Memo to Washington ERIC FARNSWORTH
gotten away with it: in the absence of strategic challenges from the region, this policy approach has sufficed. But we may not have that luxury much longer. As
the U. S. has continued to look beyond this hemisphere
in pursuit of what are perceived to be more urgent foreign policy goals, China has entered the region aggressively and is changing the game.
The expansion of Chinese trade and investment
with Latin America is a new economic and commercial
challenge in a previously consolidated market. On the
positive side, to the extent that it has contributed to regional growth and kept financial contagion from the
global economic crisis at bay, China’s engagement with
the region has been beneficial. An economically growing region means that the pie is expanding for everyone, including the United States. That is a global public
good, which International Monetary Fund (IMF) Managing Director Christine Lagarde acknowledged during her late 2011 travel to the region. Nonetheless, for
the U. S., individual investment opportunities and market share are being lost to China, whose share of Latin
American trade grew from less than 2 percent in 2000
to 11 percent in 2010.
Over the same period, the U. S. went from 53 to 39 percent of Latin American trade. To paraphrase Obama, this
is not ideology—it’s math. While the U.S. remains the
top trading partner overall, the challenge is readily apparent. In a post–Cold War world, where global competition is as much economic as military, the inability or
unwillingness to contend for markets abroad has strategic implications. Complacently watching as established
markets are captured by others is inexplicable, particularly when some of those markets were originally developed by years of patient, taxpayer-financed efforts to
reduce violence, build capacity and support democracy.
Just when the U. S. should be reaping the reward, others
are swooping in to gain the advantage.
From a foreign policy perspective, the story is even
more compelling. The reality is this: China’s still-early
but growing efforts in the Americas provide Latin American and Caribbean nations with additional trade and
investment options that reduce U.S. leverage to promote
open market, democratic values.
This is not about exporting revolution or communism
or any such thing. In fact, China’s efforts in the Americas are not driven by whether the potential partner is
communist, populist, autocratic, or democratic. Otherwise, the Chinese would have stronger economic and
political relations with Cuba and the other Alianza Bo-
Americas Quarterly WINTER 2012
livariana para los Pueblos de Nuestra América—Tratado
de Comercio de los Pueblos (Bolivarian Alternative of the
Americas—ALBA) countries (primarily Bolivia, Ecuador,
Nicaragua, and Venezuela) than with Brazil, Chile and
Peru. But China goes where the natural resources and
primary commodities are and, unlike the actions of the
Soviet Union during the Cold War, cares little about the
nature of the government that controls them.
The Chinese are not necessarily looking for a political
relationship, nor do they have much sympathy for ideologically driven regional leaders, some of whom they regard as buffoons. Rather, they are looking for economic
benefits based on the domestic political calculus of the
leadership in Beijing.
IS CHINA A THREAT TO THE NORMATIVE
ADVANCES IN THE HEMISPHERE?
Since the end of the Cold War, however, the re- gion has struggled to develop a regime of dem- ocratic behavior that is intended to prevail in the hemispheric community of nations. De- mocracy, including freedom of the press, is to
be respected; labor and the environment protected;
corruption and illegal activities inspected and prosecuted. It is difficult to implement such standards unless leverage exists to develop a broad consensus that
promotes certain behaviors, and at least one nation or
regional organization is willing and able to enforce the
For example, U.S. efforts to promote labor and environmental reforms through trade agreements are undermined when other nations have the ability to sign
similar agreements with China that do not include similar provisions. Programs of multilateral lending agencies
like the IMF, World Bank and Inter-American Development Bank that promote financial reforms and good
governance become less relevant if borrowing nations
can receive funds from China or elsewhere, including
Venezuela, without conditions. To put it starkly, the oft-maligned IMF has no influence with nations such as Argentina that do not currently require IMF funding or
access to global capital markets.
In fact, China’s huge purchases of hemispheric commodities and the provision of credits on favorable terms
have greatly assisted Latin American commodities exporters in the ongoing global economic crisis. In some
cases this has allowed leaders the flexibility to postpone indefinitely the necessary economic and political
reforms that would other wise be consistent with open