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There is tension waiting to burst in South America. Uruguay’s President Luis Lacalle Pou has hedged his entire political career on securing a trade deal with China.
A move that could solidify his legacy has come at the cost of making potential enemies of his neighbouring countries.
Brazil and Argentina have voiced anger at Uruguay for attempting to achieve a deal outside the Mercosur bloc, an alliance forged more than 30 years ago between the three countries, Paraguay and China.
In the last 20 years, China has worked to slowly hammer out investment all across the South American continent, a figure which today totals the tens of billions.
It has made China South America’s biggest trading partner and a source of both foreign direct investment (FDI) and lending in energy and infrastructure — the latter coming mostly through its grand Belt and Road Initiative (BRI).
Some of these investments, like in Uruguay, involve domestically significant products, like dairy and cattle produce. But they run to far more serious missions like the space sector and security. Here, Express.co.uk takes a look at some of the many ways China has infiltrated South America, and what President Xi Jinping is doing to ensure his country comes out on top.
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China’s growing influence
From 2000 to 2020, the World Economic Forum’s figures suggest that trade between China and Latin America grew by a whopping 26 times, from £9.1billion to £240billion.
It is, they say, expected to double by 2035 and reach almost £600billion.
Loans comprise a big chunk of the capital, a one-sided affair with China’s state-owned banks including the China Development Bank and the Export-Import Bank of China having given out 117 loans across the region since 2005, tallying around £100billion.
Three countries have benefited from these loans — Brazil, Ecuador and Venezuela — all of which included terms that allowed China favourable access to each nation’s rich natural resources.
Many of the countries have agreed to free trade agreements with China, most recently Ecuador, a deal which was struck in June this year. Others include Chile, Colombia, and Peru.
Belt and Road Initiative (BRI)
Spanning much of the world, China’s BRI looks to pump Chinese money into foreign countries in exchange for the passage of Chinese goods through their respective borders.
China’s plans for Latin America are similar to those it has for Europe. Here, however, the trade routes will be maritime and so rely on unfettered access to major ports.
Seven countries in South America are already a part of the scheme — Venezuela, Ecuador, Peru, Bolivia, Chile, Argentina, and Uruguay — and in the entire Latin America and Caribbean region, 20 out of 24 have signed and are participating in the BRI.
In an analysis, a Latin American Focus Group from the European University Institute summed up why China is so keen on maintaining Latin America as a member of its plans: “First and foremost, Latin America possesses an abundant amount of natural resources and raw materials, an abundance which can meet China’s massive demand for crude petroleum oil, iron, and copper.
Amid increasing concerns over food security, agricultural goods from Latin America are also increasingly crucial for China; indeed, Brazil and Argentina have been two of the largest soybeans and oilseeds exporters to the country for decades.”
Beijing has already made serious inroads in Brazil, its China Merchants Port Company (CMP) having bought 90 percent of the Brazilian TCP Participacoes, which manages the port of Paranagua, Brazil’s most profitable and second largest port. Operations there are estimated to be worth nearly £1billion.
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Foreign investment makes up a huge part of the BRI. Energy accounts for £72billion — 34 percent of all foreign investment — infrastructure around £20billion, some 42 percent, and mining for over £1billion, almost three percent.
In 2021 alone, Chinese state-owned companies pumped £8billion into projects in countries across South America, a figure which is expected to grow in the coming years.
Lithium mining is a huge potential money-maker for China, with several South American countries known to be rich in the mineral needed for rechargeable batteries. Much of the lithium stores on the continent are untapped. China is more than aware of this, investing £12billion into mining projects between 2018 and 2020, mostly in South America’s so-called lithium triangle between Argentina, Bolivia, and Chile.
Mining enterprises elsewhere, Peru and Ecuador for example, have been cited as hotbeds of the displacement of local populations, land seizures and environmental damage, but which have reaped huge financial gains for Beijing.
Security and defence
In striking deals, China has wooed its South American friends with Chinese-made defence equipment to ensure the maintenance of law and order, simultaneously protecting its own interests on the continent.
Not only this, but countries in the region have cooperated in Chinese military exercises, engaged in educational exchanges in techniques and tactics, as well as training for military personnel.
Between 2009 to 2019, China sold around £500million worth of arms to Argentina, Bolivia, Ecuador, Peru, and Venezuela. From self-propelled grenades to anti-tank mortars, anti-ship mortars, radar equipment, and JF-17 fight jets, little has been spared in the great exchange of military hardware.
China has been accused of aiding its South American partners with the technologies to impose digital dictatorships by tracking and controlling populations through their devices.
In doing this, Beijing has embarked on a policy of pushing Huawei’s presence in the region, encouraging Latin states to stock the technology which is used in China to cultivate personal data. Many countries, including the UK, have banned Huawei technologies from being used in public infrastructure including CCTV cameras.
Infiltrating with soft power
Xi’s efforts to promote China in emerging economies aren’t purely based on financial gain.
By October 2021, China had opened 28 Confucius Institutes in South America, public educational and cultural programs funded by the Chinese state that teach Chinese culture and language around the world.
Proponents say they exist to bridge the significant gap between China and other countries, but there are serious concerns that the institutions are a way for Beijing to spread propaganda under the guise of education, interfere with free speech and even spy on attendees.
Christopher Hughes, Professor of International Relations at LSE, previously raised concerns and accused the institutes of being “divisive” and “illegitimate” propaganda organisations, accusations which Beijing said were merely “Cold War thinking”.
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