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Mercantilism with Chinese Characteristics

R. Evan Ellis
R. Evan Ellis Newsmax

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This is the first of two parts.

The U.S., Latin America and China know mercantilism well. British restrictions on direct trade between its colonies and Europe to advantage its own industry was a driving factor in the American Revolution.

The "Boston Tea Party," taught to U.S. children from grade school, was an iconic protest against British mercantilism. Similarly, for Latin Americans, Spain's use of mercantilist regulations, including the famous "Quinto" tax on mineral exports, was part of a system to extract the wealth of its colonies, while its protected manufacturers sold them finished goods.

In Asia, from the 16th through 19th century, mercantilism through the Dutch East India Company and British East India Company included the domination of ports, supply routes and markets to capture as much of the value added as possible in the trading system, later with political and military involvement to protect the system from challengers.

In the 20th century, Latin American dependency theorists and promoters of autonomous development essentially argued that the structure of economic relations between the region and the developed world was "rigged" against the developing world, locking in a disadvantageous relationship in which foreign corporations paid relatively little to buy (or directly extract) the region's commodities, while selling it their own high value-added goods, condemning Latin Americans to work as their employees, or worse, rather than reaping the benefits of ownership and production for themselves.

In this view, local elites sold out their societies by agreeing to the lopsided deals which often benefitted them personally, and enforcing the order that those nontransparent, often corrupt deals produced.

Today, it's China, once victims of mercantilism themselves, who are exploiting international trade and investment to reorient the world to their advantage through a predatory coordination between their national champion companies, well-resourced financial partners, and their government.

The PRC discourse of mutually-beneficial "win-win" relations superficially sounds more attractive than some of the rhetoric from Washington in recent years. Yet my Latin American colleagues understand well the difference between platitudes that warm the ear, versus actions that serve their interests and benefit their countries. The more than $137 billion China has loaned to the region, the $122 billion its companies have invested in the region over the past two decades, and $278 billion in bilateral trade sounds like a good deal.

Yet as I have watched the dynamic play out in the 16-plus years I have followed and written on Chinese engagement with the Americas, my research has mostly found Latin American manufacturers displaced by Chinese ones, and PRC-based owners replace U.S. and European ones in mines, oilfields, ports, agro-industrial firms and electric companies, with negative implications for those who work there, the communities with whom they interact and the environment.

My work has brought me to the stories of businessmen tied to populist leaders from Hugo Chavez and Nicholas Maduro to Rafael Correa and Evo Morales enriching themselves in corrupt, non-transparent deals which confer benefits to their Chinese partners, without furthering sustainable development in their countries. Latin America, tragically, is expert in trading one form of exploitation and domination for something worse.

“Mercantilism with Chinese Characteristics,” Part 1 of 2, Newsmax, December 4, 2020,