China's Presence in Latin America: A View on Security from the Southern Cone

Article excerpt

THERE IS NO contemporary analysis that can possibly disregard China, a commercial, financial, and political presence of mythical proportion that has been created around a growth that, from a distance, looks like some strange miracle.1

From the Southern Cone and at a distance of 10,000 miles, almost 40 hours of flights and stopovers or a number of weeks at sea to deliver cargoes, we try to imagine China and its people. In an enormous country, the Chinese number some 1.3 billion people who walk the opposite side of the globe. A great majority of them speak Mandarin, which is the most widely spoken language on Earth. They are there down under-on the other side of the planet-with their feet pointed directly at us. In 2006, China will probably leap from the seventh to the fourth most economically powerful nation on Earth, eclipsing the United Kingdom, France, and Italy.2

After more than a quarter century of gradual market reforms in the Peoples Republic of China (PRC) and their impact in achieving an average economic growth of 9 percent per annum, the impetuous advance of the Asian power in economic and political terms, even the power of its ideas, has become evident. During the Industrial Revolution, Great Britain required 70 years to double the real per capita income of its population. When the United States emerged as the world's principal industrial power between 1890 and 1920, it took 35 years to double real per capita income. China has done it in nine years.3 In 2005, China's foreign trade exceeded $1.4 trillion, an increase of 24 percent over the previous year; its trade surplus tripled to $101.9 billion; and the Central Bank of Beijing accumulated a reserve of $711 billion.

China appears to have changed the nature of the world commodities market. It has replaced the United States as the principal consumer of coal, steel, copper, aluminum, magnesium, and zinc. The United States outpaces China only in oil consumption, but even there the Chinese are gaining. China's oil consumption has doubled since 1994, and current demand shows a 9 percent increase annually, while the rate of increase for the United States is 4 percent per annum.

To appreciate China's impact on the world commodities market, consider what her insatiable consumption of commodities implies. Between 1990 and 2003, global oil consumption increased 13 percent; during the same period, Chinese consumption jumped 81 percent. Global demand for cement grew 52 percent; China's more than doubled. Demand for stainless steel increased 48 percent; China witnessed an eight-fold increase. Copper consumption rose 39 percent; in China, it soared 423 percent. Overall, China's increased demands have driven a sustained increase in the price of metals. Copper, for example, reached its highest price in 15 years in 2005.

There is no doubt that China's inclusion in the World Trade Organization will have an impact on international trade. On the positive side for Latin America, China's doors are now open to a wide variety of Latin American goods. Moreover, because China can no longer openly subsidize certain products such as steel, it is having less of an effect on the international market. On the other hand, low salaries and labor costs in China are forcing Latin American countries to compete with Chinese workers in labor-intensive industries. Nevertheless, economic relations between China and Latin America are, and should remain, beneficial for all concerned, especially for those South American countries whose economies complement China's.

Economic Exchange

Latin American and Caribbean countries have an abundance of many of the key resources China needs, and they have centuries of experience in providing and exporting raw materials to industrialized or industrializing nations. If the PRC uses its "soft" economic power, it need not resort to heavy-handed persuasion in either region. Economic necessities have convinced many Latin American and Caribbean countries that trade with China provides a good counterbalance to trade asymmetry with the United States. …