China's Growing Involvement in Latin America Carries 'Significant Negative Consequences' for U.S.

WASHINGTON – A research professor at the U.S. Army War College warned lawmakers that China’s increasing involvement in Latin American affairs is undermining the strategic position of the United States within the Western Hemisphere.

Testifying before a combined hearing of two House Foreign Affairs subcommittees, R. Evan Ellis acknowledged that Chinese engagement is primarily economic and could conceivably advance “the development, prosperity, and even security of the region.”

But Ellis, an expert on Latin American affairs, also expressed concern that growing Chinese involvement carries “significant negative consequences” for the U.S. While the Far Eastern giant’s loans to poor nations, product purchases and sales within Latin America “benefit a limited number of sectors and economic interests,” they also “indirectly contribute to inequality, corruption, violence, and environmental problems, while undermining democracy and the rule of law in the region.”

China is employing a playbook seen elsewhere. It is securing reliable access to primary products in Latin America, such as petroleum and minerals necessary to sustain its industrial production. It also is hunting for reliable sources of agricultural goods, particularly animal feed to produce the food required to meet the needs of China’s 1.35 billion residents. And it desires accessible markets, as Chinese companies expand their capabilities in strategic, high-value-added sectors like motor vehicles, electronics and telecommunications.

“In general, the PRC (People’s Republic of China) has adopted a pragmatic, materialistic, politically agnostic approach in pursuit of its objectives in the region,” Ellis said. “It has focused on bilateral engagements built around loans and investment projects by Chinese companies, complemented by trade agreements, memorandums of understanding, or administrative certifications which grant access to the Chinese market for select categories of merchandise, frequently agricultural goods.”

China’s physical presence on the ground in Latin America has provided Chinese companies and their government “a vastly expanded stake in the internal dynamics of the countries where they operate,” he said.

China’s purchases in Latin America are generally for cheaper, lower-end goods -- soybeans rather than soil oil, iron ore rather than steel or cars, and crude petroleum rather than refined products. Conversely, China is marketing higher-end products in Latin America, Ellis said, “competing with and adversely affecting similar industries in Latin America and the Caribbean in both domestic markets, as well as in third markets such as the United States.”

Expanding business transactions open up new avenues for trans-Pacific criminal activities like money laundering. Reports are spreading, Ellis said, that the Brazilian gang First Capital Command and other Latin American criminal organizations are using Chinese banks and businesses for their operations.

“Trans-Pacific criminal ties are an emerging threat which are likely to expand in coming years with emerging PRC-Latin America commerce, particularly since overwhelmed Latin American and Caribbean police forces lack the language skills and technical contacts in the PRC to effectively investigate cases and combat groups with trans-Pacific ties,” Ellis said.

China’s engagement is also, Ellis said, “undermining democracy and good governance” through loans, investments and commodity purchases “that sustain the lives of populist regimes and with them their questionable adherence to norms of democracy, respect for private property and the rule of law, as well as their efforts -- in conjunction with regional powers such as Brazil -- to replace the inter-American system” with structures that “exclude the US and Canada from a voice in the hemisphere.”