Sino-US Trade War Continues in Latin America

December 16, 2019 Updated: December 16, 2019

News Analysis

The Sino-U.S. trade war may have declared a “Phase One” truce, but the Chinese regime continues to challenge the United States economically, and potentially militarily in Latin America.

Although The Epoch Times reported on Dec. 13 that China is committed to structural improvements and buying $200 billion in U.S. goods and services in exchange for lowering some U.S. tariffs, China continues to ramp up similar types of Cold War economic initiatives that the Russians pursued with Latin America to undermine U.S. national security in its own backyard, according to analysis by Geopolitical Futures.

The 33 economies of Latin America grew by an average of just 0.2 percent in 2019, according to the International Monetary Fund. The IMF forecasts growth of 1.8 percent in 2020, but heavy reliance on exporting commodities makes the region extremely vulnerable to the growth depressing impacts of a continued Sino-U.S. trade war.

America’s premier national security imperative has been keeping foreign powers away from North America. The United States issued the Monroe Doctrine in 1823 to discourage further European colonization, and issued the Roosevelt Corollary in 1904 to deter European states from seizing South American assets and countries to settle debts. By building a blue-water navy and then going to war to strip Spain of its remaining Western Hemisphere holdings, the United States emerged as the uncontested power in North America.

One of Xi Jinping’s first foreign policy moves after consolidating power as China’s leader in 2013 and armed services control as Chairman of the Central Leading Group for Military Reform in March 2014, was launching his “1+3+6” initiative with the community of Latin American and Caribbean States. The acronym stands for “1” plan; “3” drivers of trade, investment and financial co-operation; and targets the “6” funding priorities of energy and resources, agriculture, infrastructure construction, manufacturing, scientific and technological innovation.

In addition to Beijing buying up large swaths of Latin America natural resources, China’s $141 billion in Latin American financings did not require the type of “governance” mandates attached by multilateral lenders such as the IMF. As a result, China’s Latin American financing since 2005 has outstripped the World Bank, the Inter-American Development Bank and the Andean Development Corporation.

Xi stated in 2015 that “such friendship grows out of close interactions between the peoples.” Beijing provided Latin America with 6,000 government scholarships, 6,000 training offers in China and 400 positions of in-house studying for master’s degrees. In addition, Xi invited 1,000 Latin American political party leaders to visit China and launched the “Future Bridge” training program for 1,000 Chinese and Latin American youth leaders to develop ideological and cultural exchanges.

Geopolitical Futures highlights that Chinese investments, loans and goodwill cultural exchanges require that partners should abide by a “One China” principle as the “political basis for the establishment and development of relations between China and Latin American and Caribbean countries and regional organizations.”

Traditional U.S. allies in the region that favored China by breaking diplomatic ties with Taiwan include Panama in 2017, and the Dominican Republic and El Salvador in 2018. The United states responded by recalling its ambassadors to the three countries in September, and Vice President Mike Pence warning of the dangers of getting too close to China.

Later in the same month, Chinese State Councilor and Foreign Minister Wang Yi reiterated his country’s special interest and cooperation in Latin America. But he took what Geopolitical Futures calls a “not-so-subtle dig” at the United States by stating that Latin America and China should “stand together against unilateralism and protectionism.”

Despite global stock markets responding to the “Phase One” trade deal by surging to new all-time highs early on Dec. 13, U.S. Defense Secretary Mark Esper that afternoon stated that China is now the Pentagon’s top priority, surpassing Russia, because of China’s “brazen efforts” to undermine neighboring states’ regional territorial claims.

Geopolitical Futures commented that regardless of heightened rhetoric, “the U.S. has generally been content to play a long game and leverage its superior strategic position in the region rather than doing anything to roll back China’s expansion in disputed regional waters.” But according to a new report from the Chinese think tank South China Sea Strategic Situation Probing Initiative, the United States has been “enhancing its interoperability with other nations and making a stronger military presence to contain the rise of China as a maritime power” in China’s Indo-Pacific region backyard by holding at least 85 joint military exercises this year.

By declaring China as America’s number one military adversary, supplanting the Russians for the first time since Winston Churchill’s 1946 Iron Curtain Speech, Geopolitical Futures expects the United States to more openly challenge “China’s influence and its potential threat” in America’s backyard.

Chriss Street is an expert in macroeconomics, technology, and national security. He has served as CEO of several companies and is an active writer with more than 1,500 publications. He also regularly provides strategy lectures to graduate students at top Southern California universities.