Source: China Leadership Monitor

Xi Jinping’s ten-day trip to Latin America in July 2014 constitutes an important milestone in the development of China-Latin America relations, marking the first major visit to this increasingly important region for a top Chinese leader since the extensive trip taken by Hu Jintao in 2004. The trip occurred during an increase in various economic difficulties between Beijing and the region after a multi-year period of rapid growth.  Xi’s trip was intended in part to revitalize Beijing’s economic relationship with some key South American states through new trade and investment deals and initiatives.  It also sought to counter the impression in some quarters that the BRICS nations (and China-Brazil relations) were losing their luster.  Finally, it aimed to strengthen political ties with the region by deepening bilateral strategic partnerships, linking China-Latin American ties with the larger global trend toward greater South-South cooperation, and eliciting local support for several key, long-standing Chinese international principles and undertakings, most notably state sovereignty and a UN-based, state-centered structure of internet governance.  Although of some concern, in general, such actions do not necessarily constitute a threat to the United States. 

Introduction

On July 14–23, Xi Jinping paid his second visit to Latin America as Chinese president in a little over a year, with stops in Brazil, Argentina, Venezuela, and Cuba.  The opportunity for the tour was occasioned by Xi’s attendance at the Sixth Leaders’ Meeting of the BRICS group of Brazil, Russia, India, China, and South Africa in Fortaleza, Brazil and at the first summit of the China-Latin America and the Caribbean (CELAC) grouping in Brasilia, Brazil. In addition to the BRICS and CELAC summits, Xi participated in many additional activities during his ten-day stay in the region. 

During the trip, Xi gave three major policy speeches,  made remarks at a dialogue between the leaders of BRICS and South American countries,  provided lengthy written interview responses to regional media, attended more than 70 multilateral and bilateral events, and met with more than twenty heads of state or government. He signed over 150 contracts and framework agreements with the four countries visited, involving a total amount of approximately $70 billion and “covering areas such as energy, mining, electric power, agriculture, science and technology, and infrastructure construction and finance.” In addition to these successes, China, Brazil, and Peru “…decided to jointly discuss the construction of the Two-Ocean Railway that connects the Pacific and Atlantic Oceans.” 

Beyond these achievements in both bilateral and multilateral relationships, the BRICS summit witnessed two major steps of significance in China-Latin America ties: (1) the establishment of a BRICS-supported New Development Bank (NDB), designed to provide loans to developing countries in a manner similar to the World Bank and the Asian Development Bank (ADB); and (2) the creation of a BRICS Contingent Reserve Arrangement (CRA), intended to assist member countries (and eventually other developing states) in dealing with short-term liquidity pressures in a manner similar to the International Monetary Fund (IMF). 

Xi’s event-packed tour of four major Latin American nations marked the intensification of Beijing’s relationship with a region that has become increasingly important in overall Chinese foreign policy and development strategy. Since 2000, Chinese presidents have visited Latin America six times.  Excluding Xi’s two trips, these include: Jiang Zemin’s 2001 visit to Argentina, Brazil, Chile, Cuba, Uruguay, and Venezuela and his 2002 visit to Mexico; and Hu Jintao’s state visit in 2004 to Argentina, Brazil, Chile, and Cuba, to Mexico in 2005, Costa Rica, Cuba, and Peru in 2008, and Brazil in 2010).  

Over the course of these visits, Beijing has established, and in some cases, upgraded, “strategic partnerships” with Brazil, Venezuela, Mexico, Argentina, and Peru, promising to exchange and share views and further coordination on bilateral relations and major international issues. Moreover, Beijing has expanded contacts with Latin American countries through common membership in or dialogues with regional and subregional multilateral organizations and fora, including the G-20 summit, the BRICS, CELAC, the Rio Group, the Southern Common Market (Mercosur), the Andean Community, and APEC.  

However, the most notable indicator of—and impetus behind—Beijing’s growing ties with Latin America has been its rapidly growing economic ties. Between 2000 and 2013, trade with the region has skyrocketed from a total value of $12 billion to over $261 billion, while total investment in Latin America is now estimated to equal roughly $65 billion. China has become the second largest trading partner and third largest source of foreign investment in Latin America and the Caribbean.   China is Brazil, Chile, and Peru’s largest trade partner.  Two-way trade with Brazil alone exceeded $90 billion in 2013. Among nations in Latin America and the BRICS countries, Brazil is China’s largest trading partner.  

At the same time, China’s economic ties with Latin America have reportedly slowed notably over the past several years, from “…a year-on-year increase of 20–30 percent in 2003–2005 to merely 0.1 percent in 2013.” As one Chinese analyst observed:

This slowing of bilateral trade growth is due in part to the general economic slowdown in China that caused a drop in commodity demand. At the same time, Latin American countries are adjusting their domestic industrial structure—seeking to “re-industrialize,” protecting domestic producers and limiting imports of industrial goods. Protectionist measures such as anti-dumping initiatives against Chinese products are on the rise. A few Latin American scholars even expressed concern over the current trade structure between the two sides, noting that 80 percent of products exported from Latin America to China are raw materials, whereas China exports mainly industrial products to Latin America.

In particular, Beijing’s trade and investment relationship with Brazil has encountered increasing problems. This is partly a reflection of the slowdown in the Brazilian economy, growing protectionist sentiment, and foreign investment obstacles in Brazil.  But it also reflects the asymmetrical nature of the trade relationship—Brazil sells raw materials to and buys manufactured products from China.  Although this decline is in most respects probably temporary, it has placed some urgency on the need for Beijing to reaffirm its commitment to the region and to assure local citizens and leaders of the mutual benefits accruing from economic ties.  

Aside from its high economic value, the region serves as a major example of Beijing’s diplomatic strategy and policies toward developing nations. Beijing’s approach emphasizes mutual economic growth, political cooperation, greater policy coordination in a number of areas (from development strategies to the structure and outlook of various multilateral institutions), and the advocacy of key international principles, such as state sovereignty.   

Some observers have characterized Xi’s July visit to Latin America as the latest and arguably the most notable indication of a long-term Chinese strategy of challenging America’s preeminence in a region that is sometimes described as Washington’s “backyard.” Some have even asserted that China’s deepening relationship with Latin America is intended to counter the U.S. rebalance or “pivot” to Asia underway since at least 2009–2010.  This article takes a close look at Xi’s remarks and actions during his trip to Latin America, as well as both authoritative and non-authoritative Chinese commentary made before, during, and after the trip. It concludes with an assessment of the meaning and significance of Xi’s visit for Beijing’s stance toward Latin America, developing countries, and relations with the United States, including the notion that it serves as a milestone in Beijing’s allegedly ongoing effort to counter U.S. influence.  

This article was originally published by China Leadership Monitor. It has been updated to reflect changes in the final published version.