President Xi Jinping is set to embark on a charm offensive with the leaders of Argentina, Venezuela and Cuba in a bid to increase China's clout in the region. But analysts warn of too much dependency on Beijing.
Xi's visit, aimed at enhancing economic and political ties in Latin America, comes at a time when Beijing is on the lookout for resources to power its growth. The Chinese President arrived earlier this week at the BRICS summit in the northeastern Brazilian seaside city of Fortaleza, where the leaders of Brazil, Russia, India, China and South Africa agreed to create a development bank and a crisis reserve fund seen as rivals to Western-dominated financial institutions.
The summit was followed by bilateral talks with Brazilian President Dilma Rousseff and the launch of the China-Latin America Forum with the 33-strong CELAC group of Latin American and Caribbean states, a move seen by many as highlighting Beijing's growing influence and importance in the region.
The trip is Xi's second to Latin America since taking office last year - when he visited Mexico, Costa Rica and Trinidad and Tobago - and is viewed by analysts as Beijing's latest attempt to gain clout in a region traditionally seen as the United States' strategic backyard.
A shared destiny?
The importance of Xi's tour is underscored by the fact that China's trade with Latin America has surged more than 20-fold from 12.6 billion USD in 2000 to 261.6 billion USD last year. "China is willing to combine efforts with Brazil and other countries in the region to become good friends and allies in a shared destiny, and walk in sync," Xi was quoted by AFP as saying in a speech to Brazil's Congress on July 16.
As Víctor M. Mijares, visiting research fellow at the GIGA German Institute of Global and Area Studies in Hamburg, told DW, China's foray into Latin America is driven mainly by its growing demand for raw materials, new sources of energy, and its goal to remain the largest goods trader in the world. This is why the Chinese leader is expected to sign a series of new agreements on investment, trade and energy during his state visits to Argentina - a key source of soybeans for China, oil-supplier Venezuela and long-time political ally Cuba, from July 18 to 23.
A longtime Communist ally
Each of these three Latin American countries is of special interest to China. For instance, Communist Cuba has traditionally been a close economic and ideological ally of Beijing and as Susanne Gratius, a senior researcher at the Madrid-based think tank FRIDE, explains, bilateral ties have intensified since the end of the Cold War and the declining presence of Russia on the island.
Beijing has now become Havana's number-two economic partner after Venezuela and a critical source of financing for the economically troubled Caribbean nation. Cuba, on the other hand, is China's largest trade partner among Caribbean nations.
Moreover, Cuban President Raúl Castro has openly declared himself a follower of the Chinese model, stating his support for China's political rise. "Cuba's elite wants to evolve from an orthodox Marxist-Leninist state into a Deng Xiaoping-inspired state with a unique and strong ruling party on the one side, but also with the ability to introduce and implement key economic reforms," Mijares, who is also a professor of International Relations at the Simon Bolivar University in Caracas, told DW. The Xi-led government, in turn, has an eye on geopolitics and trade, especially given the projected expansion of the Panama Canal.
Oil is at the core
Venezuela, the next leg of Xi's visit, is currently China's number one debtor in Latin America, and Beijing's top supplier of oil in the region, with six percent of Chinese imports coming from the South American country. Bilateral trade amounted to more than 19 billion USD last year and Xi is seeking to deepen ties in an array of sectors including energy, public finances, military and air-space technology, as well (as) civil construction.
But as Mijares points out, Xi's visit to Venezuela will not be limited to business deals. "Caracas is also politically attractive to Beijing as Venezuela's foreign policy has been largely aimed at diminishing US influence in the region," he said. Analyst Susanne Gratius agrees: "Besides signing agreements on infrastructure and energy cooperation - mainly oil and gas - both governments seek to counterbalance US influence in the region."
Venezuela is China's top supplier of oil in the region, with 6 percent of Chinese imports coming from Caracas
Sino-Venezuelan ties received a boost under the presidency of socialist Hugo Chávez from 1999-2012, with the Chinese investing heavily in exchange for oil. In an article forThe National Interest, Matt Ferchen writes that through its own state-sponsored loans-for-oil deals, valued at over 50 billion USD and national oil company investments, China cemented a special state-to-state relationship with Chavez's Venezuela.
But the resident scholar at the Carnegie-Tsinghua Center for Global Policy also pointed out that all has not been well in bilateral commercial and diplomatic relations, with oil being at the center of expectations. "While China and Venezuela certainly have expanded their oil trade and investment ties in the last decade, the volume of both has fallen far short of Chinese expectations."
Despite the underlying tensions, China has promised further heavy investments in Venezuela's oil industry. Xi will also be visiting Argentina, a strategic partner of Beijing, with nearly 10 percent of China's soybean coming from the South American country. But the Chinese leader will not only focus on his country's rising demand for the crop as his country is also interested in Argentina's shale gas deposits in Vaca Muerta, one of the biggest in the world. In 2013, bilateral trade reached 14.8 billion USD, up nearly 100 percent from 2009.
Argentina's banking woes
Buenos Aires, however, is regarded as being politically more distant to Beijing than Caracas and Havana. That is why Beijing might attempt to use Argentina's historically tense relation with the multinational banking system to cement ties, says Mijares. Moreover, Xi will probably underline China's official position in the dispute between the United Kingdom and Argentina over the Falklands/Malvinas islands in the framework of anti-colonialism.
Some analysts argue that with its mixture of trade, investment, development aid and diplomacy, China is taking advantage of a power vacuum in the region created by the United States and Russia. "Beijing has understood that it cannot play the role of a major military power while its technology lags far behind that of Western powers. This is why it is using the tools it has - outstanding economic productivity, vast foreign currency reserves and political cooperation without setting political or moral conditions - to quickly catch up," says Mijares.
A new dependency?
But while for some regional powers in Latin America closer ties with China may offer short-term economic and political support at a relatively low cost, experts warn of the side-effects: "It is an asymmetric relation that partly reproduces historic dependencies with the United States," said Gratius.
This view is shared by Mijares who argues that the Chinese approach hasn't gone down well everywhere in the region. "Political and economic ties with China have also been interpreted as a part of the "Beijing Consensus," a recipe for sustainable authoritarianism." Moreover, he adds, China's economic support doesn't come for free, as the requirements set by Beijing can also be costly and generate long-term commitments prone to limit the autonomy of the state.
Many Latin American countries, however, view China as a counterweight to the US and Brazil and thus welcome Beijing's growing presence in the region, as it offers them a chance to avoid becoming over-dependent on any single power.
Whether or not Beijing will succeed in dislodging the Washington in Latin America remains to be seen. What is clear, however, is that the Chinese presence in the continent has proven troublesome for at least one regional power. "While Beijing and Brasilia may be partners within the BRICS, the two countries see each other as rivals in Latin America. This ambiguous relation with the regional power must be taken into account when trying to understand the relations between China and Latin America," Mijares told DW.