LIMA, Peru — When Peru’s President Pedro Pablo Kuczynski welcomed his Bolivian counterpart Evo Morales for a bilateral summit in Lima earlier this month, a long-mooted interoceanic train was on the agenda once again.
The idea is for the railway to run more than 2,000 miles from Brazil‘s Atlantic coast, potentially cutting through the Amazon and over the Andes, to one of Peru‘s Pacific ports. The megaproject would be a massive feat of engineering, comparable in scope and geostrategic purpose to the Panama Canal.
It would help integrate South America but, above all, slash the time and cost of sending raw materials to China and, in return, importing manufactured goods from the Asian giant.
Beijing, Lima and Brasilia commissioned feasibility studies in 2015 for an interoceanic railway, which was expected to be financed with up to $60 billion of Chinese capital. But the plan discussed by Kuczynski and Morales would be different, and not just because it would take a detour through Bolivia.
If talks with German banks prove successful, it would be funded with loans from Europe. That would allow the Andean neighbors, and Brazil, to make the most of trade with the commodity-hungry Chinese economy — but on their own terms rather than beholden to Beijing.
The move highlights how many Latin American nations are determined not to become trapped in Beijing’s orbit, economically or geopolitically, even as China is on course to overtake the United States as the region’s number one source of commerce and foreign investment, a process potentially accelerated by the Trump administration’s hostility to global trade.
Since 2000, Chinese trade with and investment in Latin America has rocketed, with the Asian giant involved in projects from dams in Patagonia to assembly plants in Mexico. Brazil, Peru and Chile are among those countries where China has already displaced the U.S. as the top trading partner.
“There is a clear will in the region for a close economic relationship with Beijing, but there is no interest in political proximity,” says Rafael Roncagliolo, Peru’s former foreign minister. That also includes the Regional Comprehensive Economic Partnership, or RCEP, a Beijing-led attempt to fill the void left by U.S. President Donald Trump‘s cancellation of the Trans-Pacific Partnership, a proposed Pacific Rim trade treaty that would have included Peru, Chile and Mexico — but not China.
But despite Beijing’s best efforts — and the uncertainty about future relations with the U.S. as Trump seeks to renegotiate NAFTA and other trade deals — the RCEP remains on the backburner with no Latin American leaders talking up the deal.
“For ideological reasons, it’s very difficult to enter a trade pact led by China,” notes Roncagliolo, who also stresses that Latin American nations are not about to repeat the mistakes of the past when the region was in thrall to Spain, Britain and then the U.S.
Others go further. “China is not the way of the future for Latin America. I just don’t see it,” says Dawisson Belém Lopes, a professor of international politics at Brazil’s Federal University of Minas Gerais, highlighting how Beijing simply cannot compete with the U.S.’s “soft power.”
That covers everything from America’s moral example on issues such as democracy and human rights — which most expect will survive the turbulent Trump era — to the global cultural dominance of Hollywood films, the NBA and Silicon Valley’s latest creations. Although the effect is impossible to measure, that means most Latin Americans want to maintain strong economic and political relationships with Washington even as they ramp up cooperation with Beijing.
“Latin Americans see ourselves as Westerners,” adds Belém Lopes. “In Itamaraty, [the building that houses Brazil’s state department] you will not find many diplomats who speak Mandarin. The same is true in most foreign ministries in Latin America.”
There are other reasons why the region may feel ambivalence toward China’s growing economic footprint, even as Beijing has vowed to ramp up trade in the region to an annual $500 billion and direct investment to $250 billion by 2025.
One of them is that China is most interested in importing South America’s raw materials, everything from metals to oil to soy, and selling it manufactured goods.
That is giving Latin America a sense of déjà vu, with some economists blaming the region’s underdevelopment on having precisely that kind of relationship with the outside world ever since the Spaniards first conquered the Aztecs and Incas. Indeed, some even warn that China’s appetite for extractive goods could threaten ” deindustrialization” for Latin America.
For its part, China has also learned the hard way that doing business in Latin America can be complicated. It has lent $60 billion to Venezuela, a country now in such profound crisis that it may never be able to pay Beijing back.
Meanwhile, a planned $4 billion high speed rail system to be built by Chinese companies in Mexico was canceled in 2014 following allegations in Mexico of corruption. And Nicaragua’s proposed $50 billion rival to the Panama Canal increasingly looks unlikely to ever come to fruition, although that is a project of a maverick Beijing billionaire rather than the Chinese government.
Yet Beijing remains undeterred. “China is where the U.S. and Japan were 50 years ago,” says Kevin Gallagher, an expert in Sino-Latin American economic relations at Boston University. “They are trying to establish themselves as a global presence. They look at risk differently. They are much more likely to pick up something that looks like a sour apple.”
Yet Lima and La Paz would still prefer to deal with the stricter requirements of European banks for financing the interoceanic railway. Even in the era of Trump, with his dismissal of Mexicans as “rapists” and insistence on a wall on the southern border, Latin America, it seems, is still anxious not to get too friendly with China.
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Latin America Is Wary of China, Despite Closer Ties originally appeared on usnews.com
