China Power

Despite US-Cuba Detente, China Forges Ahead in Latin America

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China Power

Despite US-Cuba Detente, China Forges Ahead in Latin America

At the inaugural China-CELAC forum, Beijing seeks a new role in Latin America even as the U.S. makes its own moves.

Despite US-Cuba Detente, China Forges Ahead in Latin America

Chinese President Xi Jinping meets with Latin American leaders in Brazil (July 2014).

Credit: Flickr/ Gobierno de Chile

On Thursday, Chinese President Xi Jinping presided over the opening ceremony of a new dialogue platform linking China and Latin America. The forum brings together China and the Community of Latin American and Caribbean States (CELAC), a 33-member bloc made up of the South American, Central American, and Caribbean states. China and CELAC agreed to create a joint forum at last year’s CELAC meeting in Cuba, and the inaugural ministerial meeting opened in Beijing on January 8.

As this is the first-ever China-CELAC forum, the main item on the agenda is to put in place regulations — defining rules, setting up regular dialogues, and providing “a system guarantee” for implementing plans and political consensus.  This first meeting is also expected to set the agenda for China-Latin America cooperation from 2015 to 2019.

China has already floated some ambitious goals. Foreign Ministry spokesman Hong Lei said that China wants to increase direct investment in Latin America to $250 billion by 2025. China also pledged to increase bilateral trade to $500 billion in the same time frame, nearly double the $261 billion value of China-Latin America trade in 2013. That would cement China’s position as the second-largest trading partner for the region, still far behind the U.S. (which totaled $850 billion in trade with the region in 2013).

Xi’s remarks hit the usual notes of Chinese diplomacy: win-win cooperation, equal partnerships, and joint economic growth. Xi also added that he hopes the China-CELAC forum will “have an important and far-reaching impact on promoting South-South cooperation and prosperity for the world.” Clearly, China is reaching out to Latin America based on its status as a fellow developing country and thus a supposed equal, echoing China’s strategy for engaging Africa. Another similarity is China’s strategy of using financing to secure resources from both Africa and Latin America, a tactic that has been particularly successful in the oil-rich nations of Venezuela and Ecuador.

As China seeks a greater footprint in Latin America, analysts sees a growing competition between the U.S. and China for clout in the region traditionally considered America’s “backyard.” CELAC itself, which is now the premier conduit for China’s engagement with the region, is considered to be a regional attempt to lessen U.S. influence. The group, founded in 2011, does not include the United States or Canada among its members and was designed as an alternative to the U.S.-led Organization of American States.

Tensions between the U.S. and some regional states were on display last year at the 2014 CELAC meeting, held in Havana. During his speech as host, Cuban President Raul Castro railed against the U.S. embargo on Cuba. More generally, Castro cautioned his Latin American counterparts to be wary of U.S. manipulations. “The so-called centers of power do not resign themselves to having lost control over this rich region, nor will they ever renounce attempts to change the course of history in our countries in order to recover the influence they have lost and benefit from their resources,” he said. It’s no coincidence that the announcement of the China-CELAC forum took place against this backdrop; regional states (especially those on rocky terms with the U.S.) looked to China as a way of avoiding over-reliance on Washington.

However, the political context has changed decidedly since then, following the surprise December 2014 announcement that the U.S. plans to restore full diplomatic relations with Cuba. That will not only provide a boost for U.S.-Cuba relations, but could help improve Washington’s standing in the region as a whole. U.S. President Barack Obama indicated as much in the initial announcement, saying the U.S. intends to “begin a new chapter among the nations of the Americas.” President Castro was more guarded, but still optimistic. “The progress made in our exchanges proves that it is possible to find solutions to many problems,” he said in remarks on Cuban television.

For China, the renewed U.S. policy means a shift in the political landscape that could threaten its efforts to increase influence in America’s backyard. The inaugural China-CELAC forum, then, provided an opportunity for Beijing to remind Latin American countries of what China has to offer. This week’s meeting brought a number of top leaders to Beijing, including the presidents of Costa Rica, Ecuador, and Venezuela as well as Prime Minister Perry Christie of the Bahamas.

As I noted earlier, Venezuelan President Nicolas Maduro’s visit was especially intriguing as he came seeking cash from China to prevent a national default. Chinese state media has been tight-lipped regarding any promises on that front, but Western sources (and President Maduro himself) claim China pledged $20 billion in loans and financing to Caracas. China also offered $7.5 billion in credit and loans to Ecuador, another traditional leftist ally. With offers of massive financing, especially to China’s traditional partners, Beijing is trying to shore up its Latin American base before the ramifications of a new U.S. Cuba policy fully kick in.