China eyes new turf: S. America

Bush visits Friday, but President Hu Jintao has been striking business deals for two weeks.

When President Bush arrives here Friday for the Asia-Pacific Economic Cooperation Forum, he's likely to be met by student protesters already in the streets chanting against "globalization," "colonialism," and the US occupation of Iraq.

But China's President Hu Jintao is getting quite a different reception. For two weeks now, he's been cutting ribbons at new factories in Argentina, enjoying beef barbecues in Brazil, addressing congresses, and announcing investment projects as he and 150 Chinese businessmen make their way across South America and on to Cuba.

As in Asia and Africa, China is rapidly expanding its economic and diplomatic presence in Latin America. Frustration in this region over what is perceived as Washington's preoccupation with the war on terror, and US trade pacts that never quite get signed, coincides with a surge in exports and new trade deals with China.

"It is telling that Hu is spending more time in South America over this fortnight than Bush has in the past four years," says William Ratliff, a fellow at Stanford University's Hoover Institution. "Hu will come over as much more interested in Latin American people," he suggests. "His sweet, soft-power vibes leave Bush sounding like a foghorn."

South America's "trade surpluses will be driven this year and next by Chinese demand for foodstuffs and raw materials," says Riordan Roett, director of Western Hemisphere studies at Johns Hopkins University in Baltimore. Hu's visit, he adds, is a "diplomatic breakthrough."

China's trade volume with Brazil, Argentina, and Chile reached $14.6 billion last year. Of this, China imported $10.7 billion worth of goods, mainly agricultural products and a variety of ores and minerals, according to the United Nations Economic Commission for Latin America and the Caribbean.

"I think the trip has gone well," says Cynthia Watson, a specialist in Chinese involvement in Latin America at the National War College in Washington. "Beijing leaders like the press attention because they can point to it as evidence that China is finally taking its rightful place as the important power on the international stage that they want to be," she says, stressing that her views are personal. "They are setting the stage for longer-term ties, and the Latin American states are eager for that."

China is, of course, not popular everywhere in the region. Hundreds of thousands of jobs have been lost in sectors such as textiles and electronics in Mexico and elsewhere in Central America due to Chinese competition in manufacturing exports. But this is increasingly being offset, especially in the South, by the booming commodity trade.

Over the past five years, bilateral trade between China and its most important partner in the region - Brazil - has more than quadrupled to $6.7 billion last year. By comparison, Brazil imported nearly $11.2 billion in US goods and services. The US is still Brazil's largest trading partner.

But when Brazilian President Luiz Inacio Lula da Silva led a weighty 450-member trade mission to China in May, the two countries signed 14 accords. During Hu's visit this week, Chinese officials suggested that trade with Brazil could climb to $35 billion by 2010. China is expected to eclipse Argentina as Brazil's second-largest export destination by next year.

Commerce between Argentina and China meanwhile is also going strong - from $1.5 billion five years ago to $3.1 billion today.

This week in Buenos Aires, Hu announced plans by Chinese businesses to directly invest $19.7 billion over 10 years in energy production, infrastructure, and railroad expansion - agreements which would amount to the largest bilateral trade accord for Argentina since its 2001-02 economic crisis.

Chile and China, meanwhile, are in the process of negotiating a free trade agreement - China's first - which could boost two-way commerce to $10 billion a year, up from $3.5 billion in 2003. Chile is the world's biggest copper producer and China is the No.1 copper consumer.

Trade is not the only facet of the China-South America relationship that is growing. Look at four separate developments that took place just last month:

• China sent its first troops ever in the Western Hemisphere when it sent riot police to Haiti as part of a UN mission.

• The Chinese monthly "China Today," specializing in political, cultural, economic, and social aspects of China, inaugurated its Latin American branch office in Mexico City.

• Reports suggest China has offered to help finance an expansion of the Panama Canal.

• Chilean Education Minister Sergio Bitar announced that this country would soon open up four more language and culture centers like the capital's "Institute Chileno-Chino de Cultura."

"We had two, no, three, students when we started language classes here [a decade ago]," says Mr. Lopez, the center's director. "Today we have 100, and a waiting list."

The increased interest does not surprise him at all, he says: "You can't arrive to do business in Beijing and trot out English - that won't do at all."

Do all these developments point to a seismic change in the balance of power within Latin America? Most experts say no - at least not yet.

Michael Shifter, vice president for Policy at the Inter-American Dialogue warns against exaggerating the long-term sustainability of the relationship with China.

He remembers talk a few years ago of the likely dominance of Spanish capital and investment in the region, which soon fizzled. Before that there was fascination with Japan, with everyone saying Japanese was the indispensable language of the future.

"With China, of course, the potential is much greater," he says, "but at the end of the day both geography and culture matter enormously, and most Latin Americans would prefer to strengthen their ties with the United States."

Also, would China - which has a projected $140 billion trade surplus with the US this year - risk the wrath of the US to promote itself here?

"Is that wise?" asks Hopkins's Roett. "Europe returned to the region in the 70s and 80s, in terms of investment and trade, without any US protest. EU negotiations with Mercosur [a regional trade bloc] did not seem to bother anyone in DC." But, he wonders: "Is China different?"

Probably, says Nixon. "China does not want to hurt its good trade and political relations with Washington right now which something drastic would do," she argues. Rather, she expects they will move cautiously. "They are happier to move slowly and gradually," she says. "When your culture has 5,000 years under its belt, you've got the patience."

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