India, China And Latin America: A New Turf Of Competition
Chinese President Xi Jinping met with his Venezuelan counterpart, Nicolas Maduro in Beijing this September and agreed to improve relations between their countries. In the last 10 years, both leaders have met at least five times to discuss politics, diplomacy and economic ties.
These meetings boosted the relationship and transformed it into an “all-weather strategic partnership.”
But China’s relations are not limited to only Venezuela, Beijing is maturing relationship with the diverse nations of Latin America and the Caribbean (LAC), which is primarily driven by economic security interests, is facing new challenges as the struggling region deals with an intensifying wave of economic, public security and public health crises.
According to the estimates made by the Economic Commission for Latin America and the Caribbean (ECLAC), in contrast to the 13 per cent drop in total exports, those to China increased by 2 per cent and as economic activity recovered in 2021, trade between China and Latin America increased significantly to USD 451.6 billion from USD 12 billion in 2000 which is almost 38 times increase.
Why is China getting interested in Latin America?
After China’s inclusion in the World Trade Organisation (WTO), the country’s trade flourished and built a notable presence in Latin America in key areas like mining, telecom, energy and electricity.
China has focused on three pillars to construct relationships which are trade, bilateral loans and foreign direct investments. Margaret Myers of Inter-American Dialogue says that China sees the region as an emerging market as it intends to export much larger in size and value like technological products and services.
Myers also says that Beijing has other interests in Latin America like the mining of rare-earth metals, securing food security at home and uninterrupted in-bound energy supply.
China also invests in acquisitions and mergers. Between 2005 and 2020, it invested over USD 130 billion in the region in which Brazil received USD 60 billion, and Peru and Chile received USD 27 billion each, according to the United States Institute of Peace.
Since China launched the Belt and Road Initiative (BRI) in 2013, the nature of investments has changed. Now, investments can be seen in consumer goods, financial services, industrial goods, telecommunication services and utilities which were basic materials and energy sectors before 2013.
BRI is an infrastructure development project intended to connect East Asia to Europe but expanded to Africa and Latin America. 21 of the 33 LAC countries have formally signed up Belt and Road Initiative till 2022.
In late 2018, China also built its Satellite Launch and Tracking Control General tracking hub in Argentina. However, the tracking centre’s stated objective was “peaceful,” but the lack of transparency has raised questions about the centre’s true nature. Experts believe that China might use this space facility for military purposes or expand its footprint in space technology.
India’s efforts in Latin America
EAM S Jaishankar recently visited four countries in the region, including Guyana, Panama, Colombia and the Dominican Republic. Latin America has probably only received this much attention from India twice before: once in 1968, during Prime Minister Indira Gandhi’s visit to eight countries in the region and again last August, during Jaishankar’s visit to Brazil, Argentina and Paraguay. However, PM Modi visited the continent two times: in 2014 to Brazil for the BRICS Summit and in 2018 to Argentina.
India has also recently made headlines in Latin America, including Guyana, Panama, Colombia and the Dominican Republic. The first visit of an Indian foreign minister to these countries drew generally positive commentary about the possibility of a shift in policy in New Delhi.
India’s interest in the LAC region is mainly driven by the economic interests of both sides. Total trade between the two regions grew by 145 per cent over 10 years and by 2,000 per cent in the past 20 years.
In the case of the energy transition and the climate agenda, there are opportunities for adding technological value through the production of strategic commodities such as lithium in Latin America and the Caribbean.
S Jaishankar has acknowledged that India’s ambition to become a global power requires a footprint in Latin America that also reflects a national drive for global influence and a seat at the table alongside major powers.
