As the United States prepares to turn inward after Donald Trump’s election to the presidency, Chinese President Xi Jinping has been busy reaching out to the world in a bid to fill the global leadership gap left by Washington.
Fittingly, China is making its move in Latin America, once regarded as “America’s backyard.” On November 17, Xi began a weeklong tour of South America, attending the 2016 Asia-Pacific Economic Cooperation summit in Lima, where he made the case for the Free Trade Area of the Asia-Pacific, a Beijing-backed trade agreement involving 21 APEC member countries. During the trip, which will also take him to Chile and Ecuador, Xi will also look to expand on China’s growing economic and political influence in Latin America.
In recent years, China has rolled out tens of billions of dollars in loan-for-infrastructure deals, and Xi has promised to double Chinese trade with the region to $500 billion by the end of the decade. But for some Latin American countries, more trade with China is not necessarily a good thing. Many are wary of their widening trade imbalance with China and worry that protectionist Chinese trade policies have handicapped the competitiveness of their economies in the global marketplace.
During his visit, Xi will no doubt be keen to highlight China’s role in promoting economic development in Latin America and in championing South-South cooperation. Indeed, China has done much to revitalize the region’s stagnant economies over the past two decades. From Brazilian iron ore to Venezuelan oil, China’s hunger for natural resources drove up global commodity prices from 2003 to 2013, fueling a natural-resource boom that resulted in one of Latin America’s fastest periods of growth in decades. By 2014, the region’s trade with China was 22 times greater than it had been in 2000, dwarfing the growth of its commerce with any other country.
Then, in mid-2014, waves of new U.S. shale-oil production and China’s slowing economy sent commodity markets crashing, and Latin America’s resource-driven fell into recession, where it has remained since early 2015. Venezuela’s petrostate fared even worse. Despite having received some $60 billion in oil-backed Chinese loans over the previous decade, Venezuela’s economy utterly collapsed under the pressure of falling oil prices, and the country is now teetering on the brink of political crisis.
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