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CHECKBOOK DIPLOMACY: China courts Latin America Comment on this post ↓
May 23rd, 2015 by Warren Swil

Chinese premier wields

largesse in 4 strategic

nations as US snoozes

China’s head of government Premier Li Keqiang wielded his country’s checkbook in Latin America.

While US media paid scant attention, a top Chinese official swung through Latin America this week inking deals worth billions for both ends of the transactions.
The strategic significance is enormous.
With US attention focused on a tense confrontation in the South China Sea, the Chinese premier Li Keqiang was focused on the long term as he toured Brazil, Columbia, Peru and Chile.
Trade agreements worth billions – mostly involving huge infrastructure projects – were announced in each country.
China benefits two ways: it puts its lagging construction sector to work, and gains a more steady supply of raw materials for its economy.
Significantly, it deepens bilateral ties between China and the four countries, and further erodes US hegemony in the region. It’s a development we ignore at our peril.

China’s head of government Premier Li Keqiang began his trip by unveiling a $50-billion package of deals with Brazil, according to a report May 19 in The Guardian China and Brazil confirm trade and investment deals worth billions.

The Guardian’s story on Premier Li’s visit to Brazil. Click image to enlarge.

“The news unveiled on the Chinese official visit is a huge boon for Brazil as it endures a fifth straight year of low growth after a period of rapid expansion fueled by an Asian demand for commodities that has since slowed,” The Guardian reported.
China became Brazil’s largest trading partner six years ago, but lags in investment in the country. Trade between China and Latin America as a whole exploded from barely $10 billion in 2000 to $255.5 billion in 2012, The Guardian reported.
The visit by China’s second ranking official was extensively covered all week on state broadcaster China Central TV.
The stories, collected in a special section Chinese Premier Visits Brazil, Columbia, Peru and Chile make no bones about the purpose of the trip – it was strictly business.
In Brazil, “the two sides will sign cooperative agreements in politics, economics and trade, finance, technology and agriculture,” the report says. Similar deals involving infrastructure development, investment and industrial projects are listed for Columbia, Peru and Chile.
There should be no mistaking that the benefits flow in both directions.
This was made clear in the story about Li’s ride on a subway train and ferryboat in Rio De Janeiro titled Premier Li urges harnessing China’s manufacturing prowess.
“The subway company in the Brazilian megacity has ordered 604 subway and commuter trains from Chinese manufacturers. Some 90 trains which the Chinese manufacturers will deliver soon may be used for subway lines for the Olympics,” the report says.
Most don’t think of highly engineered industrial products like locomotives as being among top Chinese exports; the prevailing view is that it supplies cheap consumer staples for stores like WalMart. But Premier Li was on a mission to dispel this notion.

The CCTV section devoted to multiple stories about the official visit to four Latin American countries.

“Li told Brazilian officials, who accompanied him during the train ride, China has superior technologies and powerful equipment manufacturing capacity in railroad transport, and China-made products are cost-effective and adaptable to various markets.”
On his stop in Columbia, Li also had business as his top priority. According to the CCTV report Li was scheduled to meet Colombian President Juan Manuel Santos.
“An array of business contracts and governmental accords ranging from trade, investment, infrastructure construction to manufacturing, agriculture and culture are expected to be signed,” the channel reported.
The visit also marked the 35th anniversary of diplomatic relations between the two countries.
In Peru on Saturday, the Chinese premiere met with Peruvian President Ollanta Humala at the government palace in Lima, CCTV reported.
An ambitious project was announced:
“China and Peru have agreed to explore the feasibility of a new transcontinental railway… a project that President Humala said would be important for regional development. Humala also said Peru is hoping to deepen its economic ties with China,” the report said.
In case anyone didn’t get the message, China is playing a devilishly smart game. On the economic front, it is providing the capital for major infrastructure projects some of which will be contracted to and built by its own industrial companies.
Then it is selling industrial equipment produced by Chinese companies to be installed at the factories, mines and other facilities constructed by its companies with its capital.
The host country reaps the rewards of industrial development (jobs for its people) and may even end up exporting more than just raw materials back to China in return.
It helps that China is a command economy where the central authorities can simply dictate economic decisions and pick winners and losers.
But it seems like many in the west are willing to acquiesce in this major extension of Chinese influence and deepening of economic ties across the Pacific.
It is no wonder the authorities in Beijing are unconcerned about the Trans Pacific Partnership trade deal from which they have been excluded. They clearly don’t need it. The have much more going for them in these burgeoning bi-lateral deals and the nascent Asian Infrastructure Investment Bank.

 

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