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A warming friendship
Part II of a Two Part Series on China, Taiwan, and Latin America
Cynthia Watson
6/22/2004

The recent spate of articles on China's growing energy and natural resource consumption is a key explanation for Beijing's growing interest in South America. While the continent remains at least fourth on China's list of priorities, the vast array of resources available, coupled with a growing population eager to increase its consumption of goods, makes this part of the world ever more enticing. The People's Republic of China (PRC) seeks to put a modest investment in diplomatic, military, cultural, and trade relations for a possible long-term gain of significant proportion.

Beijing has expanded its role in South America since 1970, although the six nations of Central America, with their small populations and predominantly agricultural-export economies, retain diplomatic recognition of Taiwan. Prior to 1970, only Cuba maintained diplomatic ties and ideological solidarity with the PRC, after Castro transferred his allegiance in 1960. Beginning with Chile in 1970, however, all but one South American state have moved to recognize Beijing as the capital of China instead of Taipei. Paraguay, the land that time forgot in the central part of the continent, has been the sole outpost for Taiwan since Uruguay finally abandoned Taipei in favor of Beijing in 1988.

For much of the past thirty years, China's ties with South American states have come in fourth place, behind growing interests in bilateral relations with the Pacific Rim (especially United States and Southeast Asia), European, and African states. The last of these is a region with which China could pretend "Third World solidarity" and considerably influence in the absence of competitors. Trade with South America has grown slowly, because Beijing's interests have been elsewhere. At the same time, the region has been absorbed first, with the trauma of the "external debt crisis" (1980-1989) and then the giddiness, followed by profound disappointment, of the "marketization-democratization" processes of the 1990s. In short, neither side had a pressing reason to raise the other in its list of priority relationships.

Jiang Zemin and the EP-3 Incident: "He's Where?"

Many U.S. analysts were startled when PRC President Jiang Zemin embarked on a tour of South America as the EP-3 incident unfolded in early April 2001. A constant stream of senior People's Liberation Army (PLA) officers and PRC political leaders had been arriving in various South American capitals for many years. Jiang's willingness to be out of the country at a time of such sensitive negotiations with Washington indicated not only his confidence in the political and diplomatic leadership left behind in Beijing, but the importance he attached to China's relations with South America. The trip to Chile, Argentina, Brazil, Venezuela and Cuba sent that message to these states. A string of meetings between senior officials from the region and the PRC followed Jiang's 2001 visit. Defense Minister General Chi Haotian held talks with Colombian and Venezuelan defense authorities and National People's Congress head Li Peng spent significant time in Uruguay, Argentina, and Cuba during a three-week trip abroad. A host of South American military and political leaders regularly make their way to the PRC for talks on trade, investment, military exchanges, and political ties.

What Each Side Has to Offer

Despite seven decades of attempting to industrialize their economies, South American states still depend almost entirely on exporting raw materials and light processed goods. Brazil is the exception, having worked assiduously over the past twenty years to develop an autonomous space program, with an equatorial launch site that appeals strongly to Beijing. Petroleum leads the list of resources South American states have to offer the PRC. Despite the erratic nature of its current government, led by the virulently anti-U.S. President Hugo Chavez Frias, Venezuela is an important source of energy to China. Beijing has invested over $1 billion in the nation and seeks to maintain good, even warm, relations with Caracas, primarily to take advantage of orimulsion, a Venezuelan petroleum product. China also seeks to buy petroleum elsewhere in Latin America, which may contain as much as 14% of the recoverable petroleum deposits in the world.


Ecuador is another particular target of PRC petroleum interests, who hope to sign exploration agreements which will lead to a "strategic alliance" between the two states. China has also shown interest in projects in Argentina, Colombia, and Mexico. Quito, however, has moved with great caution for fear that such an agreement might leave the country too dependent upon SINOPEC, China's leading overseas petroleum investor. The Ecuadoran response highlights the residual concern that smaller states have of Chinese investment becoming so significant that it will create a dependence that South American states ardently hope to avoid.

However, Latin America does not interest Beijing solely for energy resources; the region is an important source of a variety of other minerals and foodstuffs. Brazilian president Luiz Inacio "Lula" da Silva's May 2004 state visit to China highlighted the range of desirable items beyond petroleum, including uranium, soybeans, and aircraft. South America is important for two other reasons as well. Brazil and Surinam, a remote and oft-forgotten state in the northeast of the continent, both offer space launch facilities with geography far superior to anything available in China. While ties to these states have not fully developed, the likelihood of Beijing increasing its interests there is high.

Additionally, South America is a region with which the PRC has a natural affiliation in its traditional role as "protector of the Third World." The South American experience with colonial and U.S. interventions over the past century has made Beijing's search for like-minded states to create a block in the international community to protect sovereignty against "hegemony" an attractive prospect. This is a natural area for ties to grow, as the power of the United States is so important to both the PRC and Latin America. It is easy for U.S. strategists to underestimate the importance of national prestige for all of these states. Informal alliances in organizations such as the United Nations, allow voting blocks to deliver messages otherwise difficult to convey to a hyperpower accused of unilateralism.

Finally, Beijing maintains a minor interest in Latin America because of increasing concerns about "Triad" activities in the Tri-border area (where Brazil, Argentina and Paraguay meet) as well as in Paraguay itself. Criminal syndicates operating in the area have been cited in international law enforcement's concerns about the growing transnational illegal activities in the Tri-border area. Beijing monitors this activity but has little control, since it does not have relations with Paraguay and the problem is not yet a major threat in the eyes of Buenos Aires or Brasilia.

The future relationship

The potential for longer-term rivalry between China and Brazil, the likely South American leader, is currently ignored for the sake of creating better ties, as evidenced by President Lula's recent visit to the PRC. Beijing's path to increased interest and influence in Latin America will be marked by many bumps along the way. Latin America is an area of growing, logical interest to Beijing, but there is no reason to believe the southern hemisphere states will suddenly leap to the top of Beijing's priority list. The region may also grow skeptical of Beijing as the latter's power grows, and it assumes roles more in keeping with a superpower than a victimized state. Latin America is highly sensitive to states that can violate sovereignty issues at will, the essence of hyperpower status.

Beijing's interests in Latin America are substantial, but not vital. The region's importance to China lies in two areas. First is its ability to provide Beijing increasingly easy access to much needed resources. Second is China's quest to isolate Taiwan further by enticing Latin American nations to shift diplomatic recognition from Taipei to Beijing.

Cynthia Watson is Professor of Strategy at the National War College. Views expressed here are personal and do not convey those of the US Government or the Naitonal War College.

This article appears on AFAR with permission from Jamestown Foundation, China Brief.

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