Beijing to host Latin America delegation in bid to flex muscles on doorstep of US

1/8/2015

Beijing forum expected to map road ahead with resource-rich region in traditional US backyard

Beijing will flex its financial muscles to strengthen ties with Latin America as the Chinese capital hosts its first cooperation forum with nations in a region seen as the US' backyard.

The two-day forum starting tomorrow is the latest move by China to engage Latin American and Caribbean states, some of which have diplomatic ties with Taiwan, after a series of high-level exchanges over the past month.

China has held similar forums with other regions, such as Africa, and the Latin American event shows Beijing's eagerness to exert wider influence.

Leaders and ministers from about 30 countries are expected to attend and map out a consensus for future cooperation.

Economist Zhao Changhui, from the China Society for International Finance, said Beijing might also announce investment projects. "China needs the region's commodities and resources," Zhao said. "At the same time, countries in the region are looking for ways to move away from the traditional geopolitics in which the United States plays a heavily dominant role."

China has stepped up its presence in Latin America over the past year, with President Xi Jinping making a nine-day trip to the region in July to reinforce political and economic links. During the trip, Beijing called for China, Peru and Brazil to form a working group to build a rail line from Peru's Pacific coast to Brazil's Atlantic shore.

Trade between China and Latin America amounted to US$261.6 billion in 2013, 20 times the total in 2000. As the region's second-biggest trade partner, China has ploughed more than US$80 billion in investment in Latin America, accounting for 13 per cent of China's total outward direct investment, according to Xinhua. Some of China's biggest purchases have been in energy and agricultural products.

US-based environmental group Amazon Watch said China supplied 61 per cent of Ecuador's financing needs, while it bought nearly 90 per cent of the country's oil output.

Jin Bosong, a senior researcher with the commerce ministry's Chinese Academy of International Trade and Economic Cooperation, said Beijing wanted to look beyond energy to areas such as hi-tech industries.

Xie Tao, a professor of international studies at Beijing Foreign Studies University, said Beijing's moves highlighted Washington's waning economic influence in the region, despite its continued heavy political clout.

"Exports of Chinese manufactured goods to these countries are growing, reducing the demand there for US goods," Xie said.

Xie said Latin American countries were less suspicious than those in Southeast Asia of China's rise, but the ties between Beijing and Latin America were unlikely to be more than economic.

"China's economic influence there is largely driven by China's need for resources, and such influence is not sustainable," he said. "The countries there are less suspicious of China because they know that the US is in their vicinity."

Jin said the biggest challenges to ties were geopolitical, citing the abrupt cancellation of a Mexican high-speed rail project initially awarded to a Chinese-led group of companies.

"Developed nations, such as the US, may feel worried that China is foraying into its backyard," he said. "The most important thing for China is to make clear that our purpose is to seek open - rather than hostile or exclusive - cooperation with other countries. We don't intend to pose a threat to anybody."

Zhao said the forum demonstrated that Beijing could foster ties with countries that had diplomatic relations with Taipei.

Yen Chen-shen, a research fellow at the Institute of International Relations at National Chengchi University, said the forum was not an attempt by Beijing to woo Taipei's allies.

"It is simply because these countries have active economic exchanges with the mainland," Yen said. "Beijing regards cross-strait relations as a much bigger interest, which is why it has refused approaches to establish official ties with Taiwan's allies like Panama, Paraguay, Guatemala and Nicaragua."

This article appeared in the South China Morning Post print edition as China plays host to Latin America

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