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l(f)r(sh)g:2020-03-26 Դ: ĬЦԒ c(din)
China cautious as it sets up generous investment in Latin America The United States is keeping a watchful eye as China bolsters political and economic ties with Latin America. The situation has U.S. political analysts trying to determine just how Chinas emerging influence in the Western Hemisphere will affect the U.S. economy and its national security. Among the questions being asked is whether Chinas arrival in the West is a boon to the global economy or just an attempt at getting a strategic foothold in the backyard of the United States.
Reactions in the United States have been mixed, but official policy here shows a positive attitude toward Chinas investment based on the benefits many expect to come out of continued growth in the Latin American economy.
According to a U.S. Government report, Chinas imports from Latin America grew more than 600 percent in the five years from 1999 to 2004. And Chinas exports to Latin America for the same period grew from $5.3 billion to $18.3 billion. These exports largely consisted of electrical appliances, clothing, computers and machinery, and mineral fuels and oil. More recently, China analysts are predicting Chinas growth into the automotive industry, with Brazil as a key partner, will make it the worlds largest automaker by 2020--a point only more strongly impressed on the U.S. collective consciousness by the mere presence of Chinese automaker Geely at the January 2006 Detroit Auto Show.
Chinas courtship with Latin America began heating up about four years ago with former Chinese President Jiang Zemins tour of the continent in April 2001, followed by the visits of President Hu Jintao and Vice President Zeng Qinghong in 2004 and 2005, respectively.
Back in April 2005, the U.S. Western Hemisphere Subcommittee of the House International Relations Committee heard testimony from specialists in the fields of international relations, economics and national security to appraise the extent of Chinas interest in Latin America and the implications that might have for U.S. foreign policy. Then, in September, the U.S. Senate Subcommittee on the Western Hemisphere heard expert testimony on the issue. Shortly thereafter, Charles Shapiro, Principal Deputy Assistant Secretary of State for Western Hemisphere Affairs, delivered the official comments on the matter, concluding that Chinas involvement in Latin America should enhance--not impair--U.S. ties to the region. Still, critics continue to be wary of the situation, saying further competition with China for natural resources, energy and labor could mean instability--both economic and political--for both Latin America and the United States.
Long-term implications
The State Department report began with a summation that while Beijings interests in the region appear confined to matters of trade, there is still the question of long-term implications for U.S. political interests.
The United States is of two minds about this, said Alvaro Vargas Llosa, Senior Fellow and Director of the Center on Global Prosperity at the Independent Institute. They fear it on the political level and welcome it on the economic level. If Latin America prospers, that helps the U.S. economy, so growth in the region is much welcomed. But wed be naive to think they are not worried politically. The hearings demonstrate that there are fears and, in some cases, paranoia from people who think this is a very deliberate political move on the part of China.
In November 2004, President Hu fueled further excitement in Latin America when, during a speech to the Brazilian Congress, he announced Chinas plans to invest $100 billion in Latin America over the next 10 years. Among the projects targeted for this investment are railway, oil exploration and construction projects in Argentina; a nickel plant in Cuba; copper mining projects in Chile; and a steel mill, railway and oil exploration projects in Brazil. This investment in infrastructure will ensure the stable flow of the commodities China needs to support its current rate of economic growth.
The prospect of such a large investment has many in Latin America feeling positive about relations with China. In recent years, said Llosa, Latin American nations have been very welcoming toward Chinese goods and services because they wanted to diversify their commercial exchanges. This was at a time when there were large sectors of Latin America that had grown distant from the United States politically. But, more recently, there has been a growing sense that this investment may come at the expense of domestic interests, particularly where the Chinese are competing in important manufacturing sectors.
Luring investors
Now that China has grown more powerful, there is a growing resistance to the Chinese presence in some of the Andean countries that produce clothing a sector in which China is extremely powerful, Llosa said.
And in Mexico, there is a different type of fear. In the last four years, about 300 investors have left Mexico to go to China, Llosa noted.
Its an interesting situation, Llosa said. Latin America is still very welcoming and very dependent on China, but at the same time, China is beginning to lure investors away from Latin America.
Others analysts, however, see Chinas dealings with Latin America as a more strategic attempt at gaining a political foothold in the region. Frederick W. Stakelbeck Jr., a contributor to the blog American Thinker, warns that Chinas dealings with Cuba represent more ideological intentions.
Recognizing an opportunity for a permanent base of influence and operations in the Western Hemisphere, China has stepped into the void caused by the Soviet collapse to embrace Castro, giving the Cuban leader a second chance to secure a place among the worlds communist immortals, writes Stakelbeck.
But Llosa argues that while it is easy to assume that such alliances might be forged along political lines, the actual content of the dialogue between the two nations represents a different ideology altogether.
[Bolivian President] Evo Morales has the kind of rapport with president Hu Jintao that President Bush could never have, simply because the public back home wont allow that, said Llosa. And yet, what were they talking about? Free market investments.
The end result of these alliances, says Llosa, is an expansion of economic liberties by way of investment. And that is an ideological language the United States can appreciate.
Watching from the sidelines
As for concerns that China will suddenly overwhelm the economy of the Western Hemisphere, Llosa says such claims are exaggerated. This, he says, is because of the unlikelihood that China will be prepared to deliver on those pledges any time in the near future.
A lot is being made about the $100 billion China has said it will invest in the region, Llosa said. That has not materialized yet. China is not looking to simply subsidize Latin America, said Llosa. Economic stability [among Latin American nations] is very uneven and China is going to take a wait-and-see approach toward that investment.
In his official comments delivered in September, Shapiro said the Unites States supports Chinas engagement in the region in ways that create prosperity and promote transparency, good governance and respect for human rights, echoing the U.S. policy of engaging China as a stakeholder in the global arena. He added that the U.S. expects Chinas increasing engagement in the region will lead to increased cooperation between China, the United States, and other Latin American and Caribbean governments
The U.S. Senate Subcommittee on the Western Hemisphere concluded that Chinas engagement with traditional U.S. allies in the region is a natural development of its economic growth--a development that should not have any diminishing effect on U.S. influence or capabilities in the region. It is to say that there is room enough for both China and the United States to benefit from alliances with Latin America. Llosa agrees.
There was room for Britain and the United States in the 19th century, said Llosa. In the 20th century there was room for Spain and the United States. I dont see why China cant coexist with a traditional U.S. presence.
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