China and Latin America: from one dependence to the next

China is the largest donor of Latin America. But that does not only bring new roads and dams to the continent, but also economic and political problems.

China and Latin America: from one dependence to the next
  • Page 1 — from one dependency to next
  • Page 2 — environmental standards do not play a role
  • Read on a page

    For people of Argentine Patagonia, river Río Santa Cruz is a sanctuary. Its iridescent turquoise call m awe-inspiring celeste, sky blue. The Santa Cruz River is one of last glacial rivers in Latin America, home to rare animals and tourist attraction. Now re is an intervention that will change river: two huge dams, Condor Cliff and La Barrancosa, 40 and 75 meters high, should collect its water and use it to produce electricity for metropolises in north of country. Their construction costs more than 4.7 billion dollars, y are among most expensive building projects in history of Argentina. Financed by Chinese banks.

    The influence of China is growing throughout Latin America. The Beijing government has long been largest donor of region and most important trading partner of Brazil, Chile and Peru. Chinese banks have over last decade credited more than 150 billion euros to Latin America, far more than World Bank and International Monetary Fund. China finances coal-fired power plants in Brazil, helicopters in Bolivia and oil refineries in Ecuador.

    Trade between Latin America and China is also booming. According to Inter-American Development Bank, trading volume increased from less than 10 billion to 200 billion dollars in 2014 within 15 years. If it is according to will of Chinese government, this sum should double by end of next year.

    Dependence on China is growing

    China's own resources have not been enough for country for a long time. It has too few soybeans to feed its livestock, too little copper and iron for industry and too little oil to cover its energy needs. Latin America has a lot to offer. And China has money.

    "The Chinese government always emphasizes mutual benefit of relationship, win-win situation," says Matt Ferchen of Beijing Research Center Carnegie-Tsinghua Center for Global Policy, which highlights economic relations between China and Latin America were analysed. For a time, that was true, too. As commodity prices increased sharply in 2000s, Latin American countries actually benefited from trade with China.

    But when prices for resources fell again since about 2013, that changed. Today, China can buy relatively cheaply in Latin America. In addition, Chinese companies are selling more and more expensive products such as laptops or cars on Latin American markets. The win factor for China is now much greater than that for Latin America.

    China fills a power vacuum

    This awakens memories, keyword Dependencia: In 1960s, it was Latin American scientists who criticized continent's dependence on Europe and North America. So now China? Ferchen says he is surprised that Latin American governments did not push China back more strongly. "Against China, no one will open ir mouths." If Europe or US were to act comparable, that would be different.

    In part, reluctance of Latin American governments to see a chance in China's commitment is particularly important. For m, People's Republic is an attractive financier and investor. Unlike World Bank or IMF, Chinese banks are spending a lot of money on infrastructure projects that region urgently needs without large demands. "But DieKooperation has its price," says Oliver Stuenkel, professor of international relations at Institut Fundação Getulio Vargas in São Paolo. "China's enormous influence could also narrow continent's political freedom." Criticism of Chinese regime will be less likely. The consequences are already visible: that Panama has ended diplomatic relations with Taiwan last year can be attributed to influence of Chinese government.

    Date Of Update: 02 April 2018, 12:02

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