By André Ferrari (Liberdade, Socialismo e Revolução – ISA in Brazil) and Mauro Espinola (Alternativa Socialista – ISA in Mexico)
Originally published on internationalsocialist.net
From vaccine diplomacy, starting with the shipment of Sinovac vaccines in 2021, to the recent snub to Lula da Silva’s attempt to revive Mercosur through negotiations with the Lacalle Pou government in Uruguay, Chinese imperialism is clearly extending its tentacles over the economy and politics of Latin America. Meanwhile, sectors of the Latin American left nurture illusions about the supposedly progressive role of the Asian giant, as a counterweight to US imperialism, to enable a less dependent development.
Latin America will increasingly be a stage for the inter-imperialist contest of the present epoch. Although the historically dominant role of the US, as the main imperialist force in the region, continues to be decisive, it would be a grave mistake to underestimate or delude oneself about the role of rising Chinese imperialism.
Dependence and neocolonial relations
In the last period, China’s influence in Latin America has grown exponentially. Chinese trade with the region has grown from $12 billion in 2000 to $495 billion in 2022. China is now South America’s main trading partner and the second if we take Latin America and the Caribbean as a whole.
China has become the main buyer of mineral, energy and food raw materials from Latin America, concentrated basically in a few products: soybeans, copper, iron ore and oil. At the same time, China has become a major exporter of consumer goods and now also of intermediate goods (machinery, electronic components, etc.) to the region, in direct competition with the US and Europe. China has a trade surplus with all countries in the region except Brazil, Chile and Venezuela.
The export of raw materials to the Chinese market allowed for relative growth and economic stabilization of Latin American countries during the commodity boom. The interruption of this process from 2014 onwards was at the origin of the economic and political crises we have seen in the region, including the crisis of the first wave of Latin American “progressive” governments.
Moreover, the type of relationship established with China has deepened the process of deindustrialization in the main countries of the region and has set back intra-regional trade relations. It is very difficult to imagine that this type of relationship with China could in any way represent a path towards Latin American emancipation.
Debt and investment
In the most recent period, Chinese direct investment in the region has also increased, especially in the electricity, transportation and mining sectors. Major infrastructure works have also been carried out with financing from Chinese banks. Twenty countries in Latin America and the Caribbean have already signed agreements with China in connection with the Belt and Road Initiative (New Silk Road). Argentina, which signed an agreement to join the Initiative in February this year, is the first major country in the region to do so.
Chinese lending to Latin American governments has also increased. Chinese banks’ lending in the region has exceeded the total lending of the World Bank, International Development Bank and the Corporacion Andina de Fomento (CAF) during the period 2005–2017. This created new dependency relationships and political and diplomatic ties, regardless of the political color of the rulers. Ecuador, for example, governed by the right-wing Guillermo Lasso, recently had to renegotiate its debt with China. It did so after having already signed an agreement with the IMF which imposed heavy costs on the Ecuadorian people and is the backdrop to the political crisis of its government which is on the verge of collapse.
The Argentine government of Alberto Fernandez and his Economy Minister Sergio Massa has just renewed a foreign exchange agreement with China in the midst of the country’s deep crisis. The objective is to try to obtain a short-term respite from the shortage of international reserves, a scenario aggravated by the drought that has affected agricultural exports. Under the agreement, Argentina will have immediate access to US$ 10 billion to intervene in the foreign exchange market in an attempt to avoid a further devaluation of the peso, which would aggravate the social crisis on the eve of the October elections. In total, Argentina is the country that has received the most emergency loans from China, something like US$ 112 billion. It is important to note that Chinese loans are not cheaper than IMF loans. The average interest rate associated with a Chinese bailout loan is 5%, while that of the IMF is around 2%. In addition, many of the agreements with China are linked to agreements with the IMF, of which China is also a major component.
Chinese loans are not charitable. They are generally linked to economic and geopolitical guarantees, such as control of ports, monopoly of strategic minerals, etc. They also reflect an imperialist logic, even if this occurs in a context in which China remains a rising power that also has its contradictions, crises and limits.
Chinese policy in Latin America
The policy of Chinese imperialism has been gradually accompanied by greater political intervention by the Asian giant in the region. Clearly, their interests do not include industrial development or the rupture of Latin America’s dependency relations, as progressive governments would have us believe. The clearest example of this is the absolute lack of interest of Xi Jinping’s dictatorship in the proposal to boost the Mercosur trade and regional integration agreements presented by Lula da Silva, who has also sought to promote the integration of Mercosur with the European Union, obtaining similar results. If this initiative has taken some steps forward it has been more because the conflicting blocs are afraid of being left behind, than because of a genuine interest in the economic development of Latin America.
A similar example of Chinese imperialist policy in the region has been the reestablishment of diplomatic relations between China and Honduras, which in turn has severed diplomatic relations with Taiwan in pandering to the “one China” policy of the CCP dictatorship. The reestablishment of relations between Honduras and China, in addition to seeking to isolate Taiwan in the face of growing threats from China, seeks to strengthen Honduras’ agricultural exports to China and the integration of the Central American country into the Belt and Road initiative, thus strengthening Honduras’ ties of dependence on China.
The above makes clear the Chinese imperialist and geopolitical interests in the region. Xi Jinping’s government is not only interested in strengthening trade ties favorable to China, which are unfavorable for the Latin American economy, but also in using those ties to strengthen its positions and defend its interests in the region. This will be a crucial aspect in the coming period when the global economic crisis will increase financial and political pressures on progressive governments in Latin America, where China will try to leverage the advantageous positions it has built with their support.
The illusions of progressivism in China, the new Cold War and socialists in Latin America
In the camp of the left and so-called Latin American “progressivism,” the historically nefarious character of U.S. and European imperialism has given rise to illusions about a supposedly more beneficial role for relations with China. Even those who recognize that the social relations of production and the state in China have nothing socialist or communist about them, argue that the rise of a new power could weaken U.S. hegemony and establish a multipolar order, opening spaces for Latin America.
What we are seeing, however, cannot be described as a dynamic towards multipolarity, but a real dispute for imperialist hegemony in the world, which manifests itself as economic, geopolitical and even military warfare eventually, as in the case of Ukraine. This new cold war (with its multiple hot aspects) will define the next period and, faced with it, we must adopt a clear position. The war unleashed by the Russian invasion of Ukraine has increased tensions and polarization, leading one part of the left to capitulate to the Western imperialist camp, which uses the conflict to regain strength and strike at China, and another part to do the same in relation to Putin and his strategic alliance with China. Our struggle is against the Russian invasion of Ukraine, but also against NATO. In this inter-imperialist dispute, we are on the side of the working class and oppressed peoples against the capitalist governments and their generals on both sides. We are for the construction of a great international movement against war, against imperialism and capitalism.
The role of the socialist left is not to align itself with any of the imperialist camps in dispute, but to build an independent working-class alternative with a clear anti-capitalist and socialist perspective. There will be no Latin American independence from imperialism, North American or Chinese, if we do not overcome the logic of capitalism in its structural crisis and build the socialist unity of the Latin American peoples, in the direction of a new socialist world.