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China’s Xi begins 2nd trip to Latin America, in sign of expanding role

Chinese President Xi Jinping on Tuesday starts his second lengthy trip to Latin America in barely more than a year, showering attention on a region partially neglected by Washington and relishing China’s role as the biggest financier to Latin America.

Xi arrives in the Brazilian city of Fortaleza for the start of a two-day summit of the BRICS nations – Brazil, Russia, India, China and South Africa – then meets with regional leaders before heading to Argentina, Venezuela and Cuba.

Xi and a delegation of 150 Chinese bankers and industrialists will spend eight leisurely days in the hemisphere, a contrast to the often surgical-strike visits by President Barack Obama and Vice President Joe Biden.

If Latin American presidents are watching Xi’s trip with acute interest, it’s because of China’s huge role in providing loans around the hemisphere. By some accounts, China has provided more financing to Latin America in the past decade than the total of all loans by multilateral institutions such as the World Bank.

China’s trade with the region has skyrocketed. Trade volume between China and Latin America reached a record $261 billion last year, almost 21 times the figure in 2000, the China Daily newspaper noted over the weekend.

While Xi, who came to office in March 2013, will travel to only four countries, he’ll meet other Caribbean and Central and South American leaders, and will take strides toward giving China a greater role in a regional assembly.

“China is trying to become a leader within organizations that are not dominated by the U.S., and preferably which exclude the United States,” said Robert Daly, the director of the Kissinger Center on China and the United States at the Woodrow Wilson Center in Washington.

One of those groups is the Community of Latin America and Caribbean States, a bloc formed in 2011. Canada and the United States weren’t invited to join.

Xi will meet Thursday with the leaders of Brazil and four countries in the bloc – Costa Rica, Cuba, Ecuador, and St. Vincent and the Grenadines – and is poised to announce a forum of cooperation with foreign ministers of the 33 countries later this year in Beijing.

Jorge Heine, a veteran Chilean diplomat who’ll take up a post as ambassador to Beijing later this month, said China was moving quickly toward “dealing with Latin America on regional terms, not just on a bilateral basis.”

“It’s not just another routine visit,” Heine said. “It means a ratcheting up of links between Latin America and China.”

“The political message is quite interesting and strong,” added Gonzalo S. Paz, an Argentina expert on China-Latin America relations, who spoke with Heine and Daly on a conference telephone briefing organized by the Wilson Center.

Booming trade has made bilateral ties strong with nations such as Chile, Peru and Brazil, where China is the No. 1 trade partner based on its deep appetite for raw materials such as crude oil, iron ore, copper and soybeans.

“The China boom lifted the Latin American boat for a long time,” Kevin P. Gallagher, a specialist at Boston University on Latin America-China financial ties, said in a telephone interview.

“They’re all happy that they’ve got China, but the honeymoon stage is over,” Gallagher added. “They’re all running current account deficits with China now.”

But China may position itself even further on this trip as an instrumental player in providing alternative financing to the region with fewer of the conditions imposed by institutions such as the World Bank.

While in Brazil, Xi is to finalize plans for creating the BRICS Development Bank, which is expected to start lending in 2016 with a capital base of $50 billion and plans to boost capitalization to $100 billion over the next five years.

The BRICS bank, if it lends within Latin America, would further insulate the region from short-term volatility in global financial markets.

As China’s footprint in Latin America grows, it’s moving away from lending just for energy projects and heavy industry, and moving into railway and telecommunication projects and military provisioning, including in Brazil.

On the visit to Argentina, in which Xi will be feted at a state banquet Saturday night, China is to announce a $2 billion loan for Belgrano Cargas, a major railway line, to buy Chinese rail cars and locomotives. It’s also lending billions for two hydroelectric plants in Patagonia.

For Latin leaders, the growing role of China helps diversify relations and diminish U.S. leverage over inter-American affairs, a move they view as beneficial.

But for some U.S. scholars, China’s growing clout in the region causes unease over what they see as U.S. neglect of the hemisphere.

“The Chinese are quote unquote making things happen now,” said Gallagher. “The Chinese see the Latin Americans as partners. And we seem more like their patrons.”

U.S. policymakers take “too much comfort in a narrative which says that as China spreads into Africa, into Latin America and into Southeast Asia, it is experiencing a backlash and is being criticized for neo-imperialist policies,” Daly said.

The perception comes because Chinese companies flood into places such as Africa with a focus on extractive industries, giving most jobs to Chinese workers. But Daly said China had learned from the push-back and was adapting.

“I see China learning rapidly and adjusting its investment, its development and its aid policies, and actually stealing a march on the United States in diplomatic terms,” he said.