Along the Belt and Road: Breaking the cycle of underdevelopment in Latin America

The following article by Carlos Martinez was commissioned by the Taihe Institute for the January 2022 edition of its monthly magazine, TI Observer. Carlos gives an overview of the history of European and North American subjugation of Latin America, and explores the ways in which the expanding relationship between China and the region is helping to break the cycle of underdevelopment and poverty.

There is an audio version of this article available on the TI Observer podcast.

The last few months have seen a significant expansion of the Belt and Road Initiative in Latin America and the Caribbean. Although this region of the world is not the most obvious fit for an undertaking that was originally modelled on the Silk Road – a network of trade routes linking East Asia with the Middle East, Africa and Europe – the reality is that the countries of South America, Central America and the Caribbean share many of the same needs as their counterparts in Central Asia, Southeast Asia, the Middle East and Africa.

Most Latin American countries won their formal independence from Spanish and Portuguese colonialism in the 19th century, but they found themselves in the shadow of an incipient North American imperialism. The Monroe Doctrine, first articulated by President James Monroe in 1823, denounced European colonialism and interference in the Western Hemisphere, not on the basis of anti-colonial principle but with a view to buttressing US hegemonic designs. Since that time, the US has tended to consider Latin America as its ‘backyard’ – a collection of countries subjected to the control (direct or indirect) of Washington.¹

Eduardo Galeano wrote that the transition from colonialism to neocolonialism made little difference to Latin America’s position within the global capitalist economy. “Everything from the discovery until our times has always been transmuted into European – or later, United States – capital, and as such has accumulated on distant centres of power. Everything: the soil, its fruits and its mineral-rich depths, the people and their capacity to work and to consume, natural resources and human resources.”²

Galeano’s words were written almost 50 years ago, but they still ring true. The US continues with its hegemonic strategy in relation to Latin America; a strategy which seeks to make the region’s land, natural resources, labour and markets subservient to the needs of US monopoly capital. The US has shown a consistent interest in Mexican labour, in Chilean copper, in Brazilian land; but it has been indifferent to the needs of the people of these countries to development, to a decent standard of living, to social justice. And when the US fails to get what it wants through quiet pressure and economic coercion, it does not hesitate to use force, for example supporting coups against the elected governments of Bolivia³ and Venezuela,⁴ or imposing illegal sanctions on Nicaragua⁵ and Cuba.⁶

As a result, Latin America continues to suffer significant underdevelopment in many areas. The emergence of China as a major investor and trading partner is therefore proving to be indispensable for the region’s economic progress.

Steadily increasing economic ties between China and Latin America

In the last two decades, economic links between Latin America and the People’s Republic of China have been expanding at a dizzying rate. Bilateral trade in 2000 was just 12 billion USD (1 percent of Latin American’s total trade); now it stands at 315 billion USD.⁷ In the same time period, China’s foreign direct investment in Latin America has increased by a factor of five.⁸

Since the launch of the Belt and Road Initiative (BRI) in 2013, 21 of the 33 countries in the Latin American and Caribbean region have signed up to the China-led global infrastructure development strategy. Infrastructure projects have been a particular focus for Chinese firms. Writing in Foreign Policy in 2018, Max Nathanson observed that “Latin American governments have long lamented their countries’ patchy infrastructure.” China has “stepped in with a solution: roughly $150 billion loaned to Latin American countries since 2005.”⁹

Chinese investment has been widely recognised across the region for its positive economic and social impact, particularly in terms of facilitating government projects to reduce poverty and inequality. Kevin Gallagher, in his important book The China Triangle, writes that “Venezuela has been actively spending public funds to expand social inclusion to the country’s poor. The country … was able to fund such expenditures given the high price of oil in the 2000s — and due to the joint fund with China.”¹⁰

A similar story can be told about transformative social programmes in Bolivia, in Brazil (under the Workers Party governments led by Luiz Inácio Lula da Silva and Dilma Rousseff) and elsewhere. Brazil under the Lula and Dilma governments (2002-16) won global acclaim for its unprecedented campaigns to tackle poverty, homelessness, malnutrition and lack of access to education and healthcare. As part of its rejection of the Washington Consensus and its embrace of multipolarity and South-South cooperation, Lula’s administration massively expanded economic ties with China. Then foreign minister Celso Amorim said the Brazil-China relationship formed part of a “reconfiguration of the world’s commercial and diplomatic geography.”¹¹

Chinese investment has proven particularly attractive to those governments in the region that seek to protect their sovereignty and improve the living standards of their populations. Investment from the international financial institutions (most notably the IMF) has typically come with punishing conditions of privatisation, deregulation and fiscal austerity. China’s development loans on the other hand come with no such strings attached. Gallagher affirms that Chinese banks “do not impose policy conditionalities of any kind, in keeping with general foreign policy of nonintervention.”

Support during the pandemic

Aside from trade and investment, China gives over 5 billion USD in aid to Latin America each year. Since the start of the pandemic, China has provided around half the region’s Covid-19 vaccine doses¹², with a number of countries including Chile, El Salvador, Brazil and Uruguay relying almost exclusively on Chinese vaccines.¹³ Indeed as early as July 2020, Foreign Minister Wang Yi announced a 1 billion dollar loan to support vaccine access in Latin America.¹⁴

Mexican President Andrés Manuel López Obrador has spoken of his gratitude for Chinese support with vaccines, testing kits, ventilators and personal protective equipment: “We’re very grateful to China, to the Chinese government, to the President of China… We asked him for support with medical equipment, and a huge number of flights with medical equipment have arrived from China.”¹⁵

Cuba joins the Belt and Road Energy Partnership

Cuba and China established diplomatic relations in 1960, just a year after the Cuban Revolution. However, the relationship was complicated by the emerging Sino-Soviet split, and the two sides had little to do with one another in the 70s and 80s. With the collapse of the Soviet Union in 1991, compounded by a deepening blockade by the US, Cuba faced an unprecedented economic crisis. China’s economy on the other hand was starting to take off, and it stepped in to provide Cuba with urgently-needed investment, trade and aid, starting with the supply of a million bicycles.¹⁶

In 1993, awarding Jiang Zemin the Order of Jose Martí, Cuban President Fidel Castro spoke passionately about the successes of Chinese socialism: “Only socialism could have been capable of the miracle of feeding; clothing; providing with footwear, jobs, education, and healthcare; raising life expectancy to 70; and providing decorous shelter for more than 1 billion human beings in a minute portion of the planet’s arable land.”¹⁷

Since the early 1990s, bilateral trade has grown steadily, and China now accounts for around 30 percent of Cuban imports and exports.¹⁸ China invests heavily in telecommunications, mining, and energy in Cuba, and Chinese consumer goods are very popular on the island. Cuba exports sugar, nickel and other goods to China.

Most recently, Cuba has joined the Belt and Road Energy Partnership, a Chinese-led program designed to strengthen coordination around energy investments and promote clean energy. David Castrillon, research professor in international relations at the Externado University of Colombia, observes that “Cuba, like so many other countries in the global south, faces both the basic needs of the population for access to electricity, as well as the global demands to transition to more sustainable energy sources. It is in this context that cooperation with a country like China is so important, as China not only has the experience and expertise in developing these high-quality sustainable energies, but also the willingness to work hand in hand with other countries.”¹⁹

With limited natural resources, and suffering under a US economic blockade that has persisted for over 60 years, Cuba has benefitted tremendously from its deepening win-win relationship with China. As Xi Jinping said when visiting Havana in 2014, China and Cuba are both socialist countries, and the common ideal, beliefs and objectives have tightly united the two peoples together. The two should be “good friends, good comrades and good brothers forever.”²⁰

China and Nicaragua resume diplomatic ties

On 9 December 2021, Nicaragua’s Foreign Minister Denis Moncada announced the resumption of diplomatic relations between the People’s Republic of China and the Republic of Nicaragua. As Wang Wenbin, Chinese Foreign Ministry spokesperson, noted, “the two governing parties and two countries share revolutionary friendship and brotherly bonds.”²¹

There is enormous scope for the two countries to advance economic cooperation, particularly in infrastructure construction and renewable energy. Following the announcement of bilateral relations, the two sides signed several cooperation agreements, including a memorandum of understanding on cooperation under the framework of the Belt and Road Initiative (BRI) and the 21st Century Maritime Cooperation.²²

Speaking at the official reopening of China’s embassy in Nicaragua, Moncada stated: “We are sure that we will continue working together, strengthening each day the fraternal ties of friendship, cooperation, investment, expanding communication channels with the Belt and Road, strengthening peace, stability, security, development and progress for the mutual benefit of our peoples and humanity.”²³

Nicaragua is another country that has suffered terribly as a result of US intervention, destabilisation and sanctions. Increasing coordination with China will certainly help it to break out of underdevelopment and solve the needs of its people.

A rising tide of multipolarity

With the expansion of Chinese investment and trade, Latin America has the historic opportunity to break out of its status as a ‘backyard’ of the US, to climb the ladder of development, and to affirm its status as a key player in an increasingly multipolar world. Kevin Gallagher has noted that Latin American governments no longer consider it necessary to submit to the neoliberal Washington Consensus or to endure US domination, “in large part because they believe they have an alternative in China.”²⁴ The late Venezuelan president Hugo Chávez considered that an alliance with China constituted a “Great Wall against American hegemonism.”²⁵

In stark contrast to the US, China treats other countries on the basis of equality and works to develop mutually beneficial relationships. Since Chinese loans don’t come with punishing conditions of austerity and privatisation, Latin American governments have been able to leverage China’s investment and purchase of primary commodities to spend at an unprecedented rate on reducing poverty and inequality. As such, from Chile to Bolivia to Venezuela to Mexico, the relationship is producing tangible benefits for ordinary people in the region.

The late, great Hugo Chávez on China, Latin America and the emerging multipolar world: "We are creating a strategic alliance with the strength of the Great Wall." pic.twitter.com/rOoeX4LoLo

— Friends of Socialist China (@socialist_china) February 10, 2022

References

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