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China pours its wealth into Latin America

18th April 2010

The Asian superpower is becoming a major economic player in the USA's backyard

Travel through pretty much any country in Latin America and you see the influence: a football stadium for Costa Rica, scholarships for Venezuela, a car factory for Uruguay, billion-dollar loans for Brazil. All from China.

The Asian superpower has moved into a region the US once considered its backyard and discreetly established itself as a major economic player.

There are new and expanded embassies in Caracas and Brasilia, Mandarin language classes in La Paz and Buenos Aires, Chinese tourists in Machu Picchu, red flags with five gold stars fluttering from tankers steaming through the Panama canal. Last week President Hu Jintao travelled to Brazil to sign, among other things, a five-year strategic plan between China and South America's biggest economy.

China has supplanted the US as Brazil's biggest trading partner, a boom repeated across the region. Once almost invisible in Latin America, China has seen its trade here rise from $10bn a year in 2000 to well over $100bn today. Latin officials are rolling out the red carpet to Chinese delegations and hopping on planes not only to Beijing but also Guangzhou, Nanking and Shanghai.

Unlike the Russians, who grab attention by sending warships to visit anti-US leaders, such as Venezuela's Hugo Chávez, but struggle to deliver economic deals, the Chinese are all business. They are importing soy from Argentina, copper from Chile, iron ore from Brazil and zinc from Peru, and export clothes, cars and electronic equipment across the region.

The trade helped Latin America to weather the global economic crisis, but there is concern about a "neo-colonial" pattern in which the region's commodities are sucked abroad while industry loses out to cheap imports aided by China's undervalued currency. When Argentina accused China of dumping goods, Beijing bared its teeth and banned Argentine soya oil, citing safety concerns.

After China's earthquake, Hu cut short his trip to Brazil and cancelled visits to Chile and Venezuela, where he was due to sign an oil deal. The premier would come another time, said Chávez. Venezuela's leader has declared himself a Maoist, but that scarcely matters to the Chinese. They just want the oil.

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