- March 3, 2022
- Posted by: Anish
- Category: Feed
It’s no secret that China has been pouring resources into South America this century, chipping away at the U.S.’s historic dominance and making itself the continent’s No. 1 trading partner. But while international focus has turned in recent years to China’s ventures in Africa and Asia, an important shift has gone largely unnoticed in the country’s approach to South America: going local to expand and strengthen its financial grip.
Latin America, the region of 19 countries, has a total population of 620 million and GDP of $5.4 trillion. The region, which had a historic GDP contraction of 7.7 per cent in 2020, is forecast to rebound with a growth of 3.7 per cent in 2021.
In 2019 alone, at least eight Brazilian governors and four deputy governors travelled to China. In a September 2019 speech, Zou Xiaoli, China’s ambassador to Argentina, said his country’s infrastructure push was helping weave Latin America into the global marketplace.
China has bought up so much copper, pork, and soy—and constructed so many roads, trains, power grids, and bridges—that it’s surpassed the U.S. as South America’s largest trade partner and is now the single biggest trader with Brazil, Chile, and Peru. A Chinese company is leading a group that’s building the metro in the Colombian capital of Bogotá.
China’s influence, in particular, has grown thanks to its financing of tens of billions of dollars in infrastructure projects across Latin America, from an elevated metro in Colombia to a space station in Argentina. That economic leverage has put its diplomatic might in the region arguably on par with the United States.
Latin America has long been a focus of great powers. In the 15th and 16th centuries, Spain and Portugal divided the region for colonial exploitation. After national revolutions in the 19th century created independent states, Washington promulgated the Monroe Doctrine, which required European powers to consider the Western Hemisphere the U.S. sphere of influence. Well into the 1980s, Washington supported coups and sent troops into sovereign neighbours to its south.
Recently the U.S. has been trying to counter China, in part by stressing the risk of buying technology from state-controlled companies that can be used for both civilian and military purposes, such as espionage.
The U.S. isn’t giving up. In 2019, Ivanka Trump travelled to Jujuy when she was a senior adviser to her father. A year ago, the U.S. loaned Ecuador $3.5 billion to get out from under Chinese debt on the condition that it stop purchasing key technology from China.
In September, Daleep Singh, a U.S. deputy national security adviser, visited Colombia, Ecuador, and Panama to promote an alternative to China’s global infrastructure-building “Belt and Road” initiative.
This argument overlooks the fact that the U.S. has enjoyed highly constructive relationships with left-of-center governments in recent years in countries like Chile, Ecuador, Uruguay and Brazil. In fact, it is no exaggeration to say that U.S.–Brazil relations reached a high point during the early Lula years, when Washington largely welcomed Brasília’s growing willingness to take on regional responsibilities, such as leading the U.N. peacekeeping mission in Haiti.
President Vladimir Putin has also been busy trying to expand Russia’s influence thousands of miles away: in Latin America. He spoke to Daniel Ortega, Nicaragua’s strongman president, for the first time since 2014. He also called the leaders of Venezuela and Cuba. He hosted the president of Argentina, Alberto Fernández, who vowed during a Kremlin visit to reduce his country’s reliance on the United States.
In 2019, for example, South America exported $5 billion to Russia, compared with $66 billion to the United States and $119 billion to China, according to data compiled by Harvard University.
Russia’s specialty in the region has been political support for countries that are becoming isolated on the global stage. Putin has been a diplomatic lifeline for the authoritarian leaders of Venezuela, Cuba and Nicaragua. And for Bolsonaro of Brazil, who has sharply criticized China and questioned President Joe Biden’s electoral victory, Putin extended an invitation when it appeared that many other countries wouldn’t.
The Latin Americans seek to reduce their overdependence on China with which there is a growing trust deficit especially after the coronavirus. There is potential for India to increase its exports to about $20 billion in the next five years if the Indian exporters and government intensify their export promotion seriously and systematically. At this time of austerity, Latin Americans look for affordable products from less-expensive sources.
India’s exports to Latin America amounted to $12.74 billion in 2020-21 (April-March), according to the figures released by the Commerce Ministry of India. The exports to the region have declined marginally by 3.3 per cent from $13.18 billion in 2019-20.
Brazil continued as the number 1 destination of India’s exports to the region, with shipments valued at $4.25 billion. The other major destinations were: Mexico: $3.08 billion; Colombia: $865 million; Chile: $805 million; Peru: $765 million; Argentina: $688 million and Venezuela: $557 million.
The annual India-Latin America trade had reached a peak of $44.08 billion in 2013-14 due to the high oil prices and large crude imports from Venezuela and high in exports of $13.7 billion in 2014-15.
India’s Imports included from major Latin American suppliers: Brazil ($3 billion), Mexico ($2.85 billion), Argentina ($2.63 billion), Peru ($1.52 billion), Colombia ($1.4 billion), Chile ($1.18 billion), Bolivia ($1.16 billion) and Venezuela ($714 million).
Main import items in 2021 include Crude oil: $5,047 million; Gold: $4,055 million; Vegetable oil: $2,443 million; Raw sugar: $612 million; Copper: $479 million; Machinery: $378 million.