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In Search of a Balanced Relationship:China, Latin America, and theUnited States

William RatliffStanford University

This study focuses on the four stages of Chinese relations with Latin America between1949 and mid-2008. Ties during the 1950s were limited but directed toward a broadcross-section of individual Latin Americans. This was abruptly reversed during the Sino-Soviet dispute of the 1960s by militant advocacy of guerrilla warfare in Latin America.From the early 1970s until the death of Mao Zedong, militant Maoism was blended witha renewed opening of relations, now to military and civilian Latin governments. The final

period began with Deng Xiaoping and his reforms and continues to today. This studyfocuses on Sino-Latin political and economic relations in general and links to the radicalgovernments of Cuba and Venezuela in particular and weighs the impact of this expansionon Sino-U.S. relations. It concludes with comments on how Chinas presence may affectpolitical and economic developments in Latin America itself and how to hone productivecooperation among China, the United States, and Latin nations.

T he meteoric expansion of the Peoples Republic of China (PRC) into LatinAmerica in recent years has caused varying degrees of exhilaration andapprehension around the Western Hemisphere. Chinese contacts with the region

date back 60 years to the founding of the PRC government, but they havechanged radically over time and expanded exponentially during the past decadeas a result of reforms launched by Deng Xiaoping and developed by his mainsuccessors, Jiang Zemin and Hu Jintao. The expanding ties are directly related to(a) Chinas explosive economic growth; (b) the countrys escalating need for rawmaterials, markets, and food to sustain that growth and satisfy rising consumerdemands; and (c) the nations increasing drive to participate in the affairs of theworld. Each new stage is built in some degree on earlier experiences, but eachalso has its own distinct, at times contradictory, characteristics. Assuming Chinascontinuing growth in the years ahead, the prospects are for ties to continue

expanding rapidly, bringing further growth for many on both sides of the Pacific.Taken as a whole, Chinas expansion into Latin America illustrates a movementthat far transcends the events and contacts in this region and demonstrates a

Asian Politics & PolicyVolume 1, Number 1Pages 130

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shifting power configuration in the world, as discussed by Singapore diplomatKishore Mahbubani in his book The New Asian Hemisphere (Mahbubani, 2008b).This article focuses on relations between China and Latin America since the PRC

took control of the mainland and on how the United States has responded to thismovement into its traditional backyard. Latin America is perhaps the ideallocation in the world for the honing of mutually constructive relations andnonhostile competition among Chinese, U.S., and regional players that couldserve as an example for a new, constructive alignment of major powers andregions of the world in the decades to come.

Of course, Chinese relations with LatinAmerica are nothing new. Many scholarsbelieve they date back to the peopling of much of the region by immigrants fromAsia some millennia ago. Recently, a British naval officer turned historian hasargued that China discovered the Americas, though he has not yet convincedmost historians (Schurz, 1939). Clearly documented links date back to the mid-

16th century after Spainconquered the Philippines and launched trade between itscolony in todays Mexico and China by means of the so-called Manila Galleons.Even that early, the perceived liabilities and benefits of Latin relations with Chinaemerged. Shortly after some Chinese settled in Mexico City in 1669, Spanishbarbers there petitioned the government to relocate the Chinese barbers to theoutskirts of the city because they worked too hard and thus were engaging inunfair business practice (Hu-Dehart, 1995, p. 220). Still, as a Spanish padre wrotejust a few decades later, [o]ne cannot imagine any exquisite article for theequipment of a house which does not come from China (Schurz, 1939, p. 74), andthese items were hotly sought after by the wealthy in the Spanish colonial

heartlands of Mexico and Peru, and even in Spain itself. The first formal linksbetween the Chinese and some Latin governmentsdate back to the final decades ofthe Qing Dynasty in the late-19th century and were prompted by the mistreatmentof some of the hundreds of thousands of Chinese who went to the New World ascoolies to work in mines and on construction gangs and plantations. The ChineseNationalist Party (Guomindang) maintained official relations with some Latingovernments before and after it moved to Taiwan, setting the stage for a compe-tition between Beijing and Taipei that continues today in parts of Latin America.1

PRC Policy in a Global PerspectiveLike imperial leaders before them, and unlike most political leaders and poli-

cies in the West, Chairman Mao Zedong and later generations of PRC officialshave tried to look at Chinas needs and goals over the long term with a unifiedperspective, though their global views have sometimes varied greatly. ChinesePresident Hu Jintao made his case for a harmonious world in a speech at YaleUniversity in April 2006, using both traditional and modern concepts and ter-minology, as a foundation for domestic and international relations that wouldserve the interests of Chinese and all others in the long term. (Hu, 2006). A veryWestern interpretation of Chinas more comprehensive perspective, comparing itto Latin Americas short-term vision, was presented recently by an analyst advis-

ing the U.N. Latin American program. He said that China is a place whereeconomic actors tend to know where they want to go, not only today and tomor-row but ten to fifteen years from now. Latin America, in contrast, seems

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much less forward looking and more absorbed by day-to-day events (Devlin,2008, p. 128).

On foreign relations specifically, President Hu Jintao told the 17th Communist

Party of China (CPC) Congress in 2007 that the Chinese government will pursuean independent foreign policy of peace and safeguard Chinas interests interms of sovereignty, security and development (Hu, 2007). He explained howinternational relations should function cooperatively to serve the people of theworld (Hu, 2007):

* Politically, all countries should respect each other and conduct consultationson an equal footing in a common endeavor to promote democracy in inter-national relations.

* Economically, they should cooperate with each other, draw on each othersstrengths and work together to advance economic globalization in the direc-tion of balanced development, shared benefits, and win-win progress.

* Culturally, they should learn from each other in the spirit of seeking commonground while shelving differences, respect the diversity of the world, andmake joint efforts to advance human civilization.

* In the area of security, they should trust each other, strengthen cooperation,settle international disputes by peaceful means rather than by war, and worktogether to safeguard peace and stability in the world.

* On environmental issues, they should assist and cooperate with each other inconservation efforts to take good care of the Earth, the only home of humanbeings. (Hu, 2007)

Realists in the West generally consider this as a menu of platitudes hopelesslyseeking an ideal world. Even in China, leaders believe in a set of principles ininternational affairs, but consideration of its national interest causes Beijing tomake pragmatic compromises (S. S. Zhao, 2007, pp. 4, 15). But President Husis a useful framework for seeing foreign relations, and much of it is much morespecific than it may seem, a point the article returns to later. For now, the articleidentifies four broad periods in Sino-Latin American relations, though each couldbe further subdivided for greater subtlety. The first three periods are worthlooking at with some care, since they are all little more than yesterday in thecontext of Chinese history and all must still be factored into Chinas currentrelations around the world.

First Period: Cultural DiplomacyBetween 1949 and about 1961, China pursued a neighborly policy toward Latin

America, a region very far geographically from its primary concerns, in large partto break the isolation promoted by the United States and the United Nations. Ina sense this was the original application of Chinas current value-free perspec-tive. During this period China sought quite successfully to develop friendly

relations with a broad cross-section of individual Latin Americans on the basis ofan appeal to real and alleged similarities in histories, interests, and goalsmorespecifically, needs for national development and independence from American

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imperialism. One of the main differences between policies then and today,besides the former being much more limited in scope, was Chinas ferventanti-Americanism, resulting from Maos own perspectives in the context of

international conditions of the time, including the Korean War. For many yearsthere was little incentive and less opportunity for China to establish formalrelations with any government in Latin America, though Fidel Castro, who tookpower in Cuba in 1959, recognized China in 1960, being the first government inthe region to do so. During the 1950s, Latin America was not only too far away tobe of real interest to China, but it was also much more dominated by the UnitedStates than it is today.

Though limited, these contacts were relatively productive from Beijingsperspective. The policy adopted might most accurately be called a program ofcultural or peoples diplomacy, utilizing the exchange of information, ideas,persons, and culture as a systematic and unified arm of foreign policy (Walker,

1959, p. 45). More specifically, it involved visits to China by roughly 1,400 LatinAmericans, including sometimes important, sometimes marginal, labor, political,economic, cultural, and other groups from the Americas. The numbers anddiversity peaked in 1959. Even the least important guests, often in groups, metChairman Mao, Zhou Enlai, or some other top leader. As Guillain wrote in ParissLe Mondeon January 18, 1956, after a two-month visit to China: Come and See.This invitation is one of Chinas most formidable weapons, a weapon whichshe uses with consummate skill (Guillain, 1956, quoted in Ratliff, 1969, p. 60).A much smaller number of individually selected Chinese, and some performinggroups, visited Latin America (Ratliff, 1969).

In contrast to the 1960s, Chinese calls for revolution in Latin America duringthe 1950s were low-key and stressed above all opposition to U.S. influence in theregion. An article in a Chinese foreign affairs journal in August 1958 stated thatarmed struggle is still not the primary form of struggle in Latin America (Yen,1958, p. 18). Even after Castro took power in Cuba at the end of 1959 by armedrevolution, top leaders of the Cuban Communist Party for almost two years triedto slow down his reforms by promoting the Chinese road that focused onbuilding a new society with a broad, united front, including the national bour-geoisie (Ratliff, 1974).

Second Period: Anti-Imperialist Guerrilla WarfareThis is a period most in China and some outside would like to forget but

cannot because it occurred very recently, and the mere fact that it occurred onceand might occur again feeds the fears of some of Chinas critics today. Theseevents exhibit a China whose policies suddenly became so irrational, unpredict-able, and fanatical as to resemble madness. The common denominator of the firstand second periods was anti-Americanism, but there the common ground ends.The 1960s were forged in the fires of the Sino-Soviet dispute and Chairman Maosown most extreme domestic policies, including the Great Leap Forward and theGreat Proletarian Cultural Revolution. During its peak, from the early 1960s to

the early 1970s, Chinese foreign policy was value-intense, highly doctrinaire,mostly stressing the need for rural guerrilla wars to seize power around LatinAmerica. This policy was aimed at a very much reduced cadre of militants than


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those courted in the 1950s. The imperialist targets were the United Statesand Western imperialism generally, as before, but now adding Soviet socialimperialism, the heretical doctrine that for a time became more despised in

China than the imperialisms Vladimir Lenin and Leon Trotsky had analyzed andcondemned. From the mid-1960s onward, Castro-ism also became a target in anera of Chinacontra mundum.

In the early 1960s China advocated the Cuban victory as the model for otherLatin American countries. In terms of ideology, Fidel Castro and Che Guevarawere much closer to the Chinese than to the Soviets (Ratliff, 2004). But in themid-1960s Castro pragmatically sided with Moscow in the Sino-Soviet dispute,mainly because the Soviet bloc had more money and arms to give to Cuba andcould offer a shield against attempted U.S. reprisals. In 1966, Castro launched anabusive attack on Chairman Mao, charging that China had confused Marxism-Leninism with fascism. China was guilty of criminal economic aggression, he

said, because it had cut back rice shipments to Cuba. In fact, as Halperin haswritten, Castro was just trying to hide the fact that his own policies had reducedCuban production of this staple food by 90% in several years (Halperin, 1981,p. 206).2 Very shortly thereafter, Guevara was killed in Bolivia behaving like whatthe Chinese considered a petty bourgeois adventurer. So after mid-decade, theChinese insisted that the model conflict for Latin America was Maoist guerrillawarfare (Ratliff, 1976). The Chinese government then worked, usually in a veryloose fashion and to a limited degree, with whatever extremist individuals orsmall groups it could dig up or came scrambling to the gates of Zhongnanhai, asa few did (Ratliff, 1972, pp. 852853).

In a parallel movement, and even before the explosive feud between ChairmanMao and Castro emerged publicly, Chinese leaders began calling on Marxistsabroad who considered themselves real revolutionaries to take a stand withChina against Soviet social imperialism. Communist parties in Latin America,most of which were not very important, began splitting apart, with the bulk ofmost parties remaining what was then called pro-Soviet, while a minoritybroke loose to proclaim themselves pro-Chinese, or in the terminology of theday, Marxist-Leninist. Splits took place in Communist parties in Brazil (in1962), Ecuador (1963), Peru (1964), Chile (1964), Bolivia (1965), and Colombia(1965). By the late 1960s, Chinese publications usually spoke of 10 to 12 Marxist-Leninist parties and organizations in Latin America that supported China,

though only parties in Colombia, Bolivia, and Peru ever set up even remotelyserious guerrilla armies (Ratliff, 1972, p. 852).

Third Period: A Partial OpeningAt the beginning of the 1970s, China had diplomatic relations with only the two

self-proclaimed socialist governments of Latin America, Cuba and Chile. Buteven before Chairman Mao died in 1976, and the Cultural Revolution was closeddown, things began to change in some significant respects. The new line wascharacterized by a smorgasbord of elements from the first two periods: some of

the Maoist guerrilla warfare, which was very value intense, but also a renewalof the broader receptivity toward Latin Americans of any political stripe, whichwas much more value free. The partial opening of relations largely followed the


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U.S. lead. In 1972, U.S. President Richard Nixon and Henry Kissinger visitedChairman Mao in China and a joint defensive agreement was struck, aimed attheir common enemy, the Soviet Union. With this partial relaxation of hostilities,

Latin American governments in Washingtons backyard felt freer to engagemore openly with China. Many established formal diplomatic relations withBeijing during the next few years, beginning with Peru, which was alreadyalienated from Washington, in 1971. Then Mexico, Argentina, Guyana, andJamaica followed suit in 1972; Trinidad and Tobago, Venezuela, and Brazil in1974; and Surinam in 1976. Most important, in Argentina, Brazil, and Chile,Beijing developed diplomatic and economic relations with military or military-installed governments. At that time, this value-free approach drew feveredcriticism from many on the Left around the world, particularly when Chinarefused to break relations with Chile after the military there overthrew PresidentSalvador Allende in September 1973 (see Jiang, 2003, pp. 315317). One result of

this policy, however, is that by and large rightist parties and militaries in LatinAmerica are often at least as positively inclined toward the Chinese as are leftists(Dominguez, 2006).

The political reversals of the Maoist period were felt in trade as well, thoughrecovery began in the early 1970s as more countries established diplomatic rela-tions with Beijing. Sino-Latin America trade in 1950 was US$1.9 million, growingto $7.3 million in 1955 and $31.3 million in 1960. Even during the Great Leapperiod, trade expanded to $343.1 million by 1965. In 1970, with China goingthrough the extremes of the Cultural Revolution, trade with Latin America wasmore than halved, falling to $145.8 million. During the next five years it surged,

trebling to $475.7 million in 1975, and it has continued to grow ever since, asnoted later in the article (S. X. Jiang, n.d.).

Fourth Period: Escalating ReengagementThe fourth period began, as did almost everything constructive in contempo-

rary China, with the resurrection of Deng Xiaoping and his reforms beginning inthe late 1970s. First, the new Chinese leadership purged the Gang of Four andformally terminated the Cultural Revolution. Next the CPC focused on develop-ing Chinas disastrous economy and moving into the modern world. At first,dealing with the chaos Chairman Mao left behind precluded Chinas paying

much attention to distant Latin America. But as China began averaging a roughly10% annual GNP growth for year after year, the country needed raw materialsfrom abroad and a consolidation of political power in the competition withTaiwan. Thus interest in and links to Latin America were expanded for pragmaticand political reasons. The main difference between the fourth and the firstperiods, aside from the formers far greater scope, is the absence of overt anti-Americanism. The main Latin American relationship that did not change imme-diately after Chairman Maos death, as discussed later in the article, was the onewith Cuba.

Chinas interest in Latin America has matured and greatly expanded over time,

though the basic framework in the fourth period has always fallen at least insubstantial degree into the terms stated by President Hu Jintao in a talk to theBrazilian Legislature in November 2004. In a more detailed presentation than


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is quoted here, President Hu said that Chinas primary objectives in expandingrelations in Latin America are (1) deepening strategic common consensus andenhancing political mutual trust, (2) focusing on practical work and innovation

and tapping cooperation potential, and (3) valuing cultural exchanges andenhancing mutual understanding (Hu, 2004).3 Chinese leaders have tried topursue these goals by appealing to the interests of the Latin people, typicallystressing such points as peace and friendship, equality, reciprocal support,mutual benefit, and common development (Xu, n.d.a). This appeal to mutualassistance and goodwill was also promoted on earlier trips to the region byPresident Jiang Zemin, beginning in 1993, and others.

In its best of times, Chinese diplomacy has an attraction that tends to be inshort supply in the policies of some other world powers. It often has an appeal ofboth style and substance. For example, during his 2004 trip to Brazil, Argentina,Chile, and Cuba, President Hu Jintao stressed Chinas common interests with

his first three hosts, ranging from wanting a multipolar world to complement-ary economies. He was accompanied by many officials and businessmen whopledged closer relations with Latin America and substantial exchanges of dollarsand goods. Stressing mutual respect in a harmonious world, President Hu(and other Chinese travelers abroad) pushed positive buttons to win friendsand influence people and nations. Contrast this to President George W. Bushs2004 trip to South America, which to Latin Americans emphasized mainly thesecurity-oriented issues that so concern officials in Washington but not mostLatin Americans, though his trip in 2007 was more effective. Singapore diplomatMahbubani writes, American diplomacy is being trumped by Chinese diplo-

macy through the powerful combination of enhanced geopolitical acumen andbetter professional diplomacy (Mahbubani, 2008a).

Chinas Pragmatic, Global Objectives TodayAll this talk of goodwill and harmony should not obscure the fact that

China has very hard-nosed objectives in its relations with Latin America. Thesehave paid off increasingly well over the years but are not without potentialcomplications that are already evident in some nations. Chinas objectivesinclude (1) buying commodities ranging from oil and iron to copper and soy-beans that are needed for Chinas development and to satisfy increasing popular

demands for a better life; (2) investing in the production of these commoditiesabroad, and in infrastructure to facilitate their delivery to Latin American portsand then to China according to agreed-upon schedules; (3) exporting assortedmanufactured goods to the region, legally and sometimes illegally; (4) regionalstability, so as to guarantee security of investments and prompt delivery ofcontracted purchases; (5) reducing the absolute superpower status of the UnitedStates by promoting a multipolar world; and (6) eliminating Taiwan as a rival inthe One China sweepstakes around the hemisphere.

And Latin Americans have their own and sometimes varying special interestsin relations with China. These include: (1) China offering an alternative source of

power and influence, through trade, investments, aid, and large-power orienta-tion, to the United States; (2) China offering new markets to trade, ideally comple-mentary, particularly for the sale of raw materials and foodstuffs, both to promote


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growth at home and to reduce excessive reliance on one major nation, namely,the United States; (3) increasing foreign direct investment, or FDI, without thestrings associated with Western investments; (4) non-American trade and

investment, promoting national and regional diversification in economic andpolitical terms; and (5) the generally unspoken appeal of Chinas developmentexperiences that maintain elitist political control in the country while undertak-ing economic reforms. Because it has the healthiest market economy in LatinAmerica, Chile has taken the greatest strides in its relations with China. It was thefirst country to establish a bilateral trade agreement with China, and in 2007China replaced the United States as Santiagos main trading partner. This shift,like many other Chinese advances in Latin America in other contexts, was in partattributable to Washingtons needless and counterproductive drawing out of theprocess of passing a bilateral trade agreement with Santiago.

Political Relations and TaiwanIn political terms, Deng Xiaopings opening of relations paid off quickly

with the establishment of bilateral diplomatic relations with additional LatinAmerican countries during the first reform decade, all at the expense of theRepublic of China (ROC), or Taiwan. They were: Barbados in 1977; Ecuador andColombia in 1980; Antigua in 1983; Bolivia, Grenada, and Nicaragua in 1985;Belize in 1987; and Uruguay in 1988. Only 20 years later, by 2008, China hadestablished diplomatic relations with all South American countries exceptParaguay; that is, with 21 of the regions 33 independent countries. Among these

nations, the PRC has established what it considers its closest relationship, thatis, a strategic partnership, with Argentina, Brazil, Mexico, and Venezuela, andlesser but not necessarily less important relationships with others, chiefly Chile(Sullivan, 2008).

Even with these PRC successes in South America, the Caribbean Basin harborsthe highest number of countries in the world still recognizing the Republic ofChina (ROC), or Taiwan, as the One China. The 11 who remain loyal to Taiwan inthe Caribbean Basin are Belize, Dominican Republic, El Salvador, Guatemala,Haiti, Honduras, Nicaragua, Panama, St. Kitts and Nevis, St. Lucia, and St.Vincent and the Grenadines. Once in a while a country flips back to Taiwan, as St.Lucia and Nicaragua have done after shifts in ruling parties. The most recent to

abandon Taipei for Beijing, as of mid-2008, was Costa Rica in 2007, under Presi-dent Oscar Arias, though other prime candidates for a switchover include Nica-ragua, again under Sandinista President Daniel Ortega, who had recognizedthe PRC once before, and Paraguay, which in April 2008 elected Fernando Lugo,a former liberation theology priest, as president. The competition between Beijingand Taipei over the recognition of these countries has been intense, with bothsides often utilizing financial, trade, and other incentives in exchange for formaldiplomatic ties. This support ranges from building sports stadiumse.g., thePRC in Grenada and Taiwan in St. Kittsto funding assorted forms of infrastruc-ture, education and health programs, and limited emergency aid. Indications are

that the elected administration of President Ma Ying-jeou, which took power inTaiwan in May 2008, will call a truce in the dollar-diplomacy warfare (Adams,2008). If President Ma and Beijing continue the rapprochement underway in


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mid-2008, a less competitive relationship with Latin American (and other)countries may come about, perhaps with a tradeoff of diplomatic recognition ofBeijing and more ROC involvement in international institutions.

An Argentine analyst raises another important point by noting that the PRCsexternal diplomatic model can be seductive to Latin Americans because itstresses issues that coincide with certain Latin American traditions and aspira-tions and have become more attractive because of recent developments that mostLatin Americans reject in U.S. foreign policy. That is, China stresses multipolar-ism instead of unipolarism, multilateralism instead of unilateralism, noninterfer-ence instead of interventionism, soft power instead of hard, collaboration insteadof domination, and persuasion instead of coercion (Tokatlian, 2008, p. 64).Whether or not China always practices these principles, they do appeal stronglyto many Latin American leaders, who do not always practice them either. Finally,Chinas leaders know that other cultures often have trouble understanding

Chinese thinking and actions; to combat this they have established ConfuciusInstitutes in many countries to promote the learning of the Chinese language aswell as culture in many aspects.

Economic DevelopmentsChinas primary interests in Latin America at this point are securing the

political recognition discussed above; economics, namely, foreign trade andinvestment to feed the people; and reforms at home. As a scholar at the Inter-American Dialogue in Washington notes, Chinas global search for the com-

modities necessary to sustain its rapid economic expansion forms the bedrockof its relationship with Latin America (Erikson, 2008). Economic ties haveexpanded to unpredictable levels in just a quarter-century. Measured simply intotal volume, according to Chinese figures, Sino-Latin American trade surgedfrom US$1.9 million in 1950 to $475.7 million in 1975, $1.331 billion in 1980,and $ 2.572 billion in 1985, only to fall back slightly to $2.294 billion in 1990. In1995 it jumped to $6.114 billion, in 2000 to $12.6 billion, and in 2005 to $50.475billion (S. X. Jiang, n.d.). In his November 2004 address to the Brazilian Con-gress, President Hu Jintao predicted that Sino-Latin American trade wouldreach US$100 billion by 2010, but in fact it reached $102.6 billion in 2007, anincrease of 42% over the previous year. In practice, this has meant that in

most cases the big winners in terms of balance of trade have been countries inSouth America with strong agriculture and abundant raw materials, whilethe losers, in terms of trade, have usually been Mexico, Central America,and the Caribbean, where Chinese exports are in competition with localmanufactures.

As reported in theLatin Business Chroniclein early 2008, nearly 60% of Chinastrade in 2007 was with Brazil, Mexico, and Chile. Brazil is by far the mostimportant single trade partner in terms of value, the total in 2007 being US$29.7billion, up $9.4 billion over the year before. Chinas trade with Mexico was almost$15 billion in 2007, and its trade with Chile was $14.7 billion. Other top trade

partners with China in 2007, in descending order, were Argentina, Peru, Venezu-ela, Panama, and Colombia. Latin America as a whole had a slight trade deficitwith China, but some countries, including Mexico and some other Caribbean


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Basin countries, overwhelmed by the importation of inexpensive Chinese goods,have significant deficits; Mexicos, for example, was 80% of US$15 billion(Bamrud, 2008). The main Latin American export commodities of interest to

China are copper and nitrates from Chile, mining products from Brazil andAndean countries, and oil from Venezuela, Brazil, and Ecuador. China exportsplastics; various types of clothing, from shoes to textiles; and machinery. Onaverage and despite some exceptions, write three international economicanalysts, Latin America is a clear trade winner from Chinese global integration(Blzquez-Lidoy, 2007, p. 45).4 An important factor when it comes to living con-ditions is the fact that many in the middle and lower classes of Latin Americahave been able to buy more necessities and luxuries than before because ofinexpensive imports (Gonzlez, 2008; Ellis, 2008).

Chinese investments in Latin America have caused much concern and confu-sion everywhere but China because, as Devlin puts it, they are somewhat

murky (Devlin, 2008, p. 115). Among other factors, the confusion over ChineseFDI seems to result from a misunderstanding of Chinese promises, on the onehand, and what appears to be some deliberate obfuscation on the Chinese side,on the other hand. In his talk to the Brazilian Congress in November 2004,President Hu said that total trade between China and Latin America would growto $100 billion by 2010 (Hu, 2004), but that was reported as a pledge that Chinawouldinvest$100 billion during that period, a totally different and totally unre-alistic goal. Chinese trade exceeded the estimate in 2007, but FDI has been just asmall fraction of that amount.

Most investment has been directed at securing raw materials and infrastruc-

ture. One clear indication of how much more serious the Chinese are aboutdevelopment than most Latin American countries are the facts, as reported byOECD Development Centre Director Javier Santiso, that China invests 10% of itsGDP in infrastructure while Latin America averages 2% (Santiso, 2008). Thus ifthe Chinese want to move Latin raw materials to Latin American ports of embar-kation, they know they must invest in Latin American infrastructure as well astheir own, which they do. An American analyst who has followed levels ofinvestment closely in recent years testified to the U.S. Congress in June 2008 thatChina has invested substantially in primary product sectors. His examples werea $500 million agreement between China Minmetals and the Chilean nationalcopper company, Codelco; joint ventures between the Chinese Baosteel and the

Brazilian mining giant EVRD; and purchases of the Rio Blanco copper mine inPiura and the Toromocho mine in Junin, involving investments of $3 billion. Andthere is ongoing interest in Chinas Shandong Luneng in iron fields in Bolivia,Chinese CNPC and Petrochina investments of $1.42 billion in the petroleumsector of Ecuador, and a loan of $4 billion to Venezuela through a heavy invest-ment fund, which may be followed up with up to $18 billion more in the future(Ellis, 2008).

It sometimes seems the Chinese themselves do not know how much theyhave invested where, or just will not be specific. At the end of March 2007, forexample, the Chinese ambassador in Venezuela, Ju Yijie, reportedly said China

has invested more in Venezuela than any other Latin nation. He added: Weretalking about 600 million dollars in conservative terms, but I believe it could bemore than 2 billion dollars (Carlson, 2007). A Chinese official said in April


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2008 that total Chinese investments abroad were more than $90 billion by theend of 2006 and that a quarter of that amount (US$20+ billion) was in LatinAmerica (China Daily, 2008), which hardly jibes with Jus comment. In May

2008, the Xinhua news service reported that total Chinese FDI in 2007 was$18.76 billion and that it had rocketed up to $19.37 billion in the first quarteralone of 2008 (Xinhua, 2008b). If one assumes that roughly a quarter of that2007 investment was in Latin America, as some commentators claim, one mightextrapolate that investments in Latin America through 2007 were somewherebetween $25 and 30 billion. But no matter how one adds up Chinese promisesand known investments in the region as of 2008, they do not reach $2530billion.

Part of the answer to this puzzle is round-tripping. Many billions of FDIreportedly sent to Latin America seem to have gone to three British dependenciesin the region that have served as tax havens, namely, the Cayman Islands, the

British Virgin Islands, and Bermuda. There is a high probability that Chineseinvestors have put capital into these islands so that they can bring it home againto take advantage of preferences given to foreign firms (Sullivan, 2008, p. 22.)And Devlin reports that some investments were in fact long-term loans thatstipulated the use of Chinese labor (Stallings, 2008, p. 253), the latter a practicethat has angered many Latin American countries. Finally, one might compare theChinese FDI figure, whatever it is, to EU investments of $620 billion and U.S.investments of about $350 billion.

Another important area of Chinese investment is in a cooperative programwith Brazil for building and launching earth satellites, underway since 1988

after Brazil and the United States were unable to work out terms. Brazilian-Chinese earth satellites were launched in 1999, 2003, and 2007, and others arein the works. Meanwhile, one U.S. analyst reports that Latin American compa-nies have already invested some $20 billion in China, and more is promised(Erikson, 2008).

Chinas largest trade partners in mid-2008 were moderate leftist govern-ments, mainly in Brazil, Chile, and Peru, and center-right governments inMexico and Colombia. But there was also significant interaction with theregions leading anti-American, would-be miracle man, Venezuelan PresidentHugo Chvez, and his main current acolytes in Bolivia, Nicaragua, and in somerespects Ecuador, which is discussed later in the article. Recent governments

in Argentina have been semi-Chvista, and the new president of Paraguay hasa leftist background that may take him into the Chvez camp as well. Thepopulist-oriented leaders sometimes make tempting trade or investment offersto China, which the latter sometimes takes, though Beijing is not altogethercomfortable with the anti-Americanism and not at all in agreement with thesure-to-fail economic programs of the Chvistas. China knows full well that theultra-nationalist, Bolivarian populists are introducing instability into the region,a particularly flagrant example being the near-war in March 2008 that wouldhave pitted Venezuela and Ecuador against Colombia, with much widerrepercussions.

China also is a member of a variety of political and economic organizations inthe region, ranging from the Organization of American States to the Asia PacificEconomic Cooperation group (Sullivan, 2008). Levels of Latin American support


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for Chinas positions in the United Nations do not seem to be affected by thetypes of bilateral trade and political relations countries may have with China,though long-time political ally Cuba often votes alongside China (Dominguez,

2006).

The China, United States, Latin America TriangleOne serious PRC foreign policy preoccupation today is that Chinese expansion

into the Western Hemisphere will cause frictions with the United States andrevive the concerns first spoken to in 1823 by the Monroe Doctrine. Today, no onein Washington can expect to prevent or reverse current international ties in theWestern Hemisphere, including massive E.U. investments, but many do believethe United States should resist what are perceived as hostile or even potentiallyhostile influences developing there. Some Americans already consider China agrowing security threat in the Americas. Many others (in the United States)

believe, however, that China is too dependent on U.S. markets, too heavilyinvested in American debt, too concerned about potential unrest in LatinAmerica, and too determined to play by the generally accepted internationalrules to conduct policies in the Americas to provoke Washington. One of Chinasleading Latin America experts and spokespersons has written, China under-stands well that Latin America is the backyard of the United States, and thatChina should not challenge U.S. influence there. He continues, China and LatinAmerica have been opening to the outside world . . . in the age of globalization-. . . cooperation between China and Latin America will benefit regional peace

and development in Asia-Pacific and Latin America. This outcome would cer-

tainly be in the favor of the United States (S. X. Jiang, n.d.).Still, security concerns must be taken seriously, though most U.S. officials, ifone can believe their words or silence, do not consider them a problem, at leastyet. Most officials do not testify often on strategic concerns, and thus analysts stilloften hark back to comments made in early 2005 by Rogelio Pardo-Maurer, thenU.S. Assistant Secretary of Defense for Western Hemisphere Affairs. Pardo-Maurer testified that there is no evidence that Chinese military activities in thewestern hemisphere, including arms sales, pose a direct conventional threatto the United States, though he continued that Washington must be alert torapidly advancing Chinese capabilities, particularly in the field of intelligence,communications, and cyber warfare, and their possible application in the region

(Pardo-Maurer, 2005, p. 19.) The intelligence concerns alluded to relate particu-larly to Cuba. For example, delegation traffic between Cuba and China, and otherinformation, suggests that China has actively supported Cubas Air and AirDefense Forces (DAAFAR) in the development and use of sophisticated radar,early-detection, and anti-aircraft systems. Certainly, China has a listening post ofsome importance in cooperation with Cubans (Ratliff, 2006c). Other develop-ments U.S. intelligence will watch in the future include what China may get fromsatellite cooperation with Brazil and, in the future, from Venezuela, and whatthese Latin American countries themselves will learn. But the commitment towatch what China is doing is more common sense and job description than

alarmist, for when possible China is watching U.S. activities just as closely.The main military penetration China has made in the region as a whole isin large degree the result of U.S. policy. The 2002 American Servicemembers


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Protection Act, with its Article 98 restrictions, was clearly intended to protectAmerican servicemembers from prosecution at the International Criminal Court.But when almost a dozen Latin American governments refused to grant this

modern version of extraterritoriality, and the United States cut off military equip-ment and training as a result, the Chinese stepped into the spots the United Stateshad vacated. Secretary of State Condoleezza Rice later said the act was likeshooting oneself in the foot, but by the time a partial revision came in 2006, muchof the harm had been done (Mann, 2008). What has been widely perceived inLatin America as a U.S. withdrawal of interest, or unacceptable dictating of howother nations should act, opened a door the Chinese have simply walked quietlythrough. A professor at the U.S. National War College testified to the U.S. Con-gress that the Peoples Liberation Army has carried out some modest militaryexchanges, education programs, and sales in Latin America, but concluded thatthis is hardly surprising, for if Washington is not interested in having a sus-

tained, deep and satisfying, mutually respectful relationship with Latin America,the latter will turn elsewhere (Watson, 2008).

Most U.S. commentators have shown careful restraint in their responses toChinas expansion into Latin America. As analyst Gonzalo Paz notes: Thisincreasingly intense interregional activity hasnt sparked strong U.S. reactionsyet. Washington has either shown indifference or has considered such activityrelatively inoffensive (Paz, 2006, p. 105). U.S. Assistant Secretary of State forWestern Hemisphere Affairs Thomas Shannon met with Chinese LatinAmericanists in Beijing in 2006 and in the United States in 2007. In June 2008 hetold a seminar in Miami that in the second meeting, his Chinese counterpart said,

China recognizes that the political vocation of the Americas is democratic, andthat successful democracies are the best path to political stability, and that there-fore the Chinese do not come into this region with a political or revolutionarypurpose, that they come into the region really trying to build stable partnerships.(Shannon, 2008)

A top Latin Americanist at the Chinese Academy of Social Sciences reported afterthe 2006 Beijing meeting that the Chinese side had said China aims at peace,development, and cooperation in the region and that Chinas expansion has noideological color nor [is] it directed against the interests of any other country(Xu, n.d.b).

Many other U.S. comments in 2008 were in substantial part positive. In con-gressional testimony, U.S. Deputy Assistant Secretary for East Asian and PacificAffairs Thomas J. Christensen said:

We believe that China can make positive contributions to economic growth inAfrica, Latin America, and the South Pacific through increasing both directinvestment and foreign assistance, and can serve as an exemplar of how prag-matic economic policy and trade openness can lead to increased literacy,managed urbanization and poverty reduction. (Christensen, 2008)

Christensen did add his concern that China sometimes provided aid without

strings to problematic regimes and thus might undermine international effortsto promote transparency and good governance in certain countries. He con-cluded with remarks on Chinas military contacts in the region and said only that


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we seek for China to carry them out responsibly (Christensen, 2008; Ratliff,2007a).

Case Studies: Provocative Ties?Three specific issues concern many North Americans and some Latins and

thus require additional comment. The first two are Chinese relations with theCuba of Fidel, and later Ral, Castro, and expanding Cuban ties to the Venezu-ela of Hugo Chavez. These two countries are the only ones in Latin America thatlook on relations with China more in political than economic terms, though theeconomic side is also an important factor for each. And then the Panama Canal,whose two main users today are the United States and China, which the UnitedStates turned over to Panama at the beginning of the new millennium. Whatspecial challenges, if any, do these pose for Chinese and U.S. policymakers andthe region?

Cuba

During the past half-century, no large Latin American country has drawn somuch attention as the island of Cuba. Over the past two decades China hasdeveloped a special relationship with Cuba for several reasons, ranging fromloyalty to intelligence gathering. Though Chinese leaders today devote most oftheir energies to domestic market-oriented development and to cultivating anincreasingly prominent role for themselves in the globalized world, they alsowant to retain some links to their more revolutionary past. Cuba was Chinas first

friend in the region, having recognized the PRC in 1960. Ties between the CPCand the Communist Party of Cuba are a link to that past, even though, ironically,Chinas relations with Castro during much of the Cold War period ranged frombad to appalling, as described above. Even Deng Xiaopings succeeding Chair-man Mao did not bring improvement because of Chinese hostility towardVietnam, the foreign country above all others that Castro admired because of itswar of resistance against the United States. Post-Mao vitriol peaked when Chinainvaded Vietnam in early 1979. Castro loudly condemned the mad neo-fascistfaction that rules China and its leader, this numbskull [mentecato], this puppet,this brazen Deng Xiaoping . . . a sort of caricature of Hitler (F. Castro, 1979,quoted in Ratliff, 2004, p. 10). As a bland Chinese Foreign Ministry posting stated

many years later: There were little substantive contacts between China andCuba during the Cold War period from the middle of the 1960s to the early 1980s(Peoples Republic of China Foreign Ministry).

While ties became less hostile during the early and mid-1980s, a suddenimprovement in relations came with the Tiananmen confrontation in June 1989,which occurred while Chinese Foreign Minister Qian Qichen was touring LatinAmerica. The minister suddenly found his visits to several countries cancelled inprotest over Tiananmen, but when he arrived in Cuba he was treated like anemperor. As Yinghong Cheng has noted, this reception above all else openedthe door for Sino-Cuban rapprochement (Cheng, 2007, pp. 34). The Chinese

Foreign Ministry says that exchanges of foreign ministers in 1989 marked thefull resumption and development of Sino-Cuban relations (Ibid.). This improve-ment necessitated Castro eating a lot of crow, for by the time Deng Xiaoping died


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in 1997, Castro was lauding him as an illustrious son of the Chinese nation whomade a valiant contribution to the consolidation of socialism in China (Reuters,1997, quoted in Ratliff, 2004, p. 10). The successes of Chinas reforms over-

whelmed Castro on two visits to China, and when President Hu Jintao visitedCuba in November 2004, Castro said that objectively speaking [China] hasbecome the most promising hope and the best example for all developing coun-tries. After adding, I do not hesitate to say that it is now the main engine ofworld economic growth, he said that Chinas success notwithstanding, capital-ism had no future in Cuba (Agence France-Presse, 2004).

China has become Cubas second-most important trading partner, after Ven-ezuela. Political and military exchanges are frequent and cooperation in col-lecting intelligence is considerable though not easily identified, despite somefalsified published claims. For China, Cuba is of particular interest because it letsBeijing take a tit-for-tat jab at Washington, characterized as the mirror effect.

Cuba is an island important to and just off the coast of the United States. FriendlyChinese relations with that island, which greatly concern the United States,counter Chinas even greater concern over U.S. relations with Taiwan, the islandoff the Chinese coast that is part of the One China dispute and is heavily armedby Washington (Ratliff, 2006b).

For many years, Fidel Castros brother Ral, who officially took power in early2008 when his elder brother retired, has been an admirer of Chinas reforms(Ratliff, 2004). In recent years several top Latin Americanists who are friendlytoward Fidel Castro at the Chinese Academy of Social Sciences (CASS) in Beijing,the chief government think tank, have nonetheless said that if Cuba is to get out

of the economic doldrums it must deepen its reforms . . . and smash [da po]egalitarianism (Xu, n.d.c). Another CASS Cuba specialist, Mao Xianglin, wrotein late 2007 that if Cuba wishes to catch up with the rest of the reforming worldit must do so by moving rapidly to break out of its intellectual straitjacket andintensifying its reform (Mao, 2007). On July 11, 2008, Ral Castro gave a majorspeech that more than any of his other words and actions since formally takingpower suggests that this process may now be getting under way. Among otherthings, he told people to be prepared for a realistic form of Communism andreversed a very long-standing belief of his elder brother when he stated thatSocialism means social justice and equality, but equality of rights and opportu-nities, not of income. Equality is not egalitarianism. The latter, in the end, is also

a form of exploitation: of the good worker by one who isnt, of the bad worker bythe vagrant (R. Castro, 2008). It remains to be seen if tentative movement in thedirection of real social and economic reforms will be stepped up, while authori-tarian political rule may continue for a while.

Venezuela

Venezuela has long been one of the worlds leading oil exporters and accordingto some reports has the largest reserves in the world, though most of it is anextra-heavy, sour, highly sulfurous crude in the Orinoco Tar Belt in Central

Venezuela that requires extensive and expensive refining to be usable. One ofVenezuelas great problems today is the level of production by PdVSA, the stateoil company. PdVSA itself reports producing 3.2 million barrels a day and claims


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that production will soon be raised to 5.1 billion bpd, while the Paris-based IEAsays that production is stagnating at something like 2.4 million bpd (Jones, 2008).Still, as long as prices continue to rise, Venezuela will make more money each

year even if production declines.For many years the United States has bought roughly 60% of Venezuelasoutput, usually 1.2 to 1.4 million barrels per day. In a long interview in mid-2005,the Chinese ambassador in Caracas, Ju Yijie, said he understood the Venezuelanwish to diversify its clients, but added that the natural markets for Venezuelan oilare North and South America (Ju, 2005, cited in Ratliff, 2006e). It takes only fouror five days for a tanker to reach the United States to be refined there instead ofmany weeks through potentially treacherous waters and straits to get to China.Still, because of oil China has developed a significant if somewhat problematicrelationship with President Chvez. Despite Jus obviously correct comment,China is always drawn to oil, even if it is almost half a world away from the

motherland (Ratliff, 2006a). The first PRC oil contract with Venezuela was signeda year and a halfbefore Chvez became president, and Beijing expects the tiesestablished with Chvez to continue after his departure. For Chvez, relationswith China signal above all anti-American nationalism, with both political andeconomic ramifications, and China is increasingly investing in and buying moreVenezuelan oil. Deliveries to the United States declined from 1.28 million bpd inthe first four months of 2007 to 1.13 million bpd during that period in 2008, whileshipments to China have been rising gradually. Exports to China were an esti-mated 250,000 bpd in mid-2008, with a goal of 500,000 bpd by 2010 (Gentile,2008). It is a sign of the unreliability of many reports that have flowed out of

Venezuela and sometimes China that in mid-2006 Venezuela was predictingshipments of 300,000 bpd to China by the end of 2006 and predicting deliveriesof 1 million bpd by 2010. (Ratliff, 2006f).

China is also working with Venezuela on the construction of heavy oil refin-eries in Venezuela and China and on building rigs and a shipping fleet to deliverthe product. In May 2008 Chinese Vice-Premier Hui Liangyu visited Caracas, andthe New China News Agency reported that he said:

The Sino-Venezuela strategic partnership has ushered in a stage of full develop-ment, featuring close high-level contacts and deepening mutual trust; growing

bilateral trade and optimized trade structure; remarkable progress in coopera-

tion in energy, agriculture, infrastructure, and science and technology; and closecooperation and mutual support in international and regional affairs. (Xinhua,2008a)

To the extent that this very positive release is truth rather than propaganda, it willheighten the concerns of some in Washington about the intentions of both Chinaand Venezuela.

But though some things seem to be going well between China and Venezuela,the reality is more complicated. Both Chvez and China reject a unipolar worlddominated by the United States, but while the Venezuelan leader often wants tochallenge that reality head-on, China is usually more careful. Beijing has balked

at antagonizing the United States by joining Chvezs informal anti-Americanpolitical alliance that includes Iran and in some respects Russia. A Chinesegovernment advisor at the Institute of International Strategy in Beijing


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emphasized in a 2007 interview that China does not want unrest in the Americasor problems with Washington, any of which could threaten energy and otherdeliveries to China, which in turn would impede the countrys domestic devel-

opment and popular well-being. In Venezuela itself, Chvez arbitrarily cancelleda contract with China to produce orimulsion, a low-grade, dirty fuel used mainlyin power plants. Chvez also forced the renegotiation of Chinese contracts, aswith all oil companies in the country, and claimed back taxes. In mid-2007 I askeda top official of the China National Petroleum Company what his companythought of Chvezs frequently unpredictable actions and he just shrugged hisshoulders. What can anyone do? he asked.

Chvez is a revolutionary firebrand, one of the most colorful caudillos everin a hemisphere long famous for its strong and resourceful, rather than brilliantand progressive, leaders. He thrives today because he has made himself thechief spokesman for this decades wave of Latin American anti-Americanism

and because Venezuela is now awash in oil money from the United States thathe spends freely on programs to aid and court the poor and the powerful athome and abroad. Chvez and his regional followers take advantage of age-oldpopular frustrations with the seemingly intractable problems of poverty andinequality and generally unresponsive elitist governments and their relationswith the United States. They have excluded or harassed some Western investorsand buyers and presented China with opportunities that are a mixed blessing,for the Chinese, too, have suffered from disturbances by the disgruntled inmines and other industries (Ellis, 2008). One of the most telling developmentsof 2008 was the long strike across the agricultural sector in Argentina, in protest

against increased government taxes imposed by President Cristina Fernandezde Kirchner, which for months angered China by delaying large shipments ofsoybeans.

The continental tragedy of Chvismo is that it will drag down every countrythat follows or adheres to it in any degree and then will have to start rebuildingonce again. Only Venezuela has the vast oil revenues needed to pay debtsincurred for any period of time, and even Chvez will fall unless he alters hiscourse. Chinese leaders know very well that these governments will fail and thatChinas trade and investments will not turn bad domestic policies in LatinAmerica into good ones. The PRC can only calculate that its relations will survivethe collapse of the Chvistas, whenever that comes. On the other hand, if leaders

in Chvista (and some other) countries begin listening to and acting upon someof the economic advice they get from Beijing, they and the region will be betteroff for their having done so, as Secretary Christensen told Congress in 2008.

Panama

The article focuses here on concerns expressed over the 1996 Panamanianconcessions of two of five ports to the Panama Ports Company (PPC), a memberof the Hong Kongbased Hutchinson Port Holdings Group (HPHG), the worldslargest independent port operator, which now also operates a former U.S. base at

Manta, Ecuador. The two Panamanian ports (Balboa on the Pacific and Cristobalon the Caribbean) control only a small percentage of cargo traffic when comparedto the other ports owned by U.S. and Taiwanese firms. The dispute is over what


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powers were given the PPC and whether the PPC is now a stalking horse forBeijing or in danger of becoming one. It is true that Beijing can apply pressure onthe HPHG, but doing so would exact a very high price for the HPHG, Panama,

China, and the United States. In the end the pressure would fail because ifPanama gave such authority to China through the PPC, it would be inviting theUnited States to intervene in accordance with the terms of the supplementarycanal treaty written to guarantee the permanent neutrality of the waterway (thePanama Canal) (Ratliff, 1999).

Will China Impede Reform in Latin America?Like Secretary Christensen above, many U.S. leaders and analysts say they

worry about Chinas possible negative influence in Latin America. A 2007 reportpublished at the University of Miami states this concern very clearly:

The expanding relationship with China is transforming Latin America. Majorinfrastructure projects, including contemplated rail, road and pipeline projects,are focused on getting goods to and from Pacific ports. Growing trade withChina is increasing the significance of Latin American cities on or near the PacificOcean, from Guayaquil to Valparaiso. A new generation of Latin American stu-dents is studying Mandarin Chinese and the mechanics of doing business withChina. In broader terms, Latin America is increasingly attracted to the Chineseeconomic model, which suggests that rapid growth can be achieved in anauthoritarian political system pursuing mercantilist trade policies. By presentingan alternative political and economic model and an alternative to the UnitedStates as a trade partner, the PRC is significantly undermining the U.S. agenda toadvance political reform, human rights and free trade in Latin America. (Centerfor Hemispheric Policy, 2007, p. 2)

But this argument about undermining the U.S. agenda in Latin America bothmakes U.S. policy in the region seem much more consistent and committed thanit has been and places far too much responsibility for the possible advancementof political, trade, and human rights reforms on a secondary player, China, ratherthan on those who are chiefly responsible, the Latin Americans themselves. Yes,there have been occasional reasonably serious reform efforts in Latin America,but very few have made a lasting difference. If Latin Americans have reallywanted the kinds of democratic and market reforms that are on the U.S.agenda, they have had about 200 years of independence to carry them out.Indeed, Latin America might have developed more in tandem with the United

States from the period of European settlement some 500 years ago if people then,and their leaders, had chosen to do so. It was not the fault of the United States orGreat Britain that liberal democratic and market-oriented reforms were notadopted during either the colonial or independence periods, nor will it be thefault of the Chinese if those reforms are not made in the future. Indeed, it is nota matter of fault at all, but matters of choice and commitment by Latin Americansthemselves (Harrison, 2006; Ratliff, 2005, 2006d.) The bottom line is that thesereforms have not occurred, mainly for institutional and cultural reasons, and asa result many aspects of daily life for many Latin Americans, in the words ofMexican political analyst Luis Rubio, remains a never-ending ordeal (Rubio,

2007, p. 3; also see Harrison, 2000; Vargas Llosa, 2005; Wiarda, 2001).Clearly, there is greater individual political freedom in many parts of LatinAmerica today, and in some of the past, than there has been or is in China, but this


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has not brought the widespread rollback of poverty and inequality that has comefrom changes in recent decades in reforming Asia.5 Argentine analyst JuanGabriel Tokatlian (Tokatlian, 2008) and some others (e.g., Gonzlez, 2008) have

correctly noted that Latin American countries have become somewhat moredemocratic in recent decades and that democratic values in Latin America derivefrom the Western tradition that many would be reluctant to give up. According toShannon (2008), Chinese leaders accept this. But polls also show that across thecontinent as a whole, 46% of the people lack a strong or moderate commitmentto democracy. Across Latin America, only 37% are satisfied with democracy aspracticed, and only 25% think their democratic governments work for the well-being of all the countrys people (Latinobarmetro, 2007, p. 81).

In 2007, I asked a top CPC leader working in international affairs if China hadany interest in changing Latin American politics and he replied: No. Why shouldwe? We are perfectly happy with a democratic system controlled by elites that

keeps real popular involvement to a minimum, so long as they continue to enforcethe agreements made with us. This is roughly in line with the comments Chineseofficials made or implied to Shannon (2008). Still, if Latin American leaders askforconsultations on how the Chinese have accomplished so much with their economicreforms, it is not likely that PRC officials will refuse to discuss their experiences.Indeed, as several top Chinese Latin Americanists have written, the PRC con-sciously develops party-to-party relations as extensively as possible, with partiesin and out of power (Xu, n.d.a; S. X. Jiang, 2003, pp. 318319, n.d.). One LatinAmericanist has written: As fellow members of the developing world, the CPCand its Latin American counterparts exchange views on strategies to improve

governance, the management of party affairs, political modernization and socio-economic development (S. X. Jiang, 2008, p. 35). The prospects for consultationsare increased by the comparative scales of poverty and inequality in reformingAsia and LatinAmerica, the continuing popular frustrations with the performanceof Latin American democratic governments, and the feeling of leaders from thetwo regions that they have every right to make decisions for, but not necessarilyin close consultation with, the masses. The probability of Chinese discussions ofpolitical and other matters is all the greater if the Latin American economy sinksinto another of its periodic and historically seemingly inevitable economic down-turns, or crashes, though not if the next slump is related to a downturn in theChinese economy, which itself could spell disaster for Latin Americans (and

others) who now so depend on Chinese purchases and merchandise.Latin Americans repeated love affairs with the paternalism of authoritarian

governments is a central characteristic of Latin American civilization, one origi-nating in Spain (with earlier Roman roots) that is conveyed by the word caudillo.This is the strong man in many forms who has come up again and again in onecountry after another throughout Latin Americas colonial and independencehistories. But while these caudillos have bought off certain constituencies fromtime to time to keep power, very few have tried or succeeded in promotinglong-term good for majorities in their countries. Thus if one looks at the figureson inequality and poverty in Latin America over not just decades but centuries,

it is clear that the regions relative freedom has not served the economic interestsof most of the people. Governments in China and reforming Asia have been morewisely led, sometimes in the distant past and certainly in the recent past and


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present, and have been far more actively involved than Latin American govern-ments in constructive reforms that have produced tangible results for majorities.Compared to the successes in reforming Asia since World War II, including China

over the past quarter-century, Latin American governments have failed to reducepoverty and inequality or provide access to fairly good education, health services,and other markers of a modern developing society. Asias successes may seem torecommend a degree of enlightened political and economic authoritarianism, theunenlightened version of which is already so popular in most of Latin America,if conditions do not begin to clearly improve under democracy.

But whether honing a new version of political authoritarianism would actuallyimprove conditions in Latin America is far from certain, mainly because in Asia aperiod of central leadership, while important, was accompanied by another evenmore critical factor, namely, the more informed and capable leaders themselveswho were operating within a culture with a far greater focus on (a) education as

the expressway to success, (b) high goals pursued with single-minded diligenceand a relentless work ethic, (c) broader respect for and rewarding of merit, and(d) frugality and focus to guide expenditures of funds and energies (Ratliff,2007b). Thus a refined authoritarianism in the Latin American context, withoutthe above cultural characteristics, might well increase problems for most of theLatin American people, but again this is their choice to make. This would beparticularly so if China pressed Latin Americans to concentrate only on buyingChinese manufactures and themselves producing largely natural resources andfoodstuffs, thus tending to keep Latin America a cluster of banana republics.This is a greater threat so long as Latin American governments continue to invest

too little of their current profits in things that would bring greater long-termdevelopment to their countries, ranging from infrastructure to education. AsWiarda has shown, the Latin American elites over centuries have been extraor-dinarily successful at adapting new ideas to upholding the old system of eliteleadership at the service mainly of the elites themselves (Wiarda, 2001). Afternoting the commodities boom in Latin America during the early 21st century,University of Miami Latin Americanist Susan Kaufman Purcell correctly con-cludes that most of Latin America is just spending the money, taking it in but notthinking ahead, not planning, not using it to make Latin America more economi-cally competitive globally. So these are chickens that are going to come home toroost (Purcell, 2006).6

The Next Generation of Gringo Imperialists?It is entirely possible that a generation from now Latin Americans will be

denouncing Chinese imperialism and exploitation of the Americas, as in thepast they denounced American and British, and even Spanish, colonialismsand imperialisms. Indeed, those complaints have already been heard for sometime in Mexico and several smaller countries hard hit by the importation ofChinese manufactures. Already at the time of President Hu Jintaos 2004 visit,Chinese leaders were well aware of the so-called China Threat saying that is

popular in some Latin American countries (W. Jiang, 2004). A top Koreanspecialist on Latin America wrote an op-ed about China and Mexico for a majorMexican paper at about the time of President Hus visit, saying that China had


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become Mexicos Favorite Villain (Kim, 2004). Other countries, such as Braziland Argentina, which in 2004 recognized China as a market economy, haverepeatedly charged China with selling goods in Latin America cheaper than in

China, or dumping, sometimes with good reason. In short, we are hearing echoesof complaints made as far back as the 16th century, when the Mexican barberstried to get Chinese barbers out of the city because they worked too hard.

When touring Latin America in 2004, President Hu sweet-talked LatinAmericans by making the best possible case (and it is a good one) for whyChinese and Latin Americans should work together, remarking on the value ofcooperation as they climb the development ladder together. But for Chineseleaders charm sets the stage for serious, tough negotiating. Chinese businessmenand officials are interested in cooperating, but they are also interested in con-tracts, terms, responsibility, and timely delivery. They will be unhappy withinefficiency, low productivity, irregular and expensive business practices, and

disruptions that, like those in the Argentine rural sector, prevented the deliveryof contracted goods in 2008. Nor will they forever put up with the scapegoatingthat is so common in Latin America.

Thus the problem for China is that exacting negotiations do not guaranteetrouble-free contracts. The problem for Latin Americans is that they often fail totake anything close to full advantage of opportunities offered by Chinese or otherforeign investors, and they do not make significant progress toward changingwhat is inadequate. For example, in many respects Latin America is behind andfalling farther behind developed, and even some developing, countries in condi-tions that encourage progress. These shortcomings include the failure to (a)

substantially reduce poverty and inequality, (b) seriously reform and expandpublic access to quality education and health care, (c) provide equality before thelaw and control of crime, (d) provide people the opportunities to succeed, (e)accommodate to change in a globalized world, (f) fund and carry out research anddevelopment, and (g) build physical infrastructure. While China still has some ofthese problems today, evidence of Latin Americas failure to cope is legion. Oneimportant comparison is Chinas far greater success in developing endogenoustechnological capacity and competitiveness (Gallagher, 2008, p. 2.) And when itcomes to developing science and technology, the head of the Inter-AmericanDevelopment Bank (IDB) division in charge of those matters, Gonzalo Rivas, saysthat Latin American universities are guilty of navel-gazing tendencies and

though governments and leaders often talk of the importance of spending oninnovation, they never put up the resources (cited in Cevallos, 2008). Decisionsto deal effectively or not with these matters are made by Latin Americans them-selves, and Chinese are not likely to be much more effective in changing LatinAmerican culture and institutions than North Americans, or Latin Americas ownwell-informed reformers, have usually been in the past (Oppenheimer, 2005).

So two questions here are, first, whether Latin Americans will come to considerChina the 21st-century foreign imperialist on a par with or worse than the UnitedStates, and, second, whether such a charge would be justified. The answers areprobably probably and no. In recent decades, to a large degree, the Chinese

and Latin Americans in their contrasting ways have proven the efficacy of thefirst commandment of development penned by Singapore diplomat Mahbubani:Thou shalt blame only thyself for thy failures in development. Blaming


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imperialism, colonialism, and neo-imperialism is a convenient excuse to avoidself-examination (Mahbubani, 2001, p. 190). Latin Americans very often blameothers for their problems and fail to keep pace with the developing world, while

Singapore, China, and others have taken the development bull by the horns andto a large degree succeeded with reforms. Three Latin American economistswriting for the IDB emphasize

the need for countries in [Latin America] to embark on an introspectiveexamination of the factors that may be holding back productivity growth. LatinAmerican countries consistently trail other regions in the integrity of their insti-tutions, in the quality and availability of their infrastructure, in R&D spendingand in the number of available skilled workers. These are among the factors thatthe region must address in order to participate successfully in world markets andcompete effectively with China and other countries. (Lpez-Cordova, Micco, &Molina, 2007, p. 125)

Conditions in Latin America today are largely the choice of the Latin Americanleaders and people over many centuries. It is no ones fault, but a matter ofideas, choices, and consequences. With uneven levels of enthusiasm, NorthAmericans have long urged reforms in Latin America, usually with only marginalsuccess. The last thing North Americans should be doing now is encouragingLatin Americans to make China the scapegoat for the probable next round offailures in Latin America, but that is what all these worries about Chinasimpact are doing.

Quo Vadis, China?The recent, rapid resurgence of China has grabbed the worlds attention andleft everyone wondering how it was possible and what the country and itsleaders may do in the future. Of course this will be a critical question for theChinese themselves, but the countrys future will also have an enormous impacton other parts of the world, including the United States and Latin America. IfChina continues to prosper, Latin America will benefit and lose in importantrespects hinted at above and below, but if China stumbles or collapses, LatinAmerica and much of the world will feel it even more, and it will be almostentirely negative. The prospects of Chinas two most extreme alternative futuresare noted here, though they cannot be examined in detail.

On the first, Chinas resurgence is the most natural and predictable develop-ment imaginable for this ancient land. During much of the history of highcivilizations on earth, China has been the most advanced or very nearly so.Hudson Institute Sinologist Charles Horner has reminded us that as recently asseveral hundred years ago China had the largest economy in the world, gen-erating some 30% of the worlds GDP (Horner, 2006). What is more, economichistorian Albert Feuerwerker has written that if one looks back 500 years, [n]ocomparison of agricultural productivity, industrial skill, commercial complexity,urban wealth, or standard of living (not to mention bureaucratic sophistica-tion and cultural achievement) would place Europe on a par with the Chinese

Empire (cited in Fairbank, 1992, p. 2). Even when China had the power tomove far beyond its traditional (though greatly fluctuating) continental borders,as in the early Ming Dynasty, it did not do so, in contrast to Western colonial


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the main challenges and how the involved parties must respond to currentconditions and prospects if the future is to serve the interests of the vast majorityof countries and their peoples. The irony is that all parties will benefit if all parties

benefit. This seeming platitude simply means that the world should strive fora pattern of international relations that would in time reduce the manipulationand exploitation that stoke frustrations and drive people to confrontation ratherthan cooperation. There will be much shifting among world nations in the next30 years as U.S. domination in many spheres is shared or replaced by Chinaand perhaps other countries and regions. The accommodation reached by Chinaand the United States in Latin America could set a pattern for working out a newworld balance. In essence, this is the framework that President Hu Jintao pre-sented at the 2007 Congress as a method and goal for future internationalrelationships.

Finding the balance in Latin America will first require the will to do so, using

common sense, flexibility, adaptability, and a willingness to take chances, includ-ing temporary losses in pursuit of mutual benefits or a tradeoff of benefitslooking to the longer run. It must be founded in careful, realistic analyses ofobvious developments. It will require the same quality analyses of currentsbeneath the surface that improved intelligence will turn up, the latter particularlyduring the period of growing trust among the various parties. While intelligencewill always be necessary, its role will diminish as trust is improved and thebenefits of cooperation and nonhostile competition become clearer to all parties.There must also be a degree of self-criticism and genuine humility that will notcome naturally to the cultures of the United States, China, or LatinAmerica, for all

believe themselves to be very special civilizations, in some cases with much toteach the world. All parties are going to have to seek common ground whileshelving difference and respect the diversity of the world.

China and the United States have had tolerably good relations most of the timeexcept during the Maoist period, though today each has what seem to be signifi-cant reasons to be concerned about the other. All parties must begin by applyingRobert Burnss wish to see ourselves as others see us and go on from there.Looking first at the two major powers, the United States may well be concernedabout what may come from Chinas expanding role in the world, not just in LatinAmerica, including the development of its military forces. What Westerners andmany Chinese consider the madness of the Cultural Revolution, and even the

Great Leap Forward, is only a couple of decades in the past. Would a seriouseconomic downturn, or something else, reignite this madness? And if the chaosorluandoes return, what does that mean for the world, especially if China thenhas a modern military force? It is in this context that many in the West worryabout the closed nature of Chinese society, and the perceived need for transpar-ency is heightened by the fact that the PRC has been so long guided by DengXiaopings phrase, Hide brightness and nourish obscurity(tiaoguang yanghui),which to outsiders means secrets to achieve hidden objectives. And Chinais concerned about the following, among other things: the United States is anoverwhelming force in a unipolar world and to a degree can still do what it wants

to. This particularly concerns the Chinese because many Americans militantlybelieve the world must be essentially like us. Not only does the West have acenturies-long record of colonialism and imperialism worldwide, including in


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China, which China does not, but the United States today also has by far thestrongest military in the world, and both Republicans and Democrats, in Iraq andYugoslavia (among other places), use it to intervene in other countries that are not

threats to U.S. security. Moreover, the United States has military forces all overthe world, including on all sides of China, and militarily arms what Beijingconsiders a renegade Chinese province, Taiwan.

It will be a constant challenge to get Beijing and Washington to get along,though so far in Latin America they have done very well. The meeting of thetwo is complicated, predictably, by the countries that provide the playing fieldfor the engagement: the Latin American countries. In fact, this regions particu-lar characteristics could either draw China and the United States into greatercooperation and goodwill or ignite a conflagration, depending on LatinAmericas readiness and competence to carry out its part of the relationship.Latin Americas apparent prosperity toward the end of the first decade of the

new millennium is likely to prove temporary, as economic upturns in LatinAmerica historically have been temporary, booms followed by stagnation orbusts. Thus in 2006 Marta Lagos, the editor of the best polling service coveringall of Latin America, Latinobarmetro, wrote, Latin Americans know that, aftera good year, there will be a bad one. These ups and downs have been charac-teristic of the regions economy and most transitions have taken place withoutsustained growth, economic stability or constant improvement in the economicsituation of the country and its inhabitants (Lagos, 2006). Latin Americas basicproblems are imbedded in its culture and institutions, and 200 years of inde-pendence have done remarkably little to change them. Latin Americas current

prosperity occurs at a time of growing malaise in the U.S. economy, this jux-taposition alone accentuating the reality that many Latin American economieshave moved a considerable distance from their previous dependence on theUnited States. The problem in most of Latin America is that the commoditiesboom with Asia, and with China in particular, has not inspired nearly enoughLatin American dedication to pursuing basic reforms seriously; that is, not justsaying one wants change but doing what is necessary to bring it about. AsOxford fellow Laurence Whitehead has written, historically Latin America hasbeen receptive to the importation of modern techniques, but not necessarilyto undertaking the social and cultural adjustments that they require if they areto operate as expected (Whitehead, 2002, p. 39). If Asias purchases of Latin

American resources decline significantly, for example, and inexpensive con-sumer goods from Asia begin to dry up, Latin American prosperity, which hasshallow domestic roots, will wither or crash in most places.

The strongest incentive to working for success in this endeavor may be con-templating or sampling the alternatives, including a violent, chaotic LatinAmerica and U.S.-Chinese suspicions of each other, hostile competition, andperhaps confrontation. It is for this reason that high-level contacts between Chinaand the United States are so important to continue and expand. The links werelaunched in 2005 by then U.S. Deputy Secretary of State Robert Zoellick andexpanded in 2006 to include annual meetings focusing on Latin America. In an

address to the National Committee on U.S.-China Relations in New York in late2005, Zoellick presented an enlightened evaluation of China and future relations,not altogether unlike President Hus, when he said that China


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does not seek to spread radical, anti-American ideologies.

while not yet democratic, [it] does not see itself in a twilight conflict againstdemocracy around the globe.

while at times mercantilist, [it] does not see itself in a death struggle withcapitalism.

does not believe that its future depends on overturning the fundamentalorder of the international system. In fact, quite the reverse: Chinese leadershave decided that their success depends on being networked with themodern world. (Zoellick, 2005)

These talks and related relations should be expanded to cover a lot more thaneach informing the other what its interests are. They should include seriousplanning on cooperation in the region. Once the United States and China haveworked out the format for productive meetings, supplementary talks should beheld including Latin American leaders who agree to eschew propaganda in favorof real issues that will promote constructive and respectful reform of LatinAmerican culture when necessary, as well as more productive trade relations,investments, and assistance by the United States and the PRC.

Some differences and suspicions will continue among the parties on culturalgrounds and because the competition for energy, food, and other resources fordomestic needs will continue and grow among all countries of the world. Mean-while, China and the United States will continue to invest in and trade with LatinAmerica, providing the major thrust of that regions economy and making pos-

sible better lives and funds for further development. The challenge for LatinAmerica, whether dealing with the United States or China, will be to changeconditions at home so that Latin Americans can cope in the world and thus bebetter able to deal with and benefit from any outside trading/investment oppor-tunities or partners. If Latin Americans do not want change enough to makenecessary accommodations, then that is their choice. But it will be no good toblame the United States or the Chinese if the chickens of the centuries continuecoming home to roost.

Notes1I will examine these pre-Communist ties, and current developments, in a forthcoming book on

Chinas relations with Latin America.2On this rice war, see Halperin (1981, pp. 195207) and Ratliff (1990, pp. 210212).3Also see article from Brasilia inChina Daily(H. X. Zhao, 2004).4By way of comparison, U.S. trade with the region in 2006 was almost US$555 billion (Sullivan,

2008, p. 26).5By reforming Asia I mean the East and Southeast Asian countries that became the dragons

and tigers of the region, not Myanmar, Laos, Cambodia, North Korea, and those that have donelittle or nothing to change. All that have reformed had significant Chinese populations and/or astrong background of many centuries of Confucianism.

6Professor Lanxin Xiang, who teaches in Geneva and at Fudan University in Shanghai, has writtenthat the former vice-president of the Chinese Academy of Social Sciences, Li Shenzhi, pointed to apossible Pinochet political model, which demonstrated how a country could move from authori-tarianism to democracy, for China. This, Xiang notes, was the first time in Chinas history [that a linkwas drawn] between the internal politics of a Latin American country and the political future of theCommunist Party of China (Xiang, 2008, p. 49).


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7This fallacy has rarely been expressed more effectively than by Shelley in his sonnet,Ozymandias.

8Mahbubani writes that the two most salient features of our historical epoch are that we havereached the end of the era of Western domination of world history (but not the end of the West, which

will remain the single strongest civilization for decades more). Second, we will see an enormousrenaissance of Asian societies. The strategic discourse in the West should focus on how th

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