Below is a complete transcript of the Sinica Podcast, featuring our new show Café y Seda, or Coffee and Silk, with Parsifal D’Sola and Evan Ellis.
Kaiser: Hey folks, Kaiser here, we are really proud to offer you, Sinica listeners, a sneak preview of one of the new shows in the Sinica Network, Café y Seda, or Coffee and Silk, our first Spanish-language show. Don’t worry, this episxode is in English and the podcast will occasionally feature other English-speaking guests. But most of the time it will be in Spanish. The show is hosted by Parsifal D’Sola, who some of you might remember as a guest on Sinica. Parsifal is the executive director of the ABF China Latin America Research Center. And he’s also a non-resident senior fellow in the Atlantic Council’s Global China Hub.
He’s a native of Venezuela and his focus is on Sino-Latin American relations. Between 2019 and 2020, he acted as Chinese foreign policy advisor to the Minister of Foreign Affairs under the interim government of Venezuela under Juan Guaidó. I will be back next week with a regularly scheduled Sinica Podcast, but in the meantime, enjoy this and definitely subscribe to the show, which in a very short time will be switching over to our network. So, without further ado, here’s Café y Seda, Coffee and Silk.
Parsifal: Welcome. Welcome. Everybody, welcome to Silk and Coffee, Café y Seda, a space dedicated to China’s ever-evolving role in Latin America and the Caribbean. With us, you will find that there’s no topic off the table. We cover everything from Chinese loans and finance in the region, BRI dynamics, U.S. and China Competition in the region, all the way to the stories of Latin American entrepreneurs in China. Silk and Coffee is sponsored by the ABF China Latin America Research Center in Bogota.
We couldn’t be more excited because, as of today, we are a proud member of the Sinica Network powered by The China Project. I am Parsifal D’Sola, coming to you from our studio in Bogota. Today, I am thrilled to welcome Professor Evan Ellis to Silk and Coffee. Dr. Ellis is a research professor of Latin American studies at The Strategic Studies Institute of the U.S. Army War College in Washington, D.C. His work focuses on the region’s relationships with China and other non-Western hemisphere actors. Dr. Ellis previously served on the Secretary of State’s policy planning staff with responsibility for Latin America and the Caribbean, as well as international narcotics and law enforcement issues. He has given testimony on Latin American security issues to the U.S. Congress on various locations, and is often cited in the print media in both the United States and Latin America for his work in this area.
Dr. Ellis has also been awarded the Order of Military Merit José María Córdova by the Colombian government for his scholarship on security issues in the region. He’s a fluent Spanish speaker who has traveled extensively in the region. Having had the pleasure of meeting him in person, he’s deeply knowledgeable and genuinely cares about Latin America. Evan, thank you so much for joining us today.
Evan: Parsifal, thanks for having me on the program, and it’s great to be with you and to be able to share my thoughts with your program Seda Café.
Parsifal: Great. Let’s get right to it then. I will first lay down some statistics to kick off our conversation. From an economic point of view, Latin America has been the region most affected by the pandemic. With only around 8% of the world’s population, it accounts for 32% of deaths due to COVID. In 2020, the region’s GDP dropped around 9.1% compared to the global average of 4.9. It is estimated that the pandemic pushed around 45 million people into poverty, reaching a total of around 230 million.
This accounts to as much as 35% of poor people worldwide, bringing the region’s numbers back to 2006 levels. Pre-pandemic, Latin American governments already had a vested interest in accommodating China where possible to attract investment. Likewise, Chinese companies, both state-owned and private, were eager to set up shop from Tijuana all the way to the Tierra del Fuego. Given the data statistics that I just mentioned, odds are tendencies will only increase. And besides, China is already the first or second trading partner of most of, if not all, countries in the region. With economics in mind, where do you see the relationship going? In which sectors do you envision Chinese participation to grow the most?
Evan: Well, Parsifal, you raise a number of important points certainly with the impacts of COVID-19, now compounded by the petroleum and food price increases, it’s put a lot of strain on Latin America. In general, I see that has increased Chinese leverage overall, although we’re going to see a hesitation in the rate in which it advances in different sectors. So, you certainly have a greater interest in biotech collaboration. You already have co-production facilities in Chile, and I believe coming up in Colombia and possibly in other places like Peru, and Brazil, and elsewhere.
Although, I certainly think that with the more effective mRNA vaccines becoming widely available in Latin America right now, that initial effect that you got from the Chinese vaccine diplomacy with companies like Sinopharm, and CanSino, and Sinovac has trailed off a bit. But certainly, in these difficult times, the role that China plays as an importer of various different goods, whether Chile in copper or cherries, or Ecuador in shrimp, or El Salvador in sugar, or beef from Argentina. That has given China more leverage than ever.
Certainly also, the decisions that Chinese companies make in terms of investment, whether it’s the management of difficulties with the project of China Minmetals in Las Bambas in Peru, or whether it goes forward with the troubled Port of Chancay, et cetera. Again, the economic situation and the constrained fiscal situation the governments find themselves in gives China a lot more leverage. There are obviously opportunities for China, just like after the 2008 global financial crisis that, as we come out of the current situation, that Chinese companies will be well positioned through mergers and acquisition to acquire more properties in strategic sectors.
However, I do believe that there will be at least some delay for a number of reasons. Number one, obviously the economic havoc in Latin America takes certain investments and projects off the table. In China itself with the zero COVID policy and other difficulties, including an enormous debt overhang, Chinese companies are hesitant to move forward. Indeed, when we think of companies like Evergrande, especially the putting of a lot of money and a lot of debt into dubious infrastructure projects, I think, at least for the moment, the Chinese companies are feeling their weight.
In addition to that, you have the ongoing crackdown by President [Xí Jìnpíng 习近平] against corruption, as well as this delicate political transition to his unprecedented third term. And so, I think all of those things in the near term mean that Chinese companies are going to be hesitant in moving forward rapidly. Although, you certainly do see signs of progress from projects in El Salvador, to Argentina and Chile. But really, to go to your point of where, I think it really… China will continue to focus on the fundamentals. And the things that it wants is secure access to resources, markets, and of course, the vehicle of connectivity, not just transport, but other things.
And so, where I really see China eventually advancing, you will continue to see deepening in the petroleum sector across the region, certainly in the mining sector, as we already see in places like Peru and in Ecuador, and even to a certain extent in Argentina, albeit with problems. You certainly will see continuing Chinese advances in the mining sector in lithium, although that will probably be uneven. So, you can note the problems that the Ganfeng has run into with Bacanora in Mexico, or some of the environmental difficulties with the SQM project in the north of Chile, but in Argentina, it’s making tremendous progress.
I think green energy is another sector where you will continue to see Chinese advances. Not only in hydroelectric facilities, but probably some of the growth areas are certainly wind and solar projects where again, things like Cauchari in the north of Argentina, Assu in Brazil, and a number of others, and of course, wind projects across the region. But also, things like electric vehicles, not only in places like Chile, but also electric cars such as the taxi fleet recently bought from, I believe, BYD in Mexico. And certainly, the digital space, some of the types of technologies that were emphasized by China and Made in China 2025 will probably be areas of continued expansion.
So, not just 5G and telecommunication and the internet of things, although certainly Huawei has expanded and will continue to expand there, but also in areas like surveillance technologies with heat vision, certainly eCommerce. Not only companies like Alibaba, but rideshare companies, like for example, at Didi Chuxing. Even in areas like FinTech, and especially in Brazil, where, for example, with Alibaba’s partial interest in NuBank, you see the Chinese beginning to play a key role there. And things like cloud computing and data centers, where again, companies like Huawei have made tremendous advances.
And so, it really will be across the board, although again, uneven and with some delays, given the economic situation.
Parsifal: I’m curious, given the, across the board expansion with an emphasis on technology, it begs the question, given the region’s historical dependence on the export of natural resources, the rentier economic model, so to speak, why hasn’t China fallen prey to the anti-imperialist, anti-colonial narrative that we tend to see among political leads and in some sectors of the population, which is usually directed against the United States and Western actors in general? Because, well, frankly speaking, it’s the same economic model, the same market dynamics that have kept most countries in the region stuck in the middle-income trap. It’s that ongoing conversation that never gets old. We are basically just changing a set of foreign actors for another while maintaining the same underlying way of doing business.
Evan: You raise an interesting, important point Parsifal. I remember our colleague, Barbara Stallings’ book taking a look at Chinese engagement in Latin America through the lens of dependency theory. And indeed, when I used to teach at the University of Miami, I would assign my students readings from Raul Prebisch, as well as Immanuel Wallerstein’s World Systems Theory, to make that subtle point that really this can be understood in exactly that way. The question of, who does the value added go to? Who controls the benefit?
Is it the Chinese companies who are operating on the ground of Latin America that are getting the benefit from the extraction of the resources, their transformation, their transport, and then selling back much more expensive value-added goods? And where is the benefit to Latin America from that type of engagement? But certainly, the way China has managed this, I would say, has diffused some of those concerns. Certainly, as we both know, many of the manufacturers in Latin America do see China as a competitive threat in places like Mexico and Brazil especially, where they’re more politically well organized.
Many of the more unionized organizations also look at the Chinese skeptically. But, at the political level, there is this hope for benefit and this understanding that there is a much closer relationship between the Chinese government and their SOEs and that oftentimes the Chinese are very vindictive, so that if you criticize Donald Trump in Latin America, or if you criticize Joe Biden, you don’t expect that a U.S. company will not invest. But there’s a very real fear in Latin America that if you wanna be the partner to the Chinese firm, you better not say too much about what the Chinese are doing with the internment of 2 million Uyghur Muslims in Xinjiang, or what they’re doing with the stamping out of democracy against their treaty commitments in Hong Kong, or what they’re doing to militarize islands in the South and East China Sea, et cetera.
There is a tendency of avoiding speaking too aggressively if you want that benefit. And you see that across the board, you see it with politicians, you see it with business people, you see it with many of our colleagues who go to forums like the Latin America Think Tank forum. And you want to be invited back. You want to get access to those party officials. You don’t want to be ungrateful. And so, you temper a little bit of what you say. So, I think that Chinese soft power has a little bit to do with it, but it’s also what the Chinese government itself does and how they manage it. We, of course, in the United States, we gringos as you know, tend to be very preachy.
Parsifal: Yeah. You could say that.
Evan: Pushing for democracy and transparency. The Chinese, as we both know, tend to be a little bit more, well… As long as you treat their companies well, and as long as you keep silent on certain issues, they don’t mind if you violate your own constitution. They don’t mind if you violate your contractual commitments to other people. And so, that creates a very comfortable model for Latin American governments to say, “Okay, the Chinese don’t give us problems. They don’t tell us how to do things.” And so, even though there are some very real fears of who actually benefits from this relationship and what we’re sliding into, there is a comfort among those who are assigning the deals, that the Chinese don’t ask a lot of uncomfortable questions or impose uncomfortable conditions.
Now, as good studies, like the William and Mary study taking a look at Chinese debt contracts show, the actuality is in terms of contractual provisions for not disclosing obligations, for cross default clauses, for other ways that the Chinese can call in loans if you violate things, the conditions that the Chinese put are oftentimes very onerous and very little beneficial. But the discourse is, I think, the Chinese have been very good at the personal level and in the way they manage things of at least diverting that anti-imperialist discourse to really let resentment accumulate for the way the relationship is going.
Parsifal: My assessment is the same, which is why I pay a lot attention to Chinese diplomats and their public discourse. There seems to be a learning curve, right? You see them clicking all the right boxes in terms of presenting themselves as part of the Global South, as an underdeveloped economy, as a country that shares the same problems. Does this represent a deeper knowledge of the region about its political landscape and its grievances with Western countries, particularly with the United States, or is it something more of a one-size-fits-all approach to the Global South?
Evan: Well, I think it certainly is global. And as you know, the Chinese are simultaneously sophisticated and clumsy at the same time. I think some of the initial benefits come from the Chinese instincts. First, when the Chinese found themselves in a position of weakness, especially in Latin America, in the U.S. near abroad, they were instinctively deferential. It goes back to the old saying about hiding one’s capability, and things like that. And so, that style makes them seem much more palatable than the United States, which not only has politically dominated the region, but is always preaching about democracy, and transparency, and human rights, and things like that.
The interesting thing, however, is that when the Chinese do apply pressure, historically, they have applied it with a certain amount of subtlety. For example, when they cut off purchases from Argentina of soy back in 2010, because they were offended by the way in which Argentina was locking out and putting tariffs on Chinese goods on anti-dumping charges. And so, the Chinese are very good at twisting the knife when they want to, but they often do it in subtle ways. Now, one of the interesting tendencies that you see increasingly is that, as Chinese power has grown and as self-confidence has grown, especially with the Xi Jinping presidency, some of China’s more aggressive authoritarian instincts have begun to come out.
And some of China’s sensitivity of how you talk or don’t talk to people, leaves it actually awkwardly without filters. You see this with some of the Wolf Warrior diplomats that China has throughout the region, especially the previous ambassador to Chile, who was basically forced to go back to China because his style offended Chilean sensibilities. One of my Chilean colleagues said, “The Chinese thought that they were sending a regent, not an ambassador.” You see also in some of the ways, both in Latin America and Africa, where the Chinese will talk about different minority populations or rights, or things like that, that reflect just a inherent lack of sensibility of companies and countries that have not had to live within how to tolerate pluralistic democratic discourses. And you see it at the corporate level, I think, as well.
Although, clearly, the Chinese are becoming more sophisticated, not only in terms of its government, and I really have to applaud the advances that you see in the Chinese Foreign Ministry: the number of fluent Portuguese speakers, the level of fluent Spanish speakers. But also at the company level, big companies like State Grid have set up training programs for their Latin American facing personnel, their managers, their technicians, so that they can be more sensitive to these things.
I think, overall, although some companies like, for example, Minmetals with just the disastrous performance in Las Bambas contrast poorly with others, such as, for example, Chinalco in the Toromocho project, or Huawei who’s been much more sophisticated. Although there’s an unevenness, I think, across the board, not only the Chinese diplomats, but the Chinese companies are getting more sophisticated in how they deal. But at the end of the day, the Chinese also have a big disadvantage relative to the United States or even the Europeans, which is their distance. The limited number of people in China that actually speak Spanish, the limited cultural knowledge. And so, that means that the Chinese have a lot fewer options when they come over with their companies to actually do relations.
There are a lot more people in the United States, although we don’t always have a good constructive discourse towards Latin America. At the individual level, I think it’s a lot easier for Western companies and their personnel to engage in Latin America. But again, the Chinese are working to overcome some of those difficulties.
Parsifal : Especially in the Foreign Ministry, as you mentioned. A case I like to point out is that of the Chinese ambassador to Colombia, Lán Hŭ 蓝虎, prior to being assigned to Colombia, he was in the Latin America department at the Foreign Ministry back in Beijing. But before that, he was in Venezuela for about four to five years acting as a political advisor at the embassy. He arrived in 2012, if I remember correctly, when Hugo Chavez was still alive. This means he was there during Chavez’s last election, which was of vital importance, not only to Venezuela, but also to the rest of the region, particularly Colombia.
Lan Hu is a diplomat who is charismatic, who speaks fluent Spanish, and who is knowledgeable about Colombia-Venezuela relations, something that is fundamental to any diplomat from any country stationed in Colombia. What is more, prior to Lan Hu being assigned to Bogota, there was a period of around five to six months where the post was empty. Something that, if I’m not mistaken, had never happened since Colombia recognized the PRC back in 1980. This is quite telling for several other reasons. So, why did they take so long? And let’s remember, this was back in 2020 when Colombia was a key ally of Venezuela’s interim government under Juan Guaidó.
It’s obvious they thought very carefully about who to send. This person had to know how to navigate the extreme complexities of Venezuela-Colombia ties at the time. And then, Lan Hu shows up. For me, this is a brilliant appointment. It speaks to a deeper knowledge of the political dynamics of the region. So, definitely, they have come a long way in the last 15 to 20 years when Chinese diplomats who spoke Spanish were just a few. And we didn’t see much engagement at a high level between China and the governments in the region.
Evan: Sure. And you make a great point, which is that the nature of U.S. concerns about China’s engagement in Latin America sometimes are a little bit different from the way that engagement is seen from a Latin American perspective. And certainly the U.S. doesn’t always do a good job in articulating that, and oftentimes, the perception is in Latin America, “Oh, this is just all about great power competition.” Now, I think from the U.S. perspective, and I’ve certainly seen the concerns evolve. I’ve been following this, as you know, for about 20 years. If you go back to the days of, for example, people like Assistant Secretary for Western Hemisphere Arturo Valenzuela, or Roberta Jacobson, and the evolution from kind of concern and discomfort to the more active pushback during President Trump’s administration, to I would say the continued concern and engagement today, but in a perhaps a little bit less aggressive way.
For example, the fact that the rumors are that the new U.S. National Security Western Hemisphere director, Juan Gonzalez, actually takes pride in calling out that we don’t call out China in the Western hemisphere in the new strategy. But I think as I see it, and I think as colleagues that I’ve talked to see it, number one, there is a broader concern of the growing Chinese position in terms of the effect of on the U.S. policy agenda in the region: things that we want to promote in terms of democracy, human rights, et cetera, the security relationships that we want to have, collaborating on things like drugs and immigration. The sense is that the availability of Chinese money as an alternative decreases in important ways the leverage, not only of the U.S., but U.S. institutions while also displacing, to a certain degree, U.S. in Western companies.
And of course, it also adversely impacts the region. Now, but it’s not just about that soft power, if you will. But one can say that there is an indirect effect of the Chinese companies in what I call incubating authoritarian regimes. Again, with your time in Venezuela as you know, it wasn’t that Hugo Chavez came to power because of China, or that Nicolás Maduro continued in power because of China. No, typically, populous regimes have come to power in Latin America because of frustration with the performance of parties, and endemic corruption, and poor performance, and inequality, and things like that. But once in power, what’s different about the current crop of populists versus those in the ‘90s and before, is this time around, as those regimes, often applying a blueprint of how you consolidate power and how you move against the private sector, and how you change the rules of the game, is they do those things.
And as Western investors and companies get uncomfortable, the Chinese are there to say, “Okay, we’ll continue to give you money. We’ll buy your commodities. We will arrange things,” as they did in Venezuela with the oil for loans deals, “in ways to make sure that we get paid. So, you do what you want with your constitution, with your people, et cetera. As you treat us well, we will give you the lifeline through those loans and commodity purchases, and of course in some cases, investments that will give you the political space to do what you want.” At the end of the day, also, as we see in Venezuela with the VN-1 security vehicles that were used repeatedly to repress Venezuelans during national protests, as well as the use of CEIEC to spy on Juan Guaidó, or the use of the ZTE-built carnet de la patria to help in the distribution of the CLAP boxes in Venezuela.
Or even in Cuba, where the architects at Huawei had helped build for ETECSA, the Cuban telecommunications authority, were instrumental last July in helping it to shut down those protests, just in the same way that Chinese companies control the information space in China. And so, both through resources and then through other types of tools, China, in the process of pursuing its own interests, indirectly leads to a hemisphere that is ever less democratic and infilled with the types of regimes that are less disposed to cooperate with the United States. Now, there is a third area which is strategic threats. And so, I would say that certainly we see some of the signs of Chinese aggression over Taiwan, and certainly what Russia has done in Ukraine, and China’s embrace of that has taken it to a new level.
But the idea of if before the end of Xi’s third term, as many believe that he wishes to do, the PRC moves to forcibly or otherwise incorporate Taiwan and we get into a war over that, it’s highly likely that the PLA’s responsive military thinks about, “Well, how would we operate in the hemisphere?” And so, that commercial presence, the Mil to Mil relationships, the arm sales, the institutional visits, those things all expand the PLA’s ability to operate in the region in the context of a global fight, even if they’re not looking to set up bases there today. I guess where I would conclude with this is that the types of things that are transforming the region, the real reason why the United States is most concerned – and I’d say uncomfortable – is that this is the region where we are most tied to what happens, even if we don’t always pay attention to that.
In terms of ties of geography, in ties of commerce and investment, in ties of family, you see with issues like immigration, even when we pretend that we want to focus on other parts of the world, what happens in the region directly affects the United States in domestic policy terms, and it repeatedly forces our attention. And so, I think there’s an inherent level of discomfort when China’s drawing certain things that transform the politics, affect U.S. influence, and create the risk that in time of war, we would have to deal with Chinese forces in the region itself.
Parsifal: Many of the points that you just brought up, don’t they have to do more with local conditions than with China, per se? One of the things I’ve observed is that people tend to ask broad questions. What is China’s impact in Latin America? The thing is the results of engagement obviously vary by country, by sector, but I think the most important indicator of success, failure, and everything in between is in fact, the level of institutionality in the recipient country, how strong its institutions are. You do see a lot of successful Chinese projects in different sectors, but the thing is the success rate seems to be correlated with how strong the rule of law is. On this topic, I’d like to point out the extremes of Chinese engagement in the region.
On the one side, you have Venezuela, where after $62 billion in loans from China, neither country has anything to show for it. It was a disaster of monumental proportions. On the other hand, you have Chile, a developed country with strong institutions that, by and large, has been able to capitalize on Chinese investment without any corruption scandals, like the ones we saw in Venezuela. I like to think that the Chinese government and Chinese companies got burned in Venezuela, and maybe they’ve learned from the experience: a kind of 101 manual on this is what happens when you deal with a kleptocracy. Basically, Chinese participants, because they didn’t push for transparency, because they took a kind of hands-off approach to the way their loans were being administered, which in essence is part of their so-called no strings attached approach to international relations, and in the end, they dug their own grave in Venezuela.
But anyways, the narrative coming out of Washington, regardless of the administration, maybe China and Chinese companies, while they might exacerbate many of the problems that plague some of these countries, they are not necessarily the root of the problem. Just a manifestation of the country’s rule of law and institutions. I was wondering, aren’t U.S. interests better served by reframing the conversation, something that is not China focused, illegal mining, the environment? I don’t know, supporting a free press, affected indigenous populations, corruption, or any other topic that is of interest to elected officials and their constituencies. In my humble opinion, that would be a much more constructive way to address U.S. concerns vis-à-vis China’s growing participation in Latin America, instead of making or addressing China as a malign actor that has little to nothing to offer the region.
Evan: Well, I certainly agree with you, Parsifal, that the U.S. narrative in both Republican and Democratic administrations has not been effective. I think, certainly, the narrative of “just don’t engage with China” is seen badly. It’s seen as great power politics, and it plays into some of the perceptions that historically Washington has been too interventionist and overbearing in the region itself. But in addition to that, given that the Chinese have this very real soft power, this desire to benefit from the Chinese money. I think most Latin American actors, in business and otherwise, know that the Chinese tend to be very aggressive actors. They can be very predatory in their dealings and in their contracting, as we’ve talked about, and certainly with the coordination of the government across sectors, that makes it very difficult to deal with if you’re not on your game.
There’s generally a knowledge that the Chinese companies will try to rob your intellectual property if they possibly can and get the better end of the deal with a local partnership. Oftentimes, I think companies want to believe that they can control the risk to get the benefit. And so, there is a discursive tendency that, if I just call it great power politics, then that morally, and in my due diligence, frees me up to take the Chinese money because nothing really to be worried about here. And so, I think most Latin Americans understand that whatever they think about Washington, there’s this unresolved question about whether or not Chinese companies and their engagement are actually good or not for the region.
And that goes to the first part of your question, which is that clearly the nature of Chinese investment, at least with some companies, makes the characteristics of the regime ever more important. I mean, in the U.S. and most Western companies, we have things like the Foreign Corrupt Practices Act. We have a certain amount of oversight where, if U.S. companies do not behave well, and oftentimes they do not, there are at least vehicles for going against that. I think what happens in China oftentimes is that the risk, when you deal with China through state to state deals and non-transparency, those tendencies of the kickbacks for the official involved, the intermediation contract going to the sister-in-law’s brother’s company, et cetera, those types of things, are much more rampant with Chinese companies and also just the Chinese sophistication with bureaucracy. The negotiation is of the cross-default clauses. The negotiation of other things.
I think you’re perfectly right that if you look at some of the countries that have gotten the worst deals, whether it was Venezuela under Hugo Chavez, or Ecuador under Rafael Correa, or the many contracts with Bolivia under Evo Morales, oftentimes it has been the politicization of those populous bureaucracies, and the insufficiency of transparency and technical personnel, and the exclusion of non-Chinese alternatives that has really made those countries vulnerable to bad deals. I mean, Venezuela is probably, as you pointed out, one of the worst. Whereas, more strongly institutionalized regimes, like Chile, have been able to get a better deal in terms of environmental compliance, in terms of labor laws, and things like that. You are absolutely right that it makes… The most important thing is not to not do business with China, but if you’re going to deal with China and take advantage of the opportunities, you really have to be on top of your game in terms of transparency and level playing field and rule of law and strong institutions.
But the question of, what does the United States need to do differently? And certainly, the Biden administration is going exactly in the direction, I believe, that you say: trying to avoid making China the issue. It really does become the elephant in the room because if one recognizes that the deals that China is pursuing in the context of vulnerable countries, and we’re moving, as you well know, in a situation in Latin America, where the amount of vulnerability between the COVID19 effects, and the war in the Ukraine effects, and the weakened fiscal conditions of countries, and the new shift to a greater number of regimes that are willing to do the state to state deals and are open to doing things with the China, the vulnerabilities and needs have increased dramatically.
And so, I think certainly there is something to be said for the U.S. trying to be a better partner to help Latin American states strengthen institutions, and fight for transparency, and evaluate risks. And organizations like, for example, the U.S. Corps of Engineers, which is working closely with Ecuador to help it better structured deals. So, even if it works with the Chinese, it gets a better deal. I think those are certainly productive things, and we can certainly improve the discourse, and frankly, we need to do a better job in data-driven discourse to talk about what the actual track record of Chinese companies are and not say that all Chinese companies are bad or that just you shouldn’t deal with China. So, I absolutely agree with you in that area.
Parsifal: Speaking about the Venezuelan case, I think this has to do with a deep-rooted problem that has plagued Latin American politics for decades now. And it’s the lack of cooperation and integration, including the exchange of information amongst governments. One thing that surprised me the most during the run-up to Colombia’s recent presidential election is that the word “China” didn’t come up once, not in political campaigns, the debates, nowhere. Why is this so surprising to me? Because right next door, you have a country that has been immensely influenced by China. The only two countries that came up during the election were the United States and Venezuela, and some superficial mentions of the EU. So, the link between Colombia, Venezuela, China was never made.
Just now, you mentioned that many governments in the region are aware of the harmful side effects of dealing with China and Chinese companies, and yet, in my experience, I haven’t really perceived that. It’s like every country, it’s its own island, and what China does in Venezuela doesn’t impact its activities in Colombia, and the same goes for the rest of the region. Could you please elaborate on these conversations you’ve had with politicians, policy-makers and academics that gave you that impression, that sense that people in power and business circles are aware and pay attention to the downsize and challenges of engaging with China?
Evan: Sure. And also, just to respond to your comments, first, it’s probably a sad testimony of the depth of the problems that Colombia is facing right now between the FARC and the ELN and the GAO, and the stresses of 2 million Venezuelan refugees in the country, and violence in the countryside, and the question of the green economy that China has not come up. But as you also recognize, in Colombia, even while being very close to the United States, China has had a not insignificant role in many parts. I mean, in manufacturing, although limited, companies like Foton manufacturing outside of Bogota motorcycle facilities, like Jialing and Jincheng in Cali, and I believe up in the coast. Manufacturing by companies like AKT. Just about all the major Colombian companies, I mean, I think of Colcafe also with their interest in the Chinese market.
So, it’s not that China is not present. And they, for years, have been interested in getting involved in Buenaventura. They’ve been, of course, in infrastructure; they’ve just begun through public private partnership projects with, for example, the construction of that major highway from Medellín up to Necocli, one of the 4g highway projects. Of course famously, the Bogota Metro between Xi’an Metro and, I believe, China Harbor, with that at least just beginning to advance. And of course, the Chinese also have had significant problems in Colombia. Right now, the very real mess of these Zijin mining projects in Antioquia, for example, or some of the problems that, for example, Emerald Energy has had in operating in the very dangerous region in Colombia, Llanos, including the kidnapping of some of its personnel.
And so, there arguably has been a polemic there, but in terms of your question of China as an aggressive actor, it probably depends on the political orientation. For example, if you look at the Ecuadorian government right now and, for example, the commission that Fernando Villavicencio, who was actually persecuted under the Rafael Correa government for exposing some of these dirty deals, is now part of a government commission under Guillermo Lasso talking about this. The problems, for example, with the Coca Codo Sinclair Dam are very public. The problems with rerouting the Coca Codo River… Mina San Francisco was one of the other ones that had problems.
Even if you look in places like Bolivia where you had problems with everything from the Rositas dam project, to any number of different infrastructure projects that have been actually canceled under the leftist government of Evo Morales. I think, even while there’s a tendency publicly to laud the Chinese, the track record has been a lot of problems with the Chinese government. Mexico is famous for talking about, “A, los pinches Chinos.” But at the corporate level, and even AMLO… Matter of fact, one of the Chinese frustrations with Andrés Manuel López Obrador right now is he talks out of both sides of his mouth, “callando los oídos de los gringos”, talking about how much they distrust the Chinese.
And at the same time, talking with the Chinese about how important they are to Zuma Energy, and Bacanora and Tren Maya, and Dos Bocas refinery, and things like that. I’ve talked to Brazilians, I’ve talked to Embraer executives that said, “Hey, when we set up in Harbin, we knew that the Chinese would try to rob our IP and basically beat us out into the large regional jet market before we could leverage ourselves to get into that market ourselves.” So, the bet was that they could protect their IP. Another Colombian case, for example, what happened about 10 years ago in Antioquia when Sinohydro was trying to get the Hidroituango project.
And again, there were a number of the empresarios in that area that didn’t want, for their lives, to let the Chinese get a foot in the door. And so, at the end of the day, that project ended up getting broken up into a series of other projects and assigned to non-Chinese actors. And so, I think, at the end of the day, I oftentimes see the Chinese advance as a civil war between those who want to profit by bringing the Chinese in. I mean, for example, in Mexico the Dragon Mart project with Carlos Castillo, and then all of the others who were leather goods manufacturers and others who wanted to stop the Chinese from getting in.
And oftentimes, for example, in the construction sector, if you look at places like Jamaica, or I remember there’s a project in I believe it was Suriname, where they wanted to do a palm oil with then political dissident, Ronnie Brunswijk. And everyone started talking about, “Well, you know that Chinese eat dogs and use slave labor and things like that.” Oftentimes, the local companies that want to keep the Chinese out will use the most offensive racist language and prejudices to try to fight that fight. So, I think there’s an understanding at the end of the day. It’s not that everyone clearly knows that the Chinese are bad, but the discourse is not that just Latin America is blindly walking into it. I mean, I think if you ask the average business person, some see the glass as half-full and that there are these possibilities if you just know how to deal with the Chinese and be a good partner and keep your mouth shut up on politics.
And others see the Chinese as, “Okay, they set up a shell company and they divert money from one company to the other, and they leave us broke at the end of the day.” I mean, I think there’s a thousand different stories. And also, I think, in the approximately 20 years that the Chinese have engaged, especially in the 12 years since the Chinese really started accelerating their presence on the ground after about 2010, we’ve gone from the old days. I used to joke around that my old friend Zhangsu Xue, from China Academy of Social Sciences would put this lovable Chinese panda. And that was okay, the Chinese are here to rescue us, and other people, they know the Chinese are a vicious dragon that are going to gobble us up.
I think we’ve gone from China as panda versus dragon, to an understanding of the Chinese are challenging actors with difficulties and problems that are different from the types of difficulties and problems of dealing with the gringos or Western investors.
Parsifal: On that note, Dr. Evan, obviously we could talk for hours on end. I always learn so much when I talk with you. Although, before we go, I’d like to ask you for a recommendation. What do you have for us today?
Evan: Well, shameless self-promotion. As you know, I’ve been following this topic for about 20 years, and I just published my fifth book where I tried to talk about what this means in a variety of different areas. It’s called China Engages Latin America: Distorting Development and Democracy? And again, it’s available through Palgrave Macmillan. It costs a ridiculously large amount of money. So, I would encourage everyone to buy at least three or four copies, but again, a real honor to be on the show. And I welcome the opportunity to continue to engage with you and your team on this very, very important topic.
Parsifal: For sure. We will definitely have you back on the show sometime soon. After all, the U.S. continues to be the most important actor in the region. So, it’s always important for us to get a sense of Washington’s perspective and its policy towards Latin America. And China’s not going anywhere. Again, thank you so much, and we’ll see you next time.
Evan: I look forward to it, Parsifal. Great talking to you.
Parsifal: Thanks everyone for tuning in. As this is our first episode as part of the Sinica Network of The China Project, we opted for doing it in English. That being said, most of our content will be Spanish, making us the first foreign language podcast of The China Project, something we couldn’t be more excited about. Hope you enjoyed the show, and see you all next time!
