The Political Economy of China-Latin American Relations in the New Millennium

See discussions, stats, and author profiles for this publication at: https://www.researchgate.net/publication/312721514 The Political Economy of China-Latin America Relations in the New Millennium Edited by Margaret Myers & Carol Wise Book · August 2016 CITATIONS READS 14 2,336 2 authors, including: Carol Wise University of Southern California 81 PUBLICATIONS 841 CITATIONS SEE PROFILE Some of the authors of this publication are also working on these related projects: National Bureau of Asian Research Annual Book View project All content following this page was uploaded by Carol Wise on 24 January 2017. The user has requested enhancement of the downloaded file. The Political Economy of China-Latin American Relations in the New Millennium In this book, China-Latin America relations experts Margaret Myers and Carol Wise examine the political and economic forces that have underpinned Chinese engagement in the region, as well as the ways in which these forces have shaped economic sectors and policy-making in Latin America. The contributors begin with a review of developments in cross-Pacific statecraft, including the role of private, state- level, sub-national, and extra-regional actors that have influenced China-Latin America engagement in recent years. Part two of the book examines the variety of Latin American development trajectories borne of China’s growing global presence. Contributors analyse the effects of Chinese engagement on specific economic sectors, clusters (the LAC emerging economies), and sub-regions (Central America, the Southern Cone of South America, and the Andean region). Individual case studies draw out these themes. This volume is a welcome addition to the growing body of literature on China-Latin America relations. It illuminates the complex interplay between economics and politics that has characterized China’s relations with the region as a second decade of enhanced economic engagement draws to a close. This volume is an indispensable read for students, scholars and policy makers wishing to gain new insights into the political economy of China-Latin America relations. Margaret Myers is Program Director for China and Latin America at the Inter-American Dialogue. Carol Wise is Associate Professor of International Relations at University of Southern California. She specializes in international political economy and development, with an emphasis on Latin America. FULLTITLE The Political Economy of China-Latin American Relations in the New Millennium Brave New World Edited by Margaret Myers and Carol Wise COPYRIGHT PAGE First published 2016 by Routledge 711 Third Avenue, New York, NY 10017 and by Routledge 2 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN Routledge is an imprint of the Taylor & Francis Group, an informa business © 2016 Taylor & Francis The right of the editors to be identified as the authors of the editorial material, and of the authors for their individual chapters, has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. Library of Congress Cataloging in Publication Data [CIP data] ISBN: 978-1-138-66618-4 (hbk) ISBN: 978-1-138-66619-1 (pbk) ISBN: 978-1-315-61948-4 (ebk) Typeset in [font] by [Typesetter] Table of Contents Introduction: The Political Economy of China-Latin American Relations in the 21st Century Carol Wise and Margaret Myers Part I: Cross-Pacific Statecraft: Aid & Capital Flows from China to Latin America Chapter 1: One Actor, Many Agents: China’s Latin America Policy in Theory and Practice Benjamin Creutzfeldt Chapter 2: Cooperation and Mistrust between China and the US in Latin America R. Evan Ellis Chapter 3: China’s Economic Statecraft in Latin America: Evidence from China’s Policy Banks Kevin P. Gallagher and Amos Irwin Chapter 4: Chinese Foreign Aid to Latin America: Trying to Win Friends and Influence People Barbara Stallings Chapter 5: Chinese Agricultural Investment in Latin America: Less There Than Meets the Eye? Guo Jie and Margaret Myers Chapter 6: Chinese-Peruvian Relations in the Mining Sector: Learning Step-by-Step Cynthia Sanborn and Victoria Chonn Ching Part II: Development Trends since the Turn of the Millennium: A Critical Assessment Chapter 7: China and Latin America’s Emerging Economies: Debates, Dynamism, and Dependence Carol Wise Chapter 8: The Agropolis: South America, China, and the Soybean Connection Mariano Turzi Chapter 9: Central America, China and the US: What Prospects for Development? Rolando Avendaño and Jeff Dayton-Johnson Chapter 10: Who Wants What for Latin America? Voices For and Against the China- backed Extractivist Development Model Adam Chimienti and Benjamin Creutzfeldt Chapter 11: China-Brazil Economic Relations: Too Big to Fail? Dawn Elizabeth Powell Conclusion: Final Reflections on the China-Latin America Relationship José Luis León (Universidad Metropolitana) Introduction The Political Economy of China-Latin American Relations in the 21st Century Carol Wise & Margaret Myers On January 27, 2016 the Financial Times ran the following headline: “Beijing Warns Soros against Declaring ‘War on the Renminbi’.” George Soros, the billionaire investor best known for “breaking the British pound in 1992,” had just announced on Bloomberg TV that, among other things, he was betting against the Asian currencies in 2016.1 The issuing of this remarkable salvo by Chinese leaders reflects the country’s exponential leap to the very top of the international political economy over the past thirty years. From its entry into the World Trade Organization (WTO) in 2001; its surpassing of Japan to become the world’s second largest economy; its first-place ranking amongst the emerging economies (EEs) as a destination for foreign direct investment (FDI); its emergence as the top exporter to world markets; and, the designation of reserve-currency status for the Chinese yuan at the International Monetary Fund,2 China has jumped over formidable economic hurdles more quickly than any other developing country---ever. Thus far, the 21st century has mainly been the Chinese century. Our focus in this collection of essays is on China’s rise in the new millennium, told from the standpoint of its rapidly growing ties with countries in the Latin American and Caribbean (LAC) region since 2001. Here, China has also been breaking all kinds of records. For example, China has surpassed the U.S. as a top destination for South American exports and its policy banks have become the largest public lenders to LAC governments.3 China, moreover, has launched bilateral free trade agreements (FTAs) with Chile (2006), Peru (2010), and Costa Rica (2011).4 In that these three FTAs are WTO-plus,5 they defy the pessimism of some with regard to China’s true commitment to uphold international norms.6 Rather, as with its entire reform effort, China is moving at its own pace. As commonplace as it has become to cite these dazzling achievements with regard to China-LAC relations, keep in mind that trends such as these were absolutely unthinkable two decades ago. The ascendance of China in the global economy, as well as in the LAC region, is largely a story about transforming the unimaginable into a concrete reality. And yet, at least from the standpoint of China-LAC relations, we are still operating mainly at the level of stylized facts.7 The first set of facts refers to the quick escalation of trade and investment flows from China to the LAC region since 2002. As figure 1.1 depicts, China- LAC trade only started to register significant gains around 2002; similarly, as can be seen in tables 1.1 and 1.2, Chinese FDI (stocks and flows) in LAC was negligible until it too began to pick up in 2003. When these data are disaggregated a second set of stylized facts emerges: the magnitude and nature of China’s growing trade and investment ties differ considerably across countries and sub-regions within Latin America. From 2003 to 2013 the South American countries (Argentina, Brazil, Chile and Peru) that appear in figure 1.1 have enjoyed a commodity boom on par with that which was underway at the turn of the last century (see table 1.3). Partly due to buoyant Chinese demand for copper, iron ore, oil, and soybeans, all of which are abundant to varying degrees in these countries, prices on these commodities reached historical highs after 2003. As a result, all four countries have benefitted from very favorable terms of trade and solid growth (see figure 1.2) for more than a decade and all have built up sizeable foreign exchange reserves. <insert figures 1.1,1.2 & tables 1.1,1.2,1.3> For Mexico and the Central American bloc, the opposite pattern has held due to an absence of surplus commodities of the kind that China has voraciously bought up from the South American countries. This second group of countries has been on the defensive, with little to offset the flood of Chinese manufactured imports into this sub-region. Interestingly, despite these two distinct scenarios within Central and South America, a final set of stylized facts stems from the asymmetries between China and all countries in the LAC region. After registering average annual growth rates of 9-10 percent for some three decades, the Chinese economy literally towers over its LAC counterparts. For the commodity exporters, this has resurrected development debates from the 1960s concerning “unequal exchange,” the “resource curse” and the heightened “dependency” of these countries on selling commodities to the Chinese market.

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