A Letter for Latin America From Beijing

R. Evan Ellis1
During June and early July of this year, I had the opportunity to spend a month in China, teaching a course
based on my new book (Chinese Companies on the Ground in Latin America Palgrave Macmillan, 2014,
Forthcoming). While there, I had the opportunity to meet with colleagues from several of Chinas research
institutions, as well as interact with students who hope, someday, to be the Chinese diplomats, managers,
and businessmen that work in the region.
My visit and conversations in the P.R.C. about Latin America were colored by the scheduled visit by Chinas
President Xi Jinping to the region, as well a wave of other China-Latin America business and political events
in the coming months. President Xi will begin his Latin America tour in Brazil, watching the final game of
the World Cup with Dilma Rousseff, followed by the BRICS summit in Fortaleza, where lingering
resentment over the activities of the U.S. National Security Agency, and Russias deepening conflict over
the Ukraine, will likely give the summit a particularly anti-U.S. flavor. Xi will then travel to Venezuela,
Cuba, and Argentina. In each country, Xis team will likely be working hard to get important stalled
projects back on track, from oil projects with Venezuelan partner PdVSA, to Cubas Cienfuegos refinery,
to the Belgrano-Cargas railroad modernization in Argentina, yet even if Xi does not speak the words
United States, Chinas indirect contribution to the anti-U.S. projects of these partners will be the subtext
of the visit.
During or soon after Xis trip, Nicaragua will release an environmental impact report regarding the canal
that Hong Kong businessman Wang Jing proposes to build through the country. The report will almost
surely clear the project to go forward, spawning objections by environmentalists globally. Nicaragua will
also make a decision soon regarding the route that the canal will take, prompting a new wave of
international attention on the canal project, and the real or imagined role of the Chinese government.
Then, sometime in November, Mexican President Enrique Pea Nieto will travel to China, where he will
likely sign a deal providing a $2 billion Chinese loan to the Mexican oil company PEMEX, with the promise
of expanded Chinese participation in the newly liberalized Mexican oil sector, and the prospect of much
improved Mexico-Chinese cooperation in general. By contrast to Mexicos difficult relations with the
P.R.C. during the sexenio of President of Felipe Calderon, Mexicos political embrace and deepening
economic relationship with the P.R.C. under President Pea Nieto will likely generate nervousness in
Washington.
Less than a month after the Pea Nieto visit to China, the P.R.C. will then host the first China-CELAC
summit in Beijing, highlighting the willingness of President Xis government to pursue a relationship with
Latin America and the Caribbean that explicitly excludes the United States.
One of the most frequent questions that I received from my Chinese colleagues was about how the U.S.
government views the expanding Chinese presence in the hemisphere, and how it might respond. While
the P.R.C. has long maintained one eye on the reaction of the United States as it expands its activities in
Latin America and the Caribbean, it is difficult to say whether there is a sincere desire within the Chinese
1

Dr. Evan Ellis is author of over 80 works on Chinese engagement with Latin America and the Caribbean, including
the books China in Latin America: The Whats and Wherefores, and The Strategic Dimension of Chinese Engagement
with Latin America. The views expressed by Dr. Ellis in this article are solely his own.

government to arrive at an understanding with the United States regarding mutually acceptable behavior
in world affairs, or merely manage Chinas pursuit of strategic objectives in a way that does not prompt a
reaction in the United States. Several of my Chinese colleagues told me, for example, that President Xi,
in his June 2013 California summit with Barack Obama in California, had had hoped for a special
relationship with the United States, and was thus later disappointed by U.S. support for Japan and
strengthening alliances in Asia (viewed from Beijing as a strategy to encircle China). Yet Xis own
goodwill trip to California was preceded by 11 bilateral presidential summits in three countries all in
close proximity to the United States: Costa Rica, Trinidad and Tobago, and Mexico. In the months that
followed, the P.R.C. government not only announced its intention to conduct the summit with CELAC,
explicitly shutting out the United States, but conducted a minor combat exercise with the Chilean navy,
and proceeded forward with a significant new wave of arms sales to the region, including L-15 combat
aircraft, Z-9 naval helicopters, mobile radars, SM-4 self-propelled grenade launchers, SR-5 multiple launch
rocket (MLRS) vehicles, and armored amphibious vehicles for Venezuela, 6 new Z-9 helicopters for Bolivia,
40 type 90B MLRS vehicles and a possible air defense system for Peru, and negotiations for patrol boats
for Trinidad and Tobago and Uruguay. My Chinese colleagues tried to re-assure me, saying that Peru
doesnt have the money to buy the Chinese MLRS vehicles, yet I doubt that they would be reassured by
the parallel argument that Japan may not have the money to buy US F-35 fighters.
Beyond Sino-US interactions over Latin America, I also found a disconnect between Chinas expanding
loans to, and investment and technical support for Argentina and Latin Americas Bolivarian Alliance
(ALBA) regimes, versus the enormous frustrations that my Chinese colleagues expressed about doing
business there.
On one hand, the P.R.C. has provided over $50 billion in financing to Venezuela when soft loans to PdVSA
are included, plus more than $12 billion in loans to Ecuador, playing a key role in the continuing financial
viability of those regimes as they continue to defy Western institutions and investors. Billions more are
in the works, including Chinese funding of Ecuadors $12 billion refinery of the Pacific, Bolivias $1.3 billion
Multiple Rositas hydroelectric project, $10 billion in possible Argentine railroad modernization work, and
$20 billion for two hydroelectric projects on the Santa Cruz river. Also pending, of course, is Nicaraguas
$80 billion black swan projectthe transoceanic canal. P.R.C.-ALBA technology cooperation is also
reshaping the strategic environment of the region. China has launched both a communications and
surveillance satellite for Venezuela and a communications satellite for Bolivia, with a further Bolivian
surveillance satellite and a Nicaraguan communications satellite on the launch schedule for 2016.
Behind the scenes in this P.R.C.-ALBA-Argentina partnership, ironically, businesspeople with whom I spoke
in Beijing are exasperated in dealing with these regimes. In the words of a Chinese colleague who had
managed Chinese projects around the world, In Africa, things are hard, but we do what makes sense, and
things work out. In Latin America, we do what makes sense, but things dont work out.
Regarding Venezuela, my colleagues complained of continual difficulties in getting that nations
government to decide on which projects it wants them to do. They spoke of Venezuelan government
officials consuming countless hours of the Chinese companys time, soliciting proposals, then delaying
decisions or eternally changing their minds. Similarly, they spoke of long delays in getting Venezuelan
officials to process the paperwork so that their companies could get paid from Venezuelas Chinese loan
funds. And they suggested that Bolivias government is even more difficult to work with than the
Venezuelans.

Physical security in Venezuela and elsewhere in the region was also mentioned by my colleagues as a
challenge, even greater than that which they faced in war-torn Africa. As my Chinese colleague put it with
sincerity, We Chinese like safe.
I found my Chinese colleagues almost universally worried about political stability. When I asked them
why China Development Bank had loaned so much money to Venezuela when their technical people could
see the problems, they responded with nervous laughter. Yet one colleague offered a useful insight:
CDBs previous director, Chen Yuan, was a capable leader who had recognized an opportunity in
Venezuelas pro-China political alignment and ostracism from Western investors, and with the Chinese
states blessing, took full advantage of the opportunity to build up the banks portfolio abroad.
With respect to Venezuelan politics, my Chinese colleagues gave me a perspective not found in the West.
One, for example, compared Venezuelan President Nicolas Maduro to former Chinese leader Hua
Guofeng, who played an important role in the transition from the radical socialism of Mao Zedong, to the
reformist era of Deng Xioping. Huas famous mantra was that the policies of Mao must be continued. The
implication was that neither Hua then, nor Maduro now, have the intellectual weight or leadership ability
to take their countries in a necessary new direction. Indeed, many in the P.R.C. today hope for a
Venezuelan reformer, similar to Chinas Deng Xioping (Many Chinese hoped that this might be Henry
Capriles).
Beyond Venezuela, my Chinese colleagues also offered interesting insights on Nicaragua, almost
universally that the Nicaraguan canal is a crazy project that will never be built. One suggested that the
businessman leading the project, Wang Jing, is simply playing to Nicaraguan dreams. Yet over $100 million
of someones money has already been spent on the project. For many in the U.S. and Latin America, how
Wang Jing expects to make money from the deal, and if he seriously plans to take it forward, are among
the great mysteries of the orient.
With respect to the Caribbean, thinking of major Chinese investments like the Freeport Container Port,
the $3.5 billion Baha Mar resort in the Bahamas, and the $3 billion Caribbean investment fund, I asked my
colleagues why China has invested so much money and political capital in the region when its potential as
a market and source of primary products is relatively limited (particularly while the PRC and Taiwan have
suspended their battle for the countries of the region over diplomatic recognition). One Chinese colleague
suggested that wealthy Chinese want to buy properties thereyet other than interet from Xu Caihou (the
recently jailed former vice-chairman of Chinas Central Military Commission), I suspect that the
construction market, and the regions strategic location near the United States are also part of the
explanation.
Despite many differences in our perspectives, I found hope in my conversations with Chinese colleagues
that there is at least some common ground for the U.S. and the P.R.C. to collaborate on Latin American
issues in the future, including a shared positive orientation toward the Pacific Alliance, and interest in
working together on issues that adversely affect the region, such as transpacific criminal activity.
Beyond better understanding how Chinese see the politics of Latin America and their projects there, I also
gained interesting perspective on Latin American efforts to grow business in China. When I surveyed my
class of undergraduate business students, not a single one had heard of ProExport, Procomer, ProChile,
ProMexico, or APEX. Nor could they identify beef as an export of Uruguay, although several knew that
the country existed, because it had just lost to Colombia in the World Cup.

I also was moved by how much work Latin American governments have to do, to give Chinese a basic
understanding of the region and the products that it offers. In a survey that I did of my 36 students on
the first day of class, 9 believed Machu Picchu was the father of Bolivian independence, 11 thought
Suriname was an island in the Caribbean, 7 identified Pancho Villa as the current President of Mexico, and
19 identified either La Paz or Santa Cruz as Bolivias principal Pacific-coast seaport.
I left China with more and stronger friendships, but also with many unanswered questions. No one, for
example, could explain to my satisfaction the difference between the Comprehensive strategic
relationship
that
China
has
with
Brazil,
Mexico
and
Peru,
versus
the
Mutual Development Strategic Relationship that China has with Venezuela.
Perhaps the most hopeful sign during my trip is that no one referred to Chinas activities in Latin America
as a win-win relationship. Perhaps it is yet possible for the U.S., China and Latin America to collaborate
to build a more harmonious world.