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U.S. National Security Implications of Chinese Involvement in Latin America

Authored by Dr. R. Evan Ellis. | June 2005

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SUMMARY

In this monograph, the author argues that China?s pursuit of longterm strategic objectives is leading the country to increase its presence in Latin America, with serious national security implications for the United States. Sustained Chinese economic growth requires ever greater quantities of basic commodities such as petroleum products, coal, iron and steel, and strategic minerals. As the new generation of Chinese leadership under Hu Jintao has moved away from the more cautious approach of his predecessor, Jiang Zemin, China has begun to aggressively court Latin America as its principal source of supply outside Asia. Figures from the Chinese National Statistics Office show that, for example, 77 percent of all Chinese foreign investment outside Asia in 2003 went to Latin America.

The pattern of Chinese investment in countries such as Argentina, Brazil, and Chile suggests that the Asian giant is seeking to assure access to critical commodities by constructing vertically integrated supply networks over which it has leverage. China is purchasing interest in key Latin American suppliers such as the Canadian minerals firm Noranda, or the Argentine oil subsidiary PlusPetrol Norte. It is also building cooperative relationships with supplier governments such as the joint oil exploration and refinery construction deals signed with Venezuela and Brazil in 2004. Where necessary, China is also investing in the infrastructure of Latin American countries to help them more effectively bring their products to market.

In addition to documenting China?s aggressive new posture in specific Latin American countries, this monograph argues that the expanded Chinese trade and investment presence in the region ultimately will give China a stake in the politics of the region and may tempt it to become involved in the region?s security affairs. Expanded Chinese trade and investment in Latin America, for example, will expand greatly the community of Chinese nationals in the region. The broadened community of Chinese nationals multiplies opportunities for incidents involving those nationals, while also expanding the community in China with an interest in the region. At the same time, significant Chinese investments in Latin American extractive industries and increasing dependence on its production will cause the Chinese government to seek to deflect political movements in Latin American countries that could expropriate these investments or disrupt these resource flows.

Ultimately, this monograph argues that Chinese engagement with Latin America will make the nation both a powerful competitor and a potential partner for the United States in the region. On one hand, China, with major investments in Latin America and dependence on its material flows, is likely to be a nation interested in reducing political instability, armed groups, and criminal activity in the region, rather than fueling radical populism and insurgency. On the other hand, the United States needs to consider to what degree it is willing to accept a China that has increasing leverage in Latin America through its investment and trade presence?and a growing interest in the political course of the region. Now, rather than later, is the time for the United States to begin seriously considering how to most constructively engage the Chinese in the Western Hemisphere.