China Fills Trump's Empty Seat at Latin America Summit
By Alfonso Serrano
Mr. Serrano, a native of Chile, has written extensively about Latin America.
April 13, 2018
Vice President Mike Pence may be taking President Trump's place at the Summit of the Americas in Lima, Peru, on Friday, but the vacuum left by the United States' steady retreat from the region was filled, much earlier, by China.
Latin America is now the second-largest destination for Chinese investment, after Asia. China is the top trading partner for three of Latin America's biggest economies: Brazil, Chile and Peru. Chinese influence is evident throughout the region, from highway construction in Ecuador to port projects in Panama and a planned fiber optic cable running from Chile to China.
China's soft power is perhaps most visible at the southern edge of Argentina, in Santa Cruz province. This pristine Patagonian terrain, home to glacial lakes and one of Argentina's last free-flowing rivers, has also become home to bulldozers and cranes made by Shantui, the Chinese construction giant. The machines are excavating the area around the Santa Cruz River to build two hydroelectric dams, financed by $4.7 billion from the China Development Bank and built by China Gezhouba Group with partners from Argentina. When completed, the dams will flood roughly 116,000 acres, generating 5 percent of the country's energy needs and an estimated 5,000 local jobs.
The Santa Cruz project is just one of the $141 billion in loan commitments China made to Latin America from 2005 to 2016. China's lending now surpasses lending from the World Bank and the Inter-American Development Bank.
But China, unlike those agencies, isn't putting short-term conditions on those loans or pushing for austerity measures. Instead, its interest in Latin America is part of a long strategic game, an effort to assert its influence around the world, quench its need for raw materials and control the flow of global trade through Chinese-funded transportation hubs.
While the United States has been retreating from its southern neighbors for years, Mr. Trump has added outright hostility to neglect. Five months after taking office, he reversed Barack Obama's historic overtures to Cuba and stifled United States business ties with the country, a move perceived as potentially devastating for the island's private sector. Threats to blow up Nafta, cut aid to Honduras and Colombia, and militarize the United States border with Mexico have underscored Mr. Trump's contempt.
The message is not lost on Latin America, and it is much louder than anything Mr. Pence may say in Lima, where he is expected to argue that the United States, not China, is Latin America's preferred trading partner. He may also announce some progress on a renegotiated Nafta.
United States influence in the region lingers, of course. The United States remains Latin America's largest trading partner. Despite the pivot to China, certain countries have resisted its dominion, wary of China's thirst for raw materials and its lax environmental standards. President Mauricio Macri of Argentina, breaking from his predecessor, has sought warmer ties with the West. And however strong Mr. Trump's xenophobic rhetoric may be, Latin America is intimately tied to the United States by immigration. Remittances from the states to the region amounted to $74 billion in 2016, a 7.4 percent increase from the previous year.
It's not too late for Mr. Pence to quietly strengthen those ties. He could listen to the concerns of pro-business leaders, such as Mr. Macri and President Sebastián Piñera of Chile, who may ask for a return to more open trade policies. He can put something concrete behind Mr. Trump's apparent willingness to re-enter the Trans-Pacific Partnership, an agreement that includes three Latin American countries and serves as a countermeasure to China. He could signal the administration's openness to ending the ban on American business transactions with the government-led group that oversees the Cuban economy. That policy, criticized even by Republicans, is likely to harm average Cubans more than the inner circle of Cuban leadership.
This is a good moment for a few friendly gestures. Some of China's splashiest megaprojects, including a transcontinental railway from Brazil to Peru, a high-speed railway in Mexico and an interoceanic canal project in Nicaragua, have run into trouble. Germany has already emerged as a potential investor in the stalled Brazil-Peru railway.
Meanwhile, Chinese firms have begun to expand into sectors other than natural resources and transportation, particularly into energy infrastructure projects in Chile, Argentina and Ecuador, as China makes good on Xi Jinping's pledge to deliver $250 billion in direct investment and $500 billon in bilateral trade by 2025.
Mr. Xi has backed that lofty promise by visiting Latin America three times in his first three years in office. The Chinese president doesn't have a seat at the table for the Summit of the Americas, but he doesn't really need one.