TWO PAIRS OF STRUCTURAL CONTRADICTIONS IN CHINA-US-LATIN AMERICA RELATIONS: HOW TO VIEW THEM

ZHOU ZHIWEI

Researcher, Institute of Latin American Studies, Chinese Academy of Social Sciences

Before his multi-stop visit to Mexico, Argentina, Peru, Colombia and Jamaica in Latin America and the Caribbean (LAC) early February 2018, then U.S. Secretary of State Rex Tillerson released many signals for Latin America. Especially in his remarks at the University of Texas at Austin, he portrayed the presence of China and Russia in LAC as a “new imperial power” and called on nations of Latin America and the Caribbean to review and reassess China-LAC relations. By identifying China and Russia as critical reference variables for future U.S.-Latin America relations, he obviously went beyond the bilateral level of U.S.-Latin relations and implied the important changes in U.S. policy toward LAC that pressured by growing influence of extra-regional actors in LAC, the United States might strengthen its diplomatic efforts in LAC to maintain and consolidate its dominance in the region.

In response to Tillerson’s policy signals, Margaret Mayers, an expert on Latin American affairs at the Washington-based think tank Inter-American Dialogue, pointed out that the U.S. interests in Latin America are best served by strengthening U.S.-Latin America ties,rather than lecturing the region on its ties with China. Evan Ellis, a professor of Latin American studies at the U.S. Army War College, indicated that with China’s engagement in Latin America as part of the global contest between China and the U.S, the latter needs to formulate a holistic strategy to deal with a trend its gradual marginalization by China. The Chinese academic community stresses that interdependence is the momentum driving future growth of China-Latin America relations and believes that the Monroe Doctrine mindset remains deep-seated in the U.S. policy toward LAC. This passage holds that a triangle has been gradually formed among China, the United States, and Latin America and the Caribbean and that two set of structural contradictions may stand out in the triangular relationship and affect the dynamic of the three legs of the triangle.

STRUCTURAL CONTRADICTION BETWEEN CHINA AND THE UNITED STATES: DIFFERENCES IN ADVANTAGES OF STOCK AND INCREMENT

With ever stronger comprehensive national strength, China has made rapid progress in expanding its overseas interests, improving its regional influence, engaging in global affairs and participating in international decisionmaking. This process has prepared practical conditions for the evolution of the international power structure from a unipolar system to a multipolar one. China and the U.S, as an emerging power and an established power respectively, are facing a set of structural contradiction, which presents itself in multiple dimensions. The “Asia-Pacific Rebalance” strategy laid out by the Obama administration and the “Indo-Pacific Strategy” envisaged by Trump reflect the adjustment of the current U.S.global strategy and are widely considered an embodiment of the evolution of the structural contradiction between China and the U.S. in the Asia-Pacific region. On current trend of the contest of comprehensive strength between China and the U.S. and as China keeps expanding its overseas interests and presence,this structural contradiction unfolded in the Asia-Pacific region will also emerge in other regions. The specific time of its emergence will be determined by the core interests, policies approaches,balance of power and influence of the two countries in various regions. In fact,Tillerson’s statement on China-Latin America relations reflects that the U.S. has captured some traces of the emergence of China-U.S. structural contradiction in Latin America and the Caribbean. In particular, defining China as a “new imperial power” is in line with Trump’s picturing China as a strategic competitor in the National Security Strategy of the United States.Although China is far from rivalling the U.S. in terms of power and influence in the Latin American region,China’s advantage in increment and America’s advantage in stock in their respective cooperation with LAC actually mirror the substance of this set of structural contradiction between the two countries.

The rise of China, the positive interactions between China and Latin American countries (LAC), and China’s innovative solutions to the “anti-globalization” trend have helped remarkably increase the LAC’s sense of approval towards China. The picture shows that on December 1, 2017, an attendee was riding a shared bike at 11th China-LAC Business Summit in East Point, Uruguay.

I. China’s advantage in increment in Latin America

Firstly, driven by economic complementarity and robust supply and demand, economic and trade cooperation between China and LAC has picked up pace faster than the latter’s economic and trade interaction with any other(major) extra-regional countries. Secondly, pushed by sound economic and trade relations, the China-LAC overall cooperation mechanism has been laid out to plan for “upgrading the quality”of China-LAC relations at the next stage and put in place a diversity of policy options and mechanisms that guarantee the sustained and rapid growth of China-LAC cooperation. Thirdly, China has earned a significantly higher level of recognition from Latin American countries by its rising, their benign interaction and its innovative approach to countering the “anti-globalization”.

In terms of economic and trade cooperation specifically, China is the latest major country that entered into cooperation with Latin America. In 1999, fifty years after the founding of the People’s Republic of China, the trade volume between China and Latin America reached merely 8.2 billion USD, while the U.S.-Latin America trade totaled 344.7 billion USD. The U.S. was the destination for 61.6% of Latin America’s exports, while China received only 0.8%. After entering the new century, the China-Latin America trade has accelerated sharply.In 2000, the bilateral trade volume exceeded 10 billion USD for the first time and hit a historical peak of 263.6 billion USD in 2014, with an average annual growth rate of over 30%, which is three times of that of Latin America’s overall foreign trade in the same period. The same period also witnessed the climax of U.S.-Latin America trade at 814.3 billion USD, with an average annual increase of 9%. Latin America’s trade with China obviously grew more vigorously than that with the U.S. Since 2014, Latin America’s trade with both China and the U.S. has shrunk to a certain extent.However, China-Latin America trade has picked up to nearly 260 billion USD by 2017, a level close to its historical peak, while the U.S.-Latin America trade rebounded to only 763 billion USD, at a speed slower than the recovery of the former. With Mexico excluded, considering that it is a member of the North American Free Trade Area (NAFTA),China and the U.S. have already been on an even end in their respective trade with Latin America.

In terms of investment, according to the statistics released by the Ministry of Commerce of China, as of the end of 2016, China’s FDI stock in Latin America has amounted to 157.37 billion USD, highlighted by FDI of 21.46 billion USD in 2015 and 29.8 billion USD in 2016, with an increase of 67% and 39% respectively. Latin America is the second largest destination of China’s overseas investment. The past two years witnessed the growing enthusiasm of Chinese companies for merging and acquiring the assets of European and American businesses in Latin America.An example is the purchase of Dow Chemical Co.’s Brazilian corn seed assets by Longping High-Tech, a Chinese seed company, and CITIC Agricultural Fund. Driven by the economic and trade cooperation, China and Latin America launched the overall cooperation mechanism with the “China-CELAC Forum”as the main platform, and adopted a host of cooperation plans and relevant financial support arrangements (such as the Sino-Latin American Production Capacity Cooperation Investment Fund,Sino-Latin American Infrastructure Investment Fund, etc.) to facilitate the synergy of the development strategies of the two sides. The Sino-Latin American cooperation plans show that China-Latin America relations, powered by the“twin engines” of trade and investment and supported of bilateral and multilateral cooperation platforms and special mechanisms, will sustain the ongoing pace of cooperation and continue to enjoy the advantage in increment.

The dynamics of the triangular relationship among China,the U.S and Latin America will be on a track of increasingly complex changes

II. The United States enjoys apparent advantage in stock in Latin America

The U.S. remains the largest trading partner of Latin America and its investment in Latin America also far outstrips any other major foreign countries. In 2017, the trade volume between the U.S.and Latin America exceeded 763 billion USD, nearly three times of that between China and Latin America. The U.S. appeal in terms of its institutions, values,culture, soft power, and military is also an integral component of its advantage in stock in Latin America. On the whole,due to China’s rapid economic growth,the economic complementarity between China and Latin America and the synergy between their opening-up policies, their cooperation has experienced speedy progress and embraced broader sectors. However, the accumulated influence of the U.S. in Latin America is still strong and enormous.

Traditional security threats are not the core concerns of Latin America;rather, development is its top priority.Under such circumstances, the effectiveness of the measures adopted by China and the U.S. to boost Latin American economy and the number of accessible policy options will become the priority considerations of Latin America in its further international cooperation.China possesses certain advantages with a diversity of approaches to cooperation and the effectiveness of cooperation, at least for the moment. But objectively,China’s influence in Latin America is far from rivalling that of the U.S.. The U.S. warning of China-Latin America relations, on the one hand, showed the country’s concerns over the geopolitical and economic relations in the Western Hemisphere, and on the other hand,revealed the structural contradiction between China and the U.S. at the global level and its specific manifestation in Latin America. In fact, Tillerson also made similar comments on China-Africa relations before being dismissed.The strategic intention of the U.S. is to contain China’s influence and maintain its dominant position in various regions across the world so as to possibly avoid the balance of power between China and itself. However, if China can effectively use diversified policy instruments to provide more virtuous public goods that boost local economic and social development, China’s influence in Latin America will surely continue to grow and put a squeeze on the United States.As China’s national strength continues to grow, structural contradiction between China and the U.S. will surface in a more visible manner in Latin America.

STRUCTURAL CONTRADICTION BETWEEN THE UNITED STATES AND LATIN AMERICA: THE MONROE DOCTRINE AND LATIN AMERICAN INTEGRATION FOR JOINT DEVELOPMENT

A review of the history of the relations between the United States and Latin America shows that the “Monroe Doctrine” has been the core thinking penetrating the foreign policies of the U.S. toward Latin America. Its concept of regional order in the Western Hemisphere is encapsulated in one core objective and two policy measures, with the core objective referring to establishing, consolidating and maintaining the hegemony and dominance of the U.S. in Latin America and the two policy measures referring to curbing the expanding outside influences in Latin America and containing the integration of Latin America. The former policy measure is manifested in the “American System”advanced by the U.S. soon after the independence of Latin America, curb on German penetration in Latin America during the World War II, the U.S.-Soviet Union confrontation in the region during the Cold War, and the current warning against China’s presence in Latin America, while the latter is reflected in the difference thinking of the U.S. and Latin America on establishing regional order. The “Monroe Doctrine” vis-a-vis Latin American integration for joint development has been a set of structural contradiction running through the history of U.S.-Latin America relations.This set of structural contradiction has surfaced from time to time in the development of the U.S.-Latin America relations, but on the whole, it is far from fully exhibited. The reasons are that, on the one hand, the U.S. enjoys absolutely superior power and influence in Latin America, and on the other, the Latin American integration is yet to gravely shock and impact the order in the Western Hemisphere.

While highlighting pivot countries or regions, the U.S. policy toward Latin America shows an obvious intention to approach the continent as a unitary actor, which were manifested in the“Monroe Doctrine” adopted in the early years of Latin American independence,the “Alliance for Progress” initiated in 1960s and the “Free Trade Area of the Americas” proposed in mid-1990s. However, the U.S. failed to achieve its policy expectation of promoting a community of shared interests by taking a holistic approach. Examining the process of Latin American integration, we found that despite many attempts made by the continent since the 1960s, due to the inability to set up a complete industrial chain in the region and the “pendulum”in its political landscape among other factors, Latin American integration fails to work in a consistent manner on the regional economic integration advocated by the prominent Argentine economist Raúl Prebisch, an easily observed fact proved by the low level of regional trade volume in comparison with that of the other regions across the world. A review of the implementation of regional integration by the U.S. and Latin America in the past half century(in which the U.S. highlights the Western Hemisphere as a whole while Latin America emphasizes the sub-region)shows that the U.S. hasn’t achieved the policy objective of building a community of interests in the Western Hemisphere and in the meantime, Latin American integration is yet to substantially disrupt the U.S. concept of order which takes the western hemisphere as a whole.

Since Trump took office, the U.S. has shown apparently less intent to provide Latin America with public goods (such as trade facilitation, investment, aid,and remittances) and Latin America has embraced positive developments in the regional economic integration.In the past year, the Mercosur and the Pacific Alliance both put free trade on the agenda, which is expected to mend the “fragmentation” upsetting the Latin American integration process, and even narrow the difference in positions on regional integration between the South and the North since Mexico’s accession to North American Free Trade Area in 1994.

The immediate predicament impeding the economic integration in Latin America is mainly the absence of complete industrial chains in the region and inadequate connectivity of infrastructure. In fact, building interconnected infrastructure in the region has always been a goal pursued by nations of Latin America (especially South American countries), which proposed the Initiative for the Integration of Regional Infrastructure of South America in 2000 and adopted the Declaration on Infrastructure Integration at the inaugural Summit of Heads of State of the South American Community of Nations (later renamed the Union of South American Nations) in 2005. However, restrained by its inadequate investment capacity,Latin America failed to effectively implement the “connectivity” plan.

After the Belt and Road Initiative was put forward, both China and Latin America expressed strong will to identify infrastructure as a priority in aligning development strategies of the two sides,which is verified by the Special Statement on the Belt and Road Initiative issued by the Second Ministerial Meeting of the Forum of China and the Community of Latin American and Caribbean States (CELAC). The China-Latin America cooperation in infrastructure will help the region improve the “interconnectivity”, promote the integration of regional markets, upgrade and optimize the regional industrial chains, thus materializing the economic integration of Latin America. If translated into reality,the conceived cooperation will scratch the “essence” of the U.S.-Latin America relation, lead to Latin America breaking loose from its interests bound to those of the U.S. and disrupt head-on the U.S.concept of overall western hemisphere order that remains the core of its policy toward Latin America. As a result, the structural contradiction between the U.S.and Latin America will further present itself.

Based on the analysis and judgment of the above two sets of structural contradictions, the current situation calls for differentiated strategic responses from China, the United States and Latin America. For China, it can take advantage of the “window period” when the Trump administration adopts policies that deviate from Latin America’s interests, fully leverage on a diversity of policy instruments and seize the time when Latin America exhibits strong intention to enhance cooperation with China and the structural contradiction between the U.S. and Latin America gradually emerge to magnify its advantage in increment in Latin America. For the United States, three core considerations in its policies toward Latin America are preserving its advantage in stock in Latin America,curbing the presence of countries outside the region including China in Latin America and avoiding deeper integration of Latin America. For Latin America, the most reasonable policy is to maximize its interests from China-U.S. competition and expand its benefits through interaction with foreign powers other than China and the U.S. In general, the dynamics of the triangular relationship among China, the U.S and Latin America will be on a track of increasingly complex changes.