira said. “It’s not, ‘This is an ideological brother, so let’s give him a break.’ It’s much more pragmatic and business-oriented.”
Despite the robust Chinese involvement and Xi’s apparent interest in broadening ties in Latin America, analysts say there’s an opportunity for the United States, if it has something to offer in the way of trade packages or cooperative agreements.
“Biden put together this scramble of a meeting, but we don’t have much to offer,” said Boston University international relations professor Kevin Gallagher, the author of the book “The Dragon in the Room: China and the Future of Latin American Industrialization.” “We very quickly need to get beyond the first paragraph approach of saying the right thing and develop some kind of cooperation.”
Though China’s involvement over the past decade has boosted Latin American economies and helped them weather the U.S. recession, Gallagher notes that Latin American zeal for China has waned, largely because China is primarily interested in natural resources from the region, which don’t create as many jobs as manufactured goods and often are associated with environmental and land use conflict.
“The honeymoon is over and it’s a good time for us to reassert a presence, but we have to come up with something a little more creative without the U.S. having deep pockets,” Gallagher said. China, by contrast, has built sports stadiums in the region and is rumored to be interested in building an industrial park in Costa Rica.
Biden in Rio de Janeiro touted Brazil’s economic performance and declared that “the times present an incredible opportunity for a new era of relations between the United States and the Americas.”
Back in Washington, analysts say they hope the trip will lead to more pacts on trade and energy.
“It’s a little premature to celebrate as a new period of deep engagement with the region,” said Michael Shifter, the president of the Inter-American Dialogue. “These are promising visits, but whether there is a strategy behind it is another question.”