Trump’s negative Latin American agenda will help China
Here's a major world event that went almost unnoticed in the heat of the 2016 U.S. elections, and that may make big headlines in 2017: China's renewed push to increase its presence in Latin America.
While President-elect Donald J. Trump is pushing a negative agenda for Latin America — vowing to build a wall on the U.S. southern border, re-negotiate or scrap the North American Free Trade Agreement (NAFTA) with Mexico and Canada, and kill the Trans Pacific Partnership (TPP) trade deal with Asian and Latin American countries — China is happily seeking to fill the vacuum of constructive U.S. policies in the region.
In mid-November, while the U.S. was consumed by Trump's November election victory, Chinese President Xi Jinping visited Ecuador, Peru and Chile. It was the Chinese leader's third visit to Latin America since taking office in 2013.
So far, Xi has visited 10 Latin American countries since he took office three years ago, almost as many as the 11 made by President Barack Obama during his eight years in office.
During his latest Latin American tour, Xi — among other things — inaugurated Ecuador's biggest hydroelectric dam built by a Chinese firm with Chinese loans, and discussed new infrastructure investments in Peru and Chile. A few weeks earlier, in September, Xi hosted the presidents of Brazil, Argentina and Mexico at a meeting of G-20 world leaders in Hangzhou, China.
Judging from what I hear from Latin American presidents and diplomats, Xi sees an opportunity to increase China's presence in Latin America despite the recent decline in China-Latin American bilateral trade and investments.
China's trade with the region, which soared over the past 10 years and reached its peak in 2013, declined by 11 percent over the past two years, largely because of China's economic slowdown, according to U.N figures. In addition, China is stuck with billions in bad loans to Venezuela and Cuba.
Still, China remains the top or second-largest trading partner of Brazil, Chile, Peru, Ecuador, Argentina, Bolivia, Paraguay and Uruguay.
Xi's charm offensive in Latin America began before the U.S. elections. Peruvian President Pedro Pablo Kuczynski, who visited China in September in what was his first foreign trip as president, told me after the trip that "they treated me like a king" while in Beijing.
Kuczynski, a former Wall Street investment banker, said he discussed Chinese investments in Peruvian ports, railroads and perhaps highways, and “came back with the impression that they had a tremendous enthusiasm for carrying out these projects."
Trump's continued anti-Mexico tirades, his appointment of NAFTA critic Wilbur Ross as Secretary of Commerce, and — more importantly — his announcement that he will scrap the TPP agreement with Asian and Latin American countries as soon as he takes office, will be a golden opportunity for China in the region, many diplomats say.
Diego Guelar, Argentina's ambassador to China, says that with the United States in an anti-free trade mode and the European Union beset by internal problems after Britain's Brexit vote to leave the European Union, China is emerging by default as the new world champion of free trade.
China already has free trade agreements with Chile, Peru and Costa Rica. It may sign new deals with Latin American countries, or expand its Asian free trade zone negotiations to Latin American countries in the near future, he said.
"Trump's announcement that he will scrap the TPP was a godsend to China," Guelar told me from Beijing. "It's a present the Chinese never expected, wrapped in a Tiffany box and a silk bow."
My opinion: Most Latin American countries are much more eager to increase their economic ties with the United States than with China. While China buys largely raw materials such as oil, minerals and soybeans from Latin America — at depressed prices and producing relatively few jobs — the United States imports more manufactured goods from the region, which are more lucrative and generate more employment.
But if all Trump has to offer to Latin America is a negative agenda — anti-trade, anti-immigration, and anti-climate change — China will fill the void and gain even more influence in the region.