How China’s Pursuit of Self-Interest Impacts Latin America
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This work is exerpted from a broader published debate, "How are the United States and China intersecting in Latin America?" by R. Evan Ellis, Leland Lazarus, Ted Piccone, and Valerie Wirtschafter, published by The Brookings Institution
U.S. prosperity and security are tied to Latin America by bonds of geography, commerce, and family. Whether or not the United States gives the region the strategic thought or resources that its importance merits, its conditions and difficulties profoundly impact the United States as a matter of domestic and foreign policy, including through drugs, migration, and supply chains.
PRC engagement with Latin America is not all negative. PRC-based companies, when properly selected and supervised through strong Latin American institutions in transparent transactions, can contribute to the region’s commercial vitality and infrastructure. Too often, however, without the application of adequate transparency and institutional capability on the Latin American side, predatory PRC contracting practices, improper collusion among PRC entities, and the offering of personal benefits, lead to deals in which the Chinese, rather than local partners, capture a disproportionate share of the value added. They also frequently lead to poor project performance, environmental damage, social conflict, and information security risks. Because China’s 2017 national security law obliges PRC-based companies to give the state access to data if it so demands it, the increasing dominance of those companies in digital sectors across the region, including telecommunications, cloud computing, security systems, scanners, and ride-sharing apps, all raise concern over exploitable PRC access information on decisionmakers, governments, and rival companies in the region. In addition, PRC commodity purchases, loans, surveillance systems, and other forms of support to authoritarian regimes such as Venezuela, Nicaragua, and Cuba, as well as acceptance of problematic practices by others (as long as PRC-based companies are treated well) fundamentally undercuts democracy and good governance in the region.
In the undesirable event of a major war between the United States and the PRC, Latin America and its infrastructure, including its ports, digital architectures, and space facilities, will be logical targets for the PRC and aligned forces. The PRC will seek to exploit these assets to disrupt U.S. deployment, sustainment, and other Indo-Pacific-focused operations that pass through or can be reached from locations in Latin America and the Caribbean, and for Chinese warfighting initiatives to put the U.S. homeland, and those supporting the U.S. position, at risk. The United States and Latin America’s shared geography makes sustaining healthy democratic institutions in the region a vital U.S. interest. The United States is also well served by cultivating relationships with friendly governments that are willing to work with the United States in managing such challenges, pursuing joint opportunities, and preventing extra-hemispheric U.S. rivals, including the PRC, Russia, and Iran, from establishing regional positions they could exploit against the United States in time of conflict.
U.S. and Chinese interests in Latin America are dramatically different. In contrast to the aforementioned inherent U.S. stake in the region’s political and economic conditions, geographically distant PRC-based companies focus on the region’s resources and markets, which does not naturally carry the same stake in the region’s conditions beyond those facilitating access by, and good treatment of, PRC-based companies. Nor are the PRC or its companies inherently interested in their engagement’s environmental, developmental, political, or other consequences beyond the damage caused to their reputations and the credibility of the “south-south” collaboration message that facilitates their access. The PRC also diverges from the United States in two other ways: The PRC remains interested in “flipping” the diplomatic posture of and expanding its influence in countries formerly recognizing Taiwan, and the PRC retains an indirect interest in the survival of illiberal regimes such as Cuba, Venezuela, Nicaragua, and Bolivia, whose survival distracts the United States and undercuts its influence. The PRC’s support for these regimes also undermines democracy and facilitates regional instability through refugee and narcotics flows and these states’ decisions to host terrorist and criminal groups with transnational reach. The PRC does engage with democratic regimes, seeks to avoid association with authoritarian states’ bad behaviors, and positions itself to sustain economic relations if they change, yet it is notably neutral on facilitating good governance and democracy in the region.
In areas such as security cooperation and infrastructure, the PRC’s previously noted potential to exploit such positions for commercial or political espionage, or in time of war, makes the strategic risks of U.S.-PRC cooperation unacceptable.
On a more positive note, in some areas, such as trade and investment, Latin America’s engagement with the PRC has the potential to support the region’s economic health in ways that are consistent with U.S. interests. Critically, however, the region’s hopes for such positive outcomes require strong institutions, transparency, and a level playing field to ensure that often predatory Chinese business practices benefit the country instead of producing outcomes that disproportionately benefit the PRC-based companies and the local officials they persuaded to authorize the deal. As Chinese influence in the country grows, vigilance, transparency, and strong institutions are also vital to ensure that the PRC’s influence networks with local partners, and the hopes of future benefits, do not distort countries’ democratic discourse or empower non-democratic local elites to consolidate power in non-democratic ways. When political change does allow new governments to expose corruption, poor performance, abusive contracts, and other problems in their predecessors’ non-transparent dealings with the Chinese, as occurred in Ecuador, Argentina, and elsewhere, it is important to leverage such information as a cautionary tale for others.
The region generally seeks economic opportunity without strings attached, from both the United States and China. Its elites are generally aware of the risks that PRC-backed projects could turn out poorly, with excess environmental damage, social unrest, or limited benefit to the country or the local partner. Those engaging the Chinese nonetheless calculate that they can manage such risks, in hopes of securing the personal, commercial, and/or national benefits. Their rejection of U.S. words of caution, in the name of not “taking sides” in “great power competition,” may be sincere, but it also deflects a fuller consideration of such risks within their political systems.
In consideration of the aforementioned dynamics, the United States should not attempt to block the region’s sovereign right to engage in legitimate business with the PRC. Rather, the United States should lobby for transparency in such dealings, including in public tenders and contract terms, while collaborating to strengthen the region’s institutions to maximize the benefits that each country secures from all of its partners, to pursue its long-term development and security, and to protect its environment and the stewardship of its resources.
The region’s strategic importance makes it imperative for the United States to dedicate more national leadership thought and resources to it. This should include not only government programs but also more effectively leveraging the private sector. The U.S. government should also rethink policy imperatives that require U.S. assistance to concentrate on sectors such as renewable energy, women, and disadvantaged populations, and that limit engagement with “high-income” countries. These imperatives’ current excess inhibits the United States’ ability to compete with China by excessively constraining where the private sector puts its money, thus limiting the amount of money provided through such programs.
