China Widens Economic Role in Latin America

Chile - The expected arrival of President Bush, who personifies for Latin Americans the economic and political power of Washington, is being greeted with an uneasy mix of protests and hopes for greater growth.

But while the United States may still regard the region as its backyard, its dominance is no longer unquestioned. Suddenly, the presence of China can be felt everywhere, from the backwaters of the Amazon to mining camps in the Andes.

Driven by one the largest and most sustained economic expansions in history, and facing bottlenecks and shortages in Asia, China is increasingly turning to South America as a supplier. It is busy buying huge quantities of iron ore, bauxite, soybeans, timber, zinc and manganese in Brazil. It is vying for tin in Bolivia, oil in Venezuela and copper here in Chile, where last month it displaced the United States as the leading market for Chilean exports.

The United States, preoccupied with the worsening situation in Iraq, seems to have attached little importance to China’s rising profile in the region. If anything, increased trade between Latin America and China has been welcomed as a means to reduce pressure on the United States to underwrite economic reforms, with geopolitical considerations pushed to the background.

Chinese investment and purchases are seen as vital for economies short on capital and struggling to emerge from a long slump. In Argentina earlier this week, for example, Mr. Hu announced nearly $20 billion in new investment in railways, oil and gas exploration, construction and communications satellites, a huge boost for a country whose economic vitality has been sapped since a financial collapse in December 2001.

In 2003 China became Brazil’s second-largest individual trading partner, and in recent months the Chinese have been seeking joint ventures that would expand trade even further and give them a significant investment stake. Brazil is one of the few countries to enjoy a trade surplus with China, and last year alone exports to China nearly doubled, to $4.5 billion.

The same is happening elsewhere, especially in agriculture. All across the South American heartland, from the Amazon to the pampas of Argentina, a boom in the cultivation of soybeans, used mainly as animal feed, has been propelled in recent years by the emergence half a world away of a Chinese middle-class with more income and a desire for more pork, chicken and beef.

Concerned by what they see as Chinese advances, Japan and South Korea are also stepping up their efforts to secure their own supplies of raw materials in the region. Prime Minister Junichiro Koizumi of Japan visited Brazil in mid-September. President Roh Moo Hyun of South Korea has also scheduled trips to Argentina, Brazil and Chile, planned around the Chinese visits.

Thus far, China has been mainly interested in infrastructure projects that would assure a more steady flow of the products it is already buying from Brazil and Argentina. In particular, railways, ports, highways, gas pipelines and other energy-related projects are being studied. Earlier this month, a Citic delegation visited two dam sites in the Amazon that would be essential to the alumina and steel joint ventures in Brazil. Such projects have raised questions about the environment, especially in the Amazon.