The 3 pillars of China’s expansion in Latin America and the Caribbean after two years of pandemic

With the sale of millions of doses of vaccines, Beijing is giving its pharmaceutical industry a boost while at the same time, analysts say, deepening its influence on Latin America and the Caribbean.

It is what the West has called “covid diplomacy”, the sale and donation of masks, respirators, protective equipment and vaccines amid the urgent global need to face the health crisis.

And as production expanded, this practice advanced rapidly during 2021 in the region, with a view to generating agreements to co-produce them with various countries.

On the economic front, in addition, the volume of bilateral trade between China and the region continued to increase, with projections that this year would reach a record level of US $ 400,000 million, according to Beijing.

The investments committed before the pandemic in infrastructure and energy projects maintain their course, as well as advances in technological trade negotiations (such as 5G technology in Brazil) and the loans that China has offered to countries for years. with very low credit rating, such as Argentina and Venezuela.

On the other hand, the situation opened the door to new political approaches, such as with Nicaragua, which broke diplomatic relations with Taiwan to reestablish them with Beijing.

The pandemic “has been very important to China because it provided a new way to expand your participation in the region“Pepe Zhang, associate director and member of the Adrienne Arsht Latin America Center of the Atlantic Council study center, in the US, tells BBC Mundo.

The “covid diplomacy”

Also known as the “mask diplomacy or vaccine diplomacy”, The donation and sale of products to face the pandemic at its most critical moment made China become a relevant actor for Latin America in the midst of the health crisis.

While Europe and, later, the United States, tried to get respirators, protective equipment, oxygen, masks and whatever was necessary to save the lives of its inhabitants in the face of the rapid expansion of covid-19, China, where the outbreak occurred initial, reacted earlier to the tragedy and began to produce medical supplies at full speed that everyone was requiring.

Beijing applied harsh control and isolation measures against the virus and barely managed to put things under control within its territory, it positioned itself as a kind of letter of salvation for the most desperate countries that did not get medical products in the first months of 2020.

One of the first countries to receive aid was Venezuela at the middle of March. Countries such as Bolivia, Ecuador, Argentina soon followed, and in parallel to the donations, purchases began by the Latin American countries that had the economic resources available, but could not find the seller.

“We would like to thank the People’s Republic of China for the promptness with which this proposal from Mexico has been addressed.”Said Foreign Minister Marcelo Ebrard amid the shortage of protective equipment against covid-19 and the international battle to get hold of them.

According to Enrique Dussel, coordinator of the Center for China-Mexico Studies of the National Autonomous University of Mexico (UNAM) and coordinator of the Academic Network of Latin America and the Caribbean on China (Red ALC-China), the government of Andrés Manuel López Obrador launched at that time “a request for help”.

“The only country that responded quickly was China”, he says in conversation with BBC Mundo.

In this sense, Dussel believes that the idea of ​​China’s covid diplomacy is a criticism that comes from Washington towards the foreign policy of its rival.

“This of mask and vaccine diplomacy is a overreaction. China has been developing a relationship with Latin America for decades”, He points out.

Evan Ellis, a professor of Latin American studies at the United States Army War College, has a different view, specializing in the region’s relationship with China.

“The pandemic gave China room to increase its influence. It has served him to project his power”, He tells BBC Mundo.

Ellis points out that in the last two years, due to the pandemic, new markets have opened in the region for the sale of vaccines and health products.

Now, he adds, a new phase of covid diplomacy has been entered in the area of ​​healthcare technology.

An example of this phenomenon are vaccine co-production plans in Brazil, Peru and Argentina in the period 2022 to 2024.

This new type of relationship will allow Beijing, says the analyst, to advance biotechnological developments in the region.

For now, China has found a large market in Latin America for the sale of its vaccines: Sinopharm, Sinovac y CanSino.

The vast majority of the countries in the region have purchased doses of these vaccines. In Chile, for example, the early purchase of Chinese products allowed him to mount the most extensive inoculation campaign in Latin America.

Political ties and “the Taiwan factor”

Beijing’s ability to mass produce vaccines and ship them to developing countries has generated diplomatic and trade relations opening, experts say, which gave China an advantage compared to developed countries They have been focused on their own needs.

In the region, apart from the profitable sales, China has also rolled out a vaccine donation program.

A few weeks ago, the Xi Jinping government made the second donation of vaccines to Nicaragua, after the Central American country broke its diplomatic relations with Taiwan.

“There is only one China in the world”Said Nicaraguan Foreign Minister Denis Moncada, assuming Beijing’s position on the island’s government, which it considers an inalienable part of its territory.

Nicaragua’s decision, Cui Shoujun, professor and director of the Center for Latin American Studies at Renmin University in Beijing, tells BBC Mundo, “shows that China is expanding its influence in the region”.

“China views Latin American countries as partners for development and has provided enormous medical assistance to the countries hardest hit by the pandemic”, Adds the academic.

With the termination of relations by Nicaragua, Taiwan was left with only 14 diplomatic allies formalities in the world, in the midst of a growing tension with Beijing.

In Central America they are Honduras, Guatemala and Belize (although the newly elected president of Honduras, Xiomara Castro, who will take office on January 27, pledged during her campaign to sever relations with Taiwan in favor of Beijing).

In the Caribbean they are Haiti, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, while in South America it is Paraguay.

The latest donations of vaccines to Nicaragua, after the distance with Taiwan, are added to others delivered to countries in the region such as Venezuela, Cuba, Bolivia or Peru, which have appreciated the help in the midst of the health crisis.

While China views donations as a humanitarian act after the failure of the COVAX mechanism agreed by the great powers to help the most vulnerable countries, its critics consider that it uses this circumstance as an opportunity to gain an advantage in future business negotiations.

And in a broader sense, to improve the image it projects in the world.

On the other hand, a tilt to the left in Latin American governments could set a new scenario.

“Left turn opens a post-covid door for further expansion of Chinese influence in Latin America”, dice Evan Ellis.

There has been a historical pattern of ties, the researcher points out, with countries such as Venezuela, Cuba, Rafael Correa’s Ecuador, Evo Morales’ Bolivia, Cristina Kirtchner’s Argentina, and Bukele’s Salvador, to which the first encounters are added. with Pedro Castillo’s Peru and now Daniel Ortega’s Nicaragua.

However, the experts consulted agree, there is a key element: China wants to do business. And that objective depends more on the opportunities than on the political color of the government in power.

Trade

Alicia García-Herrero, chief Asia-Pacific economist at the French investment bank Natixis, in Hong Kong, and former economist at the International Monetary Fund (IMF), states that “the pandemic has exacerbated the dependency relationship between Latin America and China”.

To a trade account with a deficit and a mountain of loans from China to the region in recent decades, new elements have been added.

Among them, the dependence that Latin America now has on imports of Chinese vaccines and, in some cases, “donations in exchange for political favorsyes ”, affirms the economist.

But in addition, it is at stake the fall in the delivery of loans the region with increased pressure to pay the debts incurred.

In this context, García-Herrero points out, “the region’s most indebted countries have to face a mountain of repayments to China at a very difficult time”, When the fiscal coffers are badly damaged by the pandemic.

While China’s foreign direct investment in the region has been slower during the pandemic, says Pepe Zhang, the “trade relationship remains robust and resilient.”

“2021 is likely to be one more time a record year or close to a record year for trade between China and the region”.

In fact, during the ministerial meeting of the Forum of the Community of Latin American and Caribbean States (CELAC) -China in early December, Vice Minister of Foreign Affairs Ma Zhaoxu announced that the trade volume between the parties in 2020 exceeded US $ 300,000 million.

“And this figure is expected to reach $ 400 billion this year.”Ma pointed out.

With regard to Chinese investment in infrastructure, 24 projects were developed in the region for a value of US $ 18,000 million in 2020, explains Enrique Dussel, “even though we were in the middle of a pandemic”.

For the Mexican researcher, what China is looking for is a long-term comprehensive strategic partnership with the region that goes beyond the governments of the day.

China offers a portfolio of options to the countries of the region for more than 10 years, he adds.

“If you are interested in ping-pong, I offer you ping-pong, if you want 5G technology… I offer you 5G technology. If you want a fast train, a port, a satellite, a loan or a Confucius Institute … here you have it”, dice Dussel.

Finally, it is the countries of the region that decide what part of the portfolio they want.

And as we have seen, he adds, “countries such as Argentina, Ecuador, Brazil, Mexico, Cuba or Venezuela have chosen a part of the Chinese portfolio”.

We are seeing new triangular relations between Latin America, the United States and China, he points out.

“We will live with the tension between the two giants”, highlights. “It is unwise to marry one of the two ideologically. It seems to be unintelligent”.