Wednesday, April 11, 2007

Analysis: Is China good for Latin America?

Recently, I found my fortune telling 8 ball, the one you shake and tells you the future. Its a toy, made in China and produced for the American market. Over the last few decades China has increasingly produced consumer goods for markets in the United States, leading to its emergence as an economic powerhouse. This long lost toy spurred my thinking, given the challenge China presents the United States, is China good for Latin America?

Within the past 5 years Chinese influence has grown in the region to the benefit of the people and commerce of Latin America easily outpacing the immediate negative effects some sectors of the economy may face from direct Chinese competition.

It is useful to remember that China is still a developing nation still seeking to balance its economic potential with its domestic scarcity in many areas including civil liberties, entrepreneurship, and basic necessities outside the urban cores. However it is catching up quickly and reassuringly with the OECD countries and in fact carries more economic weight than most. So to regard China as a "developing country" is often a misrepresentation that will increasingly seem ill fitting.

This "developing" status is nevertheless important because it still places China as a direct competitor to Latin America. However, with cheaper labor and greater resources than any individual Latin American nation, China is quickly reaching the sweet spot in development, the window in time in which domestic production and domestic consumerism represent the greatest economic safety net. This same window in time was experienced by the United States and Europe in the post-WWII era. However once consumerism expands beyond the means of the domestic capacity to produce a nation begins to transfer wealth out to foreign markets, much like the United States, beginning in the 1980s through today.

Latin America never having successfully industrialized has developed a consumerist's appetite without ever having developed the capacity for production to meet the domestic demands. The production supply has always been met primarily by the United States, and running at a far second Europe, then Asia. But the recent trends in the political and economic understanding of the situation, represented most pointedly by the rise of left-leaning governments, has begun to shift the focus of policy making in different ways specially through diversification of what Latin America sees as its consumer markets.

China, which today sits on the world stage with an unparalleled budget surplus, is a much sought after consumer market for Latin America and China for its part is willing to share in a trade relationship. The lack of a manufacturing base in Latin America however still places the region in the role of a support player trading its unfinished, unrefined resources for Chinese manufactured products. This is not dissimilar to the region's existing relationship with the United States but by including China as a consumer of its resources, thereby diversifying its market, Latin America can better enhance its position against both.

Dependence, the dirty word every Latin American nation, excluding Cuba, lives by but hates to admit, is the very system of economic bondage that the recent leftist surge in Latin America seeks to deconstruct and eradicate. The problem is that Latin American dependence upon the United States is not merely economic, but by default political in its implications. Pinned under the American sphere of influence and lacking for breath, the only recourse left is to thrust against that overriding power and establish a proper living space that allows for diplomatic, economic, and social communication with the rest of the world.

China, as an emerging global power stands as a good samaritan to the Latin American struggle by continuously nudging the weight of the American Empire and leveraging it with Chinese production and investment capabilities. The trick however is not to replace one empire with another, but to play the two as opposing forces which will increasingly repell each other and allow for a gap through which the sun will finally reach Latin American soil.

This will certainly strike many as a Machiavellian interpretation, but que sera sera. For the past 100 years Latin America has been the recipient of Machiavellian politics directed from Washington, it can now hardly be blamed for having learned the game from the masters. If Latin America can reach a stable and consistently integrational process towards a Latin American Union it will enable itself to take advantage of the opportunities presented by the quickly developing U.S./China rift.

Perhaps the greatest advantage for Latin America is the USA's dismissive attitude to the idea of regional integration in Latin America which belies a far more dangerous belief in American superiority. That self confidence is blinding the US to the developments of the region which are set to focus on political self-determination.

First, however, the shadow of colonialism must lift or be lifted from the minds of Latin American communities in which many still see themselves as culturally inferior perhaps even genetically inferior to their northern neighbor. Its a shadow of self hatred and self doubt that has stripped the region of its possible future and one that Simon Bolivar would be ashamed of today. China in this aspect has something to teach Latin America. While the model of self love presented by the United States relies heavily upon the teaching of selective history and a reliance on military might, China's recent rise is preceded by an effort of the government to instill pride through largely scientific accomplishment, not the least of which is China's pursuit of space exploration.

In the meantime, while North American investments have looked to the Far East, Chinese investments are looking increasingly to Latin America. At this moment it seems that China's self interests include weakening American power and influence in throughout Latin America and by doing so Latin America regains sovereignty in the world stage. The emphasis on economic development promoted by Chinese policies in the region have thus far proved much more effective than the failed Soviet strategy to promote an ideological shift away from the United States.

In general, I would argue that playing ball with China will set the stage for a future power play by Latin America in global politics. Surely time will tell whether or not this will come about, but my fortune telling 8 ball has been shaken and 'all signs point to yes'.

by Michael Deliz

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