Conversations about China and the United States span many issues and contexts, but an acknowledgement of shifting power dynamics often burns below the words. Depending on the room, a dethroned United States is downplayed or denied. It can also be applauded or feared. One vision of the US’ fall from dominance comes in James Kraska’s ‘How the United States Lost the Naval War of 2015’. The text outlines how a fictional surprise Chinese naval attack leads to the US.’ crushing defeat and international humiliation.
Published in 2009, Kraska’s critique of US naval policy is perhaps spared the mania of today’s answers for how the global order might crumble. No ships are sank following an ill-advised breakfast tweet, no hordes of migrants rush from the boats, and North Korea does not enter the equation. But the catalyst was always on America’s doorstep: Chinese-owned ports at either side of the Panama Canal shut down and obstruct the American Navy’s passage between the Atlantic and Pacific oceans, leaving a much more treacherous route that cripples US forces.
Home to one of the world’s most vital trade routes, Panama has long been a key focal point of Washington’s interests in Latin America. But in some ways, things are changing in a way that resembles Kraska’s fictional world. Several months ago, Panama cut its long-standing ties with Taiwan to establish diplomatic relations with China.
Why is China interested in Latin America? Taiwan is not a factor to be discounted. Relations between mainland China and Taiwan have deteriorated in the past year since the election of independence-leaning Democratic Progressive Party (DPP) leader Tsai Ing-wen. Tsai is regarded with suspicion by the PRC for refusing to endorse the ‘One China’ policy, a bilateral agreement where both parties acknowledge the existence of China as one sovereign state. As a result, it is impossible for a state to have diplomatic relations with both mainland China and Taiwan; one bond must be broken to form another.
Out of just 20 countries that currently have diplomatic ties with Taiwan, 11 of them are in Latin America and the Caribbean. As Panama was previously the largest per capita economy of these nations, its shift towards the PRC deals a heavy blow to an increasingly isolated Taiwan. Nicaragua is tipped to be the next Latin American nation to flip. Having broken ties with Taiwan for China before, it could seek to galvanise the stagnating Nicaraguan Canal project, a new interoceanic link once backed by $50 billion in Chinese investment. Beijing may see in Latin America a chance for a diplomatic domino effect that would squeeze Taiwan back in line. This would track similarly to the PRC’s involvement in Africa during the 1960s and 1970s, by the end of which a combination of political support and military aid for independence movements (and large investment projects) won diplomatic relations with 44 of Africa’s then-50 countries.
Yet there is a greater game at play with the United States. Considering era-defining conflicts in the Middle East and tensions with Russia and China, Latin America did not emerge as an A-list foreign policy item for Bush or Obama. This is one thing both men have in common with the current President. Trump’s Latin America policy is skeletal to a new extreme, defined only by insurmountable walls to keep out “bad hombres“ and paper towels to mop up hurricane damage where the cost of aid proves an annoyance. In the same week that saw Trump flirt with “the military option“ for Venezuela, China’s Foreign Minister, Wang Yi, called Latin America “the natural extension of the 21st century Maritime Silk Road” with “new opportunities for co-operation“. Such unbalanced hostility from the US only creates room for China’s niceties to gain ground in Latin America and position the PRC as an increasingly valuable ally.
Latin America’s pivot away from Washington and towards Beijing is clear. Trade value between China and Latin America has increased by twenty two times since 2000; between Latin America and the US, it has merely doubled. Shortly after Trump pulled the US out of the Trans-Pacific Partnership (TPP), the Pacific Alliance (Chile, Mexico, Peru, and Colombia) met with representatives from other TPP nations and China to discuss alternative multilateral trade arrangements. As Washington’s NAFTA renegotiations draw increasing domestic ire, Beijing pumps money into Mexico, investing $200 million into an SUV production factory earlier this year. In Argentina, the contrast between China and the US is one of proactivity and paralysis. While Trump in January ordered a 60-day stay to review lifting a 15-year ban on Argentine lemons, Chinese state-backed company Shandong Gold agreed to pay almost $1 billion for half of Barrick Gold’s mine in Veladero. Beijing also continued the development of its space-monitoring base in Patagonia – described as “purely for exploration purposes“, yet secret clauses in the agreement between China and Argentina make the true motivation anyone’s guess.
Maintaining the relationship
In China, Latin America has found a promising economic and diplomatic ally. In Latin America, China has a rich well of natural resources and opportunities to outmuscle the influence of Taiwan and the US. But their relationship is not without challenges. While Latin American exports of petroleum and copper ore to China soared between 2011-2016, general exports to China barely grew after doubling in the five years previous. China’s structural switch towards serving domestic consumer demands is projected to drastically halt the growth of mining and fuel exports from Latin America. These nations could instead play to China’s changing consumption patterns: per-capita consumption of sugar, poultry, fish, lamb and beef – among other food items – are expected to grow by around twenty percent in a decade.
Cultural estrangement certainly holds back the potential of the relationship. Lacking mutual education on Chinese and Latin American politics, poor Spanish and Mandarin proficiency, and unclear China policies from certain Latin American countries are among the factors identified as limiting the growth of relations. This alienation further creeps into business and politics: China’s beleaguered construction of the Nicaragua Canal was strongly protested by locals. Meanwhile, UN Human Rights Council voting data from 2005-2015 reveals that Latin America’s alignment towards the US has generally increased and with some exceptions (Venezuela, Ecuador, Bolivia), has decreased towards China.
November will see the first China-Latin America And Caribbean International Exposition take place with the aim of boosting cultural and economic co-operation. Time will tell what is achieved from the event – and it is premature to suggest that Beijing will imminently usurp Washington as the regional hegemon in Latin America. But as the US continues to poison its relationships south of the border, Kraska’s Panama Canal scenario is a nice metaphor for Latin America’s outlook: long-assumed US dominance undercut by Chinese money.