HEARN, Adrian - China and Latin America - Economy and Society

7/27/2019 HEARN, Adrian - China and Latin America - Economy and Society

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China and Latin America:

Economy and Society

Adrian Hearn

The expansion of Chinas economic and political alliances in the Western Hemisphere inthe early 21st century signals its emerging international influence. Latin America hasbecome a crucial source of oil, copper, coal, steel, grain, and other resources for China,stimulating economic growth in supplier countries but also a range of new dilemmas forthe regions development. This article explores Chinas integrated pursuit of social, politi-cal, and economic goals in the region and the local reactions this has provoked. Drawingon case studies, interviews, and observations gathered in China, Cuba, and Mexico, thearticle argues that Chinas approach to Latin America is characterized by a blend ofstate and market strategies for building long-term cooperation, social capital, andunderstanding.

La expansin de las alianzas econmicas y polticas de China en el hemisferio occidentala principios del siglo XXI muestra su emergente influencia internacional. Amrica Latina

se ha convertido en una fuente crucial de petrleo, cobre, carbn, acero, granos y otrosrecursos para China, lo que estimula el crecimiento econmico de los pases abastecedores,pero tambin una serie de nuevos dilemas para el desarrollo de la regin. Este artculoexamina la integral bsqueda de China de retos sociales, polticos y econmicos en laregin y las reacciones locales que esta ha provocado. Al basarse en estudios de caso,entrevistas y observaciones recolectadas en China, Cuba y Mxico, el artculo argumentaque el acercamiento chino a Amrica Latina est caracterizado por una mezcla deestrategias de Estado y de mercado para crear una cooperacin a largo plazo, capital socialy entendimiento.

Key words: Latin America, China, social capital, soft power, international relations

The acquisition of energy, mineral, and agricultural resources is a key dimen-sion of Chinas foreign policy, and observers have recognized China as thenew engine of Latin American growth (Jiang, 2005; Zweig & Jianhai, 2005).Resource exporters, such as Argentina and Brazil (iron ore and soy beans), Chile(copper), Cuba (nickel), Peru (copper and fishmeal), and Venezuela (crude oil),have benefited from increasing demand and rising commodity prices. Countriesthat export few natural resources, such as Mexico and the nations of CentralAmerica, have experienced significant trade deficits as Chinese manufacturedproducts enter their markets.

Latin American PolicyVolume 4, Number 1Pages 2435 2013 Policy Studies Organization. Published by Wiley Periodicals, Inc.


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This article argues that China has approached Latin America by buildingcooperative relationships with nations across the political spectrum, whether

they export natural resources or not. This strategy hinges largely on how wellChina can overcome the sociopolitical challenge of harmoniously integratingpolitically diverse actors and nations into a cohesive foreign policy framework.To deepen bilateral relationships, China has developed state-to-state programsthat prioritize the accrual of trust and social capital over the long term. This hasbecome particularly important for promoting goodwill with countries likeMexico, where the economic terms of trade have disproportionately favoredChina.

China and International Community Building

Chinas foreign policy, as articulated to the United Nations, does not revealspecific geopolitical objectives but rather endorses a global environment thatsustains the prerogative of sovereign nations to interact and collaborate with eachother in stable, long-term partnerships (PRC, 2004). Such an environment suitsthe needs of an emerging power that has established itself as a nonalignedinternational protagonist seeking to deepen its global influence over thecourse of the 21st century.1 Chinas success over the past decade in buildingrelationships with socialist countries such as Cuba and Venezuela whilesimultaneously forging links with more-conservative countries such as Mexico,Columbia, and the nations of Central America, illustrates its capacity to transcend

traditional political divides. One of Chinas strengths is its approach to a centralchallenge faced by any community-building initiative: the integration of actors,organizations, and nations, each with diverse agendas and aspirations, into acomprehensive policy framework.

Sociological research into the effect of social capital on economic development,democratization, and civic participation has shed light on the problems of com-munity building and collaborative social integration in domestic scenarios(Evans, 1996; Fedderke, de Kadt, & Luiz, 1999; Hearn, 2008; Lin, 2001; Portes,1998; Putnam, 2000; Woolcock, 1998). Applied to the international scale, some ofthe findings of this literature help to explain how China has set about building aglobal community and how governments in the Americas have reacted to this

prospect. A good starting point is an article by Johannes Fedderke et al. (1999)that reflects on the international implications of domestic social capital formation.The authors argue that a key determinant of a governments ability to developeffective international partnerships is its ability to rationalize domestic eco-nomic practices and customs into a form that is intelligible to foreign actors. Thisprocess is characterized by the transformation of substantive local rules andvalues into a wider system of procedural norms, or the gradual replacement ofinformal associations and networks by formal administrative structures, and theimpersonal market mechanism no longer tied to individual identities . . . Actionpremised on social capital with a rationalized mode of delivery is rendered moreflexible, and stands a greater chance of successful adaptation to a wide range ofenvironmental circumstances (Fedderke et al., 1999, pp. 719, 721). In practice,this means that nations seeking to integrate themselves into larger internationalmarkets should first pass through a series of domestic reforms to minimize the

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influence of administrative idiosyncrasies and interpersonal affinities on theireconomic and legal systems, because other global actors may not share these.

During the Cold War, the processes of domestic rationalization that mostcountries pursued were characterized by the privatization and opening ofmarkets to facilitate integration into the U.S.-led system of free trade or by thecentralization and regulation of markets to facilitate integration into the traderegime of the Soviet-led United Front. Whereas the former countries developedlegal codes to protect commercial initiatives capable of rapidly generating finan-cial capital, the latter produced political alliances that prioritized the long-termstability of state-led economic exchange and resource bartering.

In the first decade of the 21st century, the emergence of the new left in LatinAmerica, galvanized by experiments with alternative regional models of tradeand development and by broad disenchantment with the Washington Consen-

sus, challenged the ascendancy of global capitalism since the late 1980s. The termnew left was coined in the early 2000s to describe the elected governments ofHugo Chvez in Venezuela (1998 and 2007), Luiz Incio Lula da Silva in Brazil(2002 and 2006), Kristina Kirchner in Argentina (2007), Tabar Vsquez inUruguay (2004), Evo Morales in Bolivia (2005), Michele Bachelet in Chile (2006),Daniel Ortega in Nicaragua (2006), and Rafael Correa in Ecuador (2006), whichtogether came to govern nearly 60% of Latin Americas population of 527 million(Arnson, 2007, p. 3). Although these leaders exhibited varying degrees of cautionregarding upsetting trade relations with the United States, all signaled a greaterrole for the state in economic affairs and moved to strengthen regional alliances

that reduce dependence on the U.S. market. All also set in motion closer relation-ships with China.2

Recognizing the opportunities and risks that this scenario poses, China hasreciprocated with a strategic balance of economic and diplomatic engagement.The basis of this balance is a calculated integration of practices that two decadesago would have been unequivocally identified as communist or capitalist.China has worked hard to develop state-to-state institutional alliances that fosterlong-term collaboration and build political legitimacy with cooperating govern-ments (much as the Soviet Union did), but it has done this as a World TradeOrganization (WTO) member employing the mechanisms of global capitalism toadvance its position in the world market.3 To avoid comparisons with the Soviet

Unions Cold War attempts to build a communist United Front, Chinas languagehas been colored with less-threatening commitments to southsouth coopera-tion, a nonaligned agenda and solidarity with an international community ofdeveloping nations.

As social capital theorists Alejandro Portes and Julia Sensenbrenner (1993)have shown at the microlevel, communities that perceive themselves to be insome way disadvantaged or subordinated to larger dominating forces are espe-cially likely to develop mechanisms of cooperation, trust, and social capital. In a2004 press conference with Fidel Castro, Hu Jintao invoked just such a scenario,stating that China and Cuba have helped each other and treated each otherwith sincerity . . . We are fraternal brothers . . . passing the test of changing andadverse international circumstances (Murray, 2004; also see Lam, 2004, p. 3;Len-Manrquez, 2006, p. 45). At the 2006 meeting of the Non-Aligned Movementin Havana, China extended an invitation for greater southsouth solidarity to

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Latin America as a whole. These commitments have materialized in trade accordsand exchange programs established by a constant flow of high-level Chinese

diplomats to Latin America, including President Hu Jintao in 2004 and 2008 andPresident-in-waiting Xi Jinping in 2011. As a result of these accords, ChinaLatinAmerica trade grew from US$10 billion in 2000 to more than US$240 billion in2011.

U.S. Commerce Department official Tim Ashby has pointed out that Chinaoften pays its bills with trade credits, construction equipment, infrastructureupgrading, and technical training rather than hard currency, making deals likethose forged with Cuba less economically significant than they may seem(Robles, 2005). Nevertheless, the significance of such exchanges may not lie intheir capacity to generate short-term economic gains. Chinas more-encompassing goal is to build stable alliances that facilitate growth and influence

over the longer term. As one study of social capital has argued, the currencywith which obligations are repaid may be different from that with which theywere incurred in the first place and may be as intangible as the granting ofapproval or allegiance (Portes, 1998, p. 7).

Although some Chinese investments may not register as economic transac-tions, their significance should be evaluated in the context of contemporary LatinAmerican politics. Venezuela, Cuba, Bolivia, Nicaragua, and Ecuador are build-ing a trade network called the Bolivarian Alliance for the Americas (ALBA),which has proven more successful than the (now abandoned) U.S.-backed FreeTrade Area of the Americas (FTAA). In addition to creating an ALBA Develop-

ment Bank, the network promotes the exchange and bartering of resources,particularly Venezuelan oil and assistance with debt relief for Cuban doctors, theuse of Ecuadorian oil refining facilities, Bolivian coca and soy products, andNicaraguan meat and dairy. Chinese assistance with physical and human devel-opment initiatives fits neatly into this model. Such exchanges may not produceimmediate financial returns, but as Hugo Chvez pointed out during a February2006 public speech in Havana, their value lies in stable alliances, face-to-facecooperation, direct assistance to poor communities, and long-term economicoutcomes.

As Chinese inroads into Latin America deepen, the United States must balanceits strategic and commercial interests in new ways. Mrozinski, Williams, Kent, &

Tyner (2002) point out that, although Latin American resource exports fuelChinas economic growth, this process serves the interests of U.S. corporationswith manufacturing operations in China. The resulting conflict of strategic andeconomic interests was a little-discussed motivating force behind the FTAA nego-tiations. A crucial component of the FTAA was the Central American Free TradeAgreement (CAFTA), whose political merits George W. Bush emphasized whenhe pushed it through Congress on a combined national security and economicplatform (Economist, 2005). Bush said that the political logic behind CAFTA wasto shore up democracy in Central America rather than leave it prey to theintervention of foreign socialist governments. Meanwhile, CAFTAs economiclogic lies in a value-adding business environment in Latin America that couldlure investorsparticularly those from the United Statesaway from China. IfCAFTA and some revived variant of the FTAA ever succeed in bringing thisabout, the conflict between U.S. economic and political interests will diminish,



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potentially clearing the way for more-assertive measures from Washington tocontain Chinas influence in the Western Hemisphere.

In this context, Chinas commitment to southsouth cooperation takes onbroader significance. It is a commitment that aims at nothing less than simulta-neous harmonization with contemporary capitalist and socialist economicregimes. This flexibility has proven useful not only for forging relations across thepolitical spectrum, but also for defending against criticism. During his 2005 tripto Washington, Cheng Siwei, vice president of Chinas Permanent Committeeof the National Popular Assembly, responded to concerns about his countrysrelations with Cuba by stressing economic over political objectives. Dontbe sensitive. This is a normal development. Business is business (quoted inRobles, 2005).

These comments reveal what Fedderke et al. (1999) might call a dual rational-

ization of social capital to suit the dominant trends of the global economicclimate, providing China with an effective means for integrating politicallydiverse countries into a cohesive foreign policy framework. It will becomeincreasingly difficult for China to maintain this diplomatic balance as competi-tion for Latin Americas natural resources intensifies. The next section describeshow Chinas industrial and cultural programs in the region are protecting itsresource interests and creating a sociopolitical environment that favors closereconomic integration across the political spectrum.

Chinas Local EffectsThe U.S. governments geopolitical anxieties are less damaging to China thanthe broader fear of a growing China threat that has begun to emerge in coun-tries across Latin America. These apprehensions find historical precedence in theobservations of Vladimir Lenin in the early 20th century, Ral Prebisch in the1950s, and Noam Chomsky since the 1980s that the regions prospects for movinginwards from the periphery of the global market lie in less dependence onresource exports and more attention to educational and technical advancement.Chinese investment in Latin American resources may bring rapid economicgrowth but does not in itself provide a long-term, sustainable platform for devel-opment (Len-Manrquez, 2006, p. 40). With this in mind, Devlin, Estevadeordal,

and Rodrguez caution that It is inadvisable for countries simply to allowcurrent market forces (partly triggered by China) to lead them toward special-ization in a few traditional sectors (2006, p. 169).

Latin Americans have grown accustomed to foreign-managed manufacturingoperations, industrial parks, and resource extraction projects that have too oftenfailed to build local technical capacities or create opportunities for domesticbusinesses (Pritchard & Hearn, 2005; Mesquita Moreira, 2004). It is no coinci-dence that, according to Latinobarometro, 63% of Latin Americans oppose theprivatization of their energy resources (Economist, 2006, p. 42). Concerns aboutunfair commercial competition and dissatisfaction with labor conditions, wages,industrial insulation, and the practice of bringing in workers from mainlandChina to replace the local workforce have surfaced in Mexico, Bolivia, Colombia,and Chile. Similar grievances against Chinese enterprises have also emerged inAfrica (Faul, 2007).



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According to sources in Beijing, China is pursuing a model of developmentthat takes account of the successes and failures of the United States in the region.

For Jiang Shixue, former deputy director of the Institute for Latin AmericanStudies at the Chinese Academy of Social Sciences, the key to this approach is abalance between equality and growth and a shared attention to social and eco-nomic concerns (personal communication, July 17, 2007). Other Chinese officialsdraw attention to the domestic operations of state-controlled enterprises as anindication of their corporate responsibility. The electronics manufacturer Haierparticipates in social programs ranging from blood drives to natural disasterrelief (Hawes, 2007; Sun Hongbo, personal communication, July 30, 2007). Theability of Chinese enterprises to simultaneously pursue a social and economicagenda results largely from the fact that the government, which according to oneprominent Chinese businessman (personal communication, September 20, 2012),

funds public welfare in this way to build popular respect for state enterpriseswhile reducing the official size of its budget, controls most of them. It remains tobe seen whether Chinese enterprises are concerned enough about public opinionin Latin America to make comparable investments in local welfare.

Chinese corporations emphasize or play down their governmental connectionsdepending on political conditions in partner countries. In their Cuban opera-tions, Chinese enterprises publicly advertise the fact that they are state operatedas they enter into joint ventures with the Cuban state. Haier and China PutianCorporation dominate the electronics sector of the annual Havana Trade Fair, thelatters promotional banner announcing that, China Putian Corporation was

founded in 1980. It is an extra-large sized state-owned enterprise directly underthe management of [the] Chinese central government . . . China Putian Corpora-tion will regard Cuba as a platform so as to develop is business in LatinAmerica. According to an industrial analyst at the University of Havana, publicidentification with the Chinese state is intended to inspire confidence in corpo-rate responsibility and accountability, qualities that have become harder to proveas imported Chinese textiles and small appliances find their way into Cubasalready expansive informal sector (personal communication, January 10, 2012).By contrast, the advertising campaigns of Chinese companies such as Lenovo inmarket-oriented Latin American countries do not openly celebrate linkages withthe Chinese state.4 This adaptive strategy is an important ingredient in Chinas

effort to engage with public and private counterparts and build what Devlin andEstevadeordal (2004) call a trade-cooperation nexus.

At the core of this nexus is an awareness that the accrual of social capital overthe long term can weigh heavily on the formation of broader industrial anddiplomatic relations. A good example of this is a project currently under devel-opment by the China National Offshore Oil Corporation with the Venezuelan oilcompany Petrleos de Venezuela. The project seeks to reduce the reliance ofVenezuelas oil sector on the expertise of U.S. firms by building national technicalcapacities, especially in the manufacture of oil-drilling equipment. A team of 71Venezuelan technicians and engineers arrived in Beijing in March 2007 to com-mence its first phase, which involved technical training and daily Mandarinlanguage and culture classes at Beijing Foreign Studies University.5 In October2007, the second phase brought the Venezuelans home with a team of Spanish-speaking Chinese technicians to supervise the assembly of drill parts and the



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maintenance of the completed equipment. The third phase, which commenced inmid-2008, saw Venezuela independently building the equipment and putting it

into operation.The amount of Venezuelan oil bound for China is increasing (640,000 barrelsper day as of mid-2012) and will increase further upon completion of a US$8billion pipeline stretching 2,000 miles from Venezuelas Caribbean coast toColombias Pacific coast. Further facilitating the export of Venezuelan oil toChina, in 2006, a national referendum in Panama approved a proposal to widenthe Panama Canal, an undertaking that began in 2007 and will cost US$5.25billion over eight years. The China Ocean Shipping Company has publiclyendorsed this endeavor, which will allow the canal, whose Pacific and Atlanticport facilities Chinese companies presently control, to accommodate ultralargecrude carriers. Venezuelan oil minister Rafael Ramrez has outlined his goal to

increase his countrys oil exports to China to one million barrels per day by 2015,and to this end, China National Petroleum Corporation is working with Petrleosde Venezuela to build three refineries in China (CEG, 2007; Daly, 2012).

Although Chinas political agenda may be less explicit than Venezuelas, thecollaboration of their oil enterprises fortifies state-to-state relations in a way thatwould be unlikely under a free market system. A strictly market-based frame-work would have trouble accommodating such long-term financial horizons,investment in language and cultural awareness, and the gradual process of build-ing professional and social ties. Furthermore, as one of the Venezuelan techni-cians pointed out in Beijing, the focus on technology transfer overcomes a key

problem that disadvantaged countries face under global capitalism, namely, thatcontracted multinational corporations go to great lengths to retain their technicalknow-how and intellectual property rather than enhance the self-sufficiency ofpotential local competitors. In contrast, as the technician put it, We are emissar-ies of socialism, and one of the keys to modern socialism is technology transfer(personal communication, June 21, 2007).

According to Jianmin Li, deputy secretary general of the China ScholarshipsCouncil, direct state-to-state cooperation has allowed China to prioritize educa-tional exchange and capacity-building in priority areas. In 2007, the councilfunded 12,000 young Chinese to study overseas; 400 of these went to Cuba tostudy medicine and tourism, a number that doubled in 2008 and has since

continued to grow. As Li explained,

Look where the students come from: overwhelmingly from the Western provincesof China, because thats where our central government is trying to develop infra-structure and social programs. So these doctors will return from Cuba to WesternChina and fill an important need. In the meantime, a significant number of Cubandoctors are in Western China, filling the need for the short term. (Personal com-munication, July 5, 2007)

Educational exchange is a central component of the Chinese governmentsambitious program of institutional capacity-building, Project 211, and as such hasemerged as a key strategic branch of Chinas foreign policy. The China NationalOffshore Oil Corporation, the China National Petroleum Corporation, and otherChinese oil companies fund Chinas three petroleum universities, which enrolltheir studentsoften with support from the Ministry of Educationin LatinAmerican universities to learn Spanish and local business culture.



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Education programs also serve the broader purpose of reducing anxietiesabout Chinas perceived threat to the region. A case in point is Mexico, where

relations with China are characterized less by cooperation than competition.Manufactured products, such as textiles, appliances, and automobile parts,account for more than 85% of Mexicos exports, but China manufactures the sameproducts at a lower cost and consequently surpassed Mexicos position in the U.S.market in 2002. Competition with China has caused the loss of more than 672,000Mexican jobs across 12 industrial sectors, with further losses resulting from theabolition of tariffs on shoes and textiles in December 2011. El Salvador, Guate-mala, Honduras, Nicaragua, and Panama face similar problems and have expe-rienced rising poverty and consequent disappointment with the WashingtonConsensus, CAFTA notwithstanding (Len-Manrquez, 2006; Villafae & DiMasi, 2002; Villafae & Uscanga, 2000).

This situation has driven Mexico to begin emulating the resource-intensivestrategies of other Latin American countries by increasing copper and oil pro-duction. Industry watchers note the potential of Mexican oil output to rival thatof Saudi Arabia but stress the need for investment of some US$20 billion per yearto exploit existing fields and explore discoveries such as the deepwater Noxalfield in the Gulf of Mexico (Reuters, 2004; Rueda, 2005). China, the United States,and other countries are lining up to provide this investment, but the efforts offormer presidents Felipe Caldern and Vicente Fox to allow foreign companiesinto the sector met with strong domestic opposition. President Enrique PeaNieto, inaugurated in December 2012, has faced comparable opposition to this

agenda and has already begun to articulate a more conciliatory position endors-ing ongoing public control of the sector (Thomson, 2012).Nationalized by the progressive President Lzaro Crdenas in 1938 under the

PEMEX Corporation, oil is one of Mexicos only significant economic resources toremain in national hands through the economic reforms of the past two decades.Public sensitivity about the matter stems largely from Mexicos rather suddenentry into the world market through the 1986 General Agreement on Tariffs andTrade and the 1994 North American Free Trade Agreement (Dussel Peters, 2007,p. 20). A combination of competition in manufacturing and pressure to export oil,both resulting largely from the emergence of China, have essentially underminedthe benefits of industrial upgrading that Mexico achieved in the mid-to-late 20th

century.Adding to the bilateral tension, the Confederation of Industrial Chambers has

asserted that, for every two manufactured products exported by Mexico, tenenter from China, and that between 900,000 and 1 million workers have lost theirjobs (Mural, 2011, p. 4). The informal sector is woven tightly into these indicators,with 60% of clothing sold in Mexico thought to consist of contraband, most ofwhich comes from China (Mayoral Jimnez, 2011; Rodrguez, 2011). Studiesconducted in 2012 found that 53% of Mexicans aged 16 to 25 habitually purchasecontraband and that the informal sector constituted 15% of GDP (Informador,2012).

According to a Beijing-based representative of Mexicos Tecnolgico deMonterrey, politicians from both countries have sought to improve Mexicanperceptions of China and simultaneously accrue political capital by establish-ing cultural and industrial education programs (personal communication,



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November 3, 2007). Led by the Secretariat of Economic Development of the stateof Michoacn, nine Mexican state governments now offer scholarships for stu-

dents to live in China and study its business practices. Eloy Vargas Arreola,secretary of the Michoacn Secretariat of Economic Development, has urgedpublic optimism, stating that, China, a friend and ally of Mexico, poses nothreat (Kai, 2006). To amplify this message, a 2006 bilateral cultural developmentagreement resulted in the inauguration of Latin Americas first Confucius Insti-tute in Mexico City.

There are currently 190 Confucius Institutes operating in 57 countries (five inMexico), and there is a broad range of perceptions of their function. According toJiang Yandong, director of development and planning at Hanban (the organiza-tion responsible for the institutes),

In addition to language teaching we have a cultural mission, which has two parts:the first is to make people aware of Chinas special kind of socialism, and thesecond is to teach traditional Asian values through the lessons of Confucius. Ourcultural teaching draws on the Confucian texts, whose lessons can be summed upas h wi gi, which means, harmony is the priority.. . . We have to see past theprofits before our eyes and instead see the opportunities of the future. (Personalcommunication, November 17, 2007)

As representatives of the Chinese Ministry of Education, the Confucius Insti-tutes frame educational and cultural exchange within the values of officialChinese political discourse. Confucian principles such as long-term cooperation,ordered harmony, and respect for the autonomy of others reflect the geopolitical

conditions that the Chinese government considers necessary for global peace andprosperity, as expressed in its foreign policy (PRC, 2004). Responding to accusa-tions that the Confucius Institutes attempt to extend Beijings soft power byrecasting Maoist communism in less-threatening terms (e.g., Kurlantzick, 2007;OMF, 2006; York, 2005), Jiang points out that the institutes are only set up whenhost countries request them.

Although we provide some funding, teachers, and resources, the Institutes belongto the host organization and result from independent applications to set them up.Our objectives may fit with those of the Chinese government, but our office ismade up of different people with different goals from the Communist Party. Were

not trying to extend soft power any more than the Goethe Institutes of Germanyor the Study Centers of the British Council. Actually, we have one major differencefrom both of these: our Institutes are always set up collaboratively with localeducational institutions, and so from the start they are tied to host country inter-ests. (Personal communication, November 17, 2007)

Although the institutes harbor no specific political objective, the officialChinese news service Peoples Daily acknowledges that they and their associatedprograms serve to minimize the misconception of [Chinas] development as theChina threat by making its traditional value systems known to the world(Peoples Daily, 2006). The hope seems to be that greater cultural familiarity willoffset local misunderstandings, suspicions, and fears associated with Chinasgrowing influence. This is a timely objective in Mexico, where the terms of tradehave disproportionately benefited China, and illicit commerce has damaged theimage of both governments. The extent to which education programs will ease



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apprehensions and potentially stimulate creative thinking about new forms ofofficial commercial cooperation remains to be seen.

ConclusionUnderstanding Chinas multilayered relations with Latin America requires

attention to the role of cultural programs, educational exchange, and socialcapital in building political legitimacy and long-term economic growth. As NanLin has written, Social networks and social capital are at the core of the micro-macro link. Concepts of power, dependence, solidarity, social contracts, andmultilevel systems do not make sense until social capital is brought into consid-eration (2001, p. 142).

Chinas flexible approach to international relations is evident in its simulta-neous cooperation with politically diverse trading partners, from Cuba and Ven-

ezuela to Mexico and the United States. The pursuit of WTO market economystatus signals Chinas integration into the capitalist world system, even as it seekscommon ground and solidarity with other nonaligned, developing coun-tries. The collaborative programs that underpin this solidarity are similarlymixed, oriented toward economic growth and profitability but in most casesdeveloped through direct intergovernmental channels rather than in the privatesector. Greater state participation in economic affairs, a longer-term vision ofgrowth, technical training, educational exchange, and industrial upgrading reso-nate closely with the goals of Latin Americas new left. Countries across theregion have begun to show interest in emulating aspects of Chinese market

socialism and in rationalizing their domestic systems of governance to facilitatecloser integration (Devlin et al., 2006, p. 169; Lu, 2005, p. 40).It is difficult to assess how deep Chinas appeal and influence in Latin America

will run over the course of the early 21st century. As Jorge I. Domnguez put itwhen the effects of Chinas influence were beginning to make their mark in theregion, The twenty-first century may or may not be the China century in LatinAmerica but this first decade of the century surely is the China decade (2006,p. 48). Since then, Chinas effect on Latin America has significantly deepened andis set to deepen further. The Chinese governments foreign policy commitment tobuilding relationships across the political spectrum, with resource exporters andotherwise, has so far proven hard to resist.

About the AuthorDr. Adrian H. Hearn is an Australian Research Council Future Fellow at the

University of Sydney China Studies Centre and Chair of the Latin AmericanStudies Association (LASA) Section for Asia and the Americas. Recent publica-tions include Cuba: Religion, Social Capital, and Development (Duke UniversityPress, 2008) and (as editor) China Engages Latin America: Tracing the Trajectory(Lynne Rienner, 2011).

Notes1An important objective of Chinese foreign policy that falls beyond the scope of this article is its

attempt to persuade the 12 Latin American countries (of 23 worldwide) that maintain diplomaticrelations with Taiwan to shift their allegiance to the Peoples Republic of China (PRC). A furtherobjective, realized in Argentina, Brazil, Chile, and Peru during Hu Jintaos 2004 visit, is to becomemore broadly recognized as a market economy in the WTO.



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2Nicaragua has been comparatively slow to warm to China, but like Panama, the DominicanRepublic, and Paraguay, domestic pressure is growing within Nicaragua to cut diplomatic ties withTaiwan (CRS, 2008, p. 19).

3

Empirical examples of this process from across Latin America are presented in Hearn andLen-Manrquez (2011).4The Chinese company Legend Holdings is Lenovos largest single stakeholder, with 34% of stock,

and the Chinese governments Academy of Sciences owns 36% of Legend Holdings (Lenovo, 2012).5This information is from a focus group interview with Venezuelan technicians in Beijing con-

ducted on June 21, 2007. The technicians noted that the project is only a partial solution to dependenceon the United States because it will still be necessary to purchase some drill components from the U.S.firm Caterpillar.

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HEARN, Adrian - China and Latin America - Economy and Society

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