Carlos Aquino*

China is a major actor in the world economy and international politics. It is the second biggest economy in the world and by the end of this decade it will become the biggest in the world. It is already the biggest destination for more than 130 countries exports of goods, a major investor in many developing countries, and the main lender for many of them.

Under Xi Jinping leadership China´s foreign policy has become more assertive, and with Trump policy of confronting China (that to a big extent is followed by Biden[1]), its competition with U.S. is seen as inevitable.

In this article a review of China’s foreign policy is given. First, its foreign policy before Xi Jinping is analyzed; Second, the current China foreign policy is reviewed; Third, China foreign policy toward Latin America is seen; and Last, some conclusions are given.

A. China´s Foreign Policy before Xi Jinping

When the People ´s Republic of China was created in 1949 it was a poor country, and its priority was to ensure its independence, and later when it broke with the Soviet Union, its aim was to fight against the hegemonism, both of United States, U.S., and the Soviet Union.

By the end of 1969, China had established diplomatic relations with more than 50 countries, double of what it had in 1955.

It established 5 principles of peaceful coexistence that have guided much of its foreign policy. They include: “mutual respect for sovereignty and territorial integrity, mutual non-aggression, non-interference in each other's internal affairs, equality and mutual benefit, and peaceful coexistence”[2].

In the decade of the 1970s when it saw the opportunity offered by the United States, China established relations with this country and with many others in the West, to counterbalance the Soviet Union. In October 1971 China regains its seat in the United Nations and as one of the five country Permanent members of the Security Council.

It also had as the cornerstone of its foreign policy the maintenance of its territorial integrity (that as many countries as possible recognize that Taiwan is part of China).

China in December 1978 decided to undertake reforms and open its economy to get out of the backwardness in which it had been, especially compared with countries such as Japan and South Korea.

Under Deng Xiaoping leadership China leaves behind its planned economy system to take advantage of the capital, know-how, and markets of the West. To ensure its economic growth, China sought to expand relations with many countries, considering the provision of natural resources, which it does not have in abundance compared to its needs.

Chinese economic growth since 1979 is spectacular. In 2010 it became the second largest economy in the world surpassing Japan.

Deng Xiaoping argued that Chinese foreign policy should be characterized by "hiding strengths and waiting", "hiding weaknesses", and not "taking a leadership position". He argued to keep a low profile (taoguang yanhui 韬光养晦) in international affairs. The priority was economic growth and China should not be distracted from this goal.

China sought to resolve its problems with its neighbors. At the end of the 1980s China settled its problems with the Soviet Union (which became Russia) and with South Korea established diplomatic relations in 1992 for example.

B. China Foreign Policy in the present

It is said that China foreign policy has changed from Deng Xiaoping policy of “hide your capacities, bide your time” to Xi assertive foreign policy. Xi assumed power in 2012.

But things began to change before Xi became leader of China. By the end of the 2000s, the outcome of the great international financial crisis of 2008-2009 began to change how China saw the world and its position in it. The Chinese economy continued to grow while many countries, especially in the West, suffered economic crisis. The Chinese felt more confident in its own economic and political system.

Besides this, Chinese economic growth began to generate some apprehension abroad, although China emphasized that its rise will be peaceful, that it will be a responsible superpower, that it will seek to democratize international relations, and that it will support multilateralism.

In fact, China presence began to be felt all over the world. By the beginning of the XXI century, it became the engine of the world economy, and its influence on the movement of the price of raw materials became evident. It is in this scenario that Xi Jinping, the most powerful leader that China has had since Mao Zedong (Xi was elected Secretary General of the Communist Party of China in November 2012 and President of the country in March 2013), took office. In March 2018 the National People's Congress removed term limits for the President and Vice President, so paving the way for Xi to remain in power if he wishes to do so (and many think he wish that).

China began to strengthen its presence in the world, especially in its immediate area, East Asia. Its disputes with Japan, Vietnam, and its greater presence in the South China Sea are proof of this.

China wants to achieve a developed country status by 2049. It aims to reach the rejuvenation of the nation, and the Chinese dream (proposed in 2013: to achieve a strong, civilized, harmonious, beautiful China). It wants to regain the place it had before its forced opening to the world at the middle of the XIX century. For most of the last 2000 years China was the biggest and most advanced economy in the world, even right before its forced opening with the Opium war of 1839-1840.

China wants to have a greater voice in international affairs. It would like to contribute more funds to the World Bank, the International Monetary Fund, but the US will not let it (as this will mean a major voice of China on those organizations, with the corresponding decrease of influence of the US).

Anyway, China is also creating mechanisms to have a greater financial presence in the world, to make better use of its huge international reserves, and (through institutions such as the Asian Infrastructure Investment Bank, the New Development Bank, the Silk Road Fund), etc., participate in the financing of development and infrastructure of developing countries.

It has plans to improve its industrial structure with its Made in China 2025 program (revealed in 2015), and the Belt and Road initiative (announced in 2013, which has five priority areas of cooperation: policy coordination, connectivity of infrastructure, trade facilitation, financial cooperation, and people-to-people exchange).

China wants to establish itself as the champion of multilateralism (as opposed to Trump's unilateralism, something that the new Biden administration said will reverse). China says that it is the standard-bearer of globalization, as it has been the greatest beneficiary of it.

It has a win-win proposal, of South-South cooperation, and continues to present itself as the older brother of developing countries.

Trump's rise presented a challenge for China. Trump is gone but the major guidelines of its foreign policy will continue, with the difference that to face China the Biden administration has said that it will work with its allies and like-minded parties.

In fact, China presents a major challenge to US hegemony, the only truly one up to now. The Soviet Union was considered a challenger but in fact it could not win that competition. Even if in military terms it achieved some parity with US in economic terms it was never a competitor. At some point in the 1980s even Japan was considered by some people a challenger to US in economic terms but with the burst of its bubble economy at the beginning of the 1990s that was not the case. Japan lacked two things to have challenged the US. It direly lacks natural resources and military strength (being dependent in the US for its security).

China is different. It will become the biggest economy, among other reasons thanks to its huge internal market, and its military strength is increasing with time. But still is behind the US in some advanced technologies like semiconductors, AI, nanotechnology, etc.

With the Biden administration US is preparing to keep ahead in the advantages that still have vis a vis China, and this will assure that competition between them will persist. The question for some is if this competition will escalate and become a military one. Some see China and US falling into the called Trap of Thucydides, where the hegemon struggles to preserve its position against an emerging power (as was the case of Sparta against Greece).

Already China influence is bigger in some places, like in Africa, and is becoming bigger in East Asia, and Latin America. The Russia invasion of Ukraine from February 2022 and the Western economic sanction against Russia is drawing China closer to it. Perhaps in Asia it is possible to see the growing confrontation between China and U.S. United States is arranging a broader coalition to confront China, with the AUKUS, the Quad, and other initiatives. China is bringing Russia closer to it, increasing for example joint military exercises between their navy and air forces. And regional powers, like Japan for example, are also taking a more assertive foreign policy to confront what it sees as a growing military presence of China in the region.

Let´s focus China foreign policy in the Latin America region where its presence is rapidly becoming bigger with time.

C. China foreign policy in Latin America.

China presence in Latin America is becoming bigger by the time. Without considering Mexico, that have a strong relationship with US, China already is the biggest economic partner of the region, one of its main investors and the main lender. Rapipdly

The People´s Republic of China began establishing diplomatic relations with most of Latin America countries in the 1970s after recovering its seat in the United Nations. But economic relations were still weak, and it began to increase after the 1990s.

At first China was putting emphasis in having Latin American countries switch diplomatic recognition from Taiwan. Of the 14 countries in the world recognizing Taiwan, several of them (and the biggest ones), are in Latin America, like Paraguay (Nicaragua shifted recognition to China in December 2021).

Economic relations between China and Latin America began increasing from the 1990s, thanks to the growing appetite of China for natural resources of the region. Specially in South America countries have plenty of copper (Chile and Peru), iron (Peru, Brazil), oil (Ecuador, Colombia, Venezuela), soybeans (Argentina, Bolivia, Brazil), etc. Also, cheap manufactured goods from China were demanded from the region.

The region benefited specially from the increase in the price of many primary goods that occurred between 2002-2003 to 2011-2012. China strong demand for those goods was the reason. In this way China become the biggest export market of several of them, beginning with Peru and Chile, where more than half their copper (the main product exported) goes to China.

Also, from the 1990s and specially from the 2000s onward, China began to invest in the extraction of natural resources, especially iron, copper, and oil. But China also became important for countries like Venezuela, Ecuador, and Argentina, that after losing access to the international capital markets, began receiving loans from China.

In this way China become the major export destination for many Latin American countries, one of its main investors, and for several of them their major, and unique lender. Moreover, up to now, 20 countries in the region have joined China Belt and Road initiative (BRI), the last being Argentina in February 2022.

Six Latin American countries are members of the Asia Investment Infrastructure Bank, AIIB: Ecuador, Uruguay, Brazil, Argentina, Chile, and Peru. And Peru, the last country in the region to join the AIIB, contributed with 154.6 million dollars, around 84% of the total given by countries in Latin America.

Latin American members of the AIIB, millions of dollars

Members	Ammount given	Share.%	Date of incorporationa
Ecuador	5	3%	1 noviembre, 2019
Uruguay	5	3%	28 de abril, 2020
Brasil	5	3%	2 de noviembre, 2020
Argentina	5	3%	30 de marzo, 2021
Chile	10	5%	2 de julio, 2021
Perú	154.6	84%	14 de enero, 2022
Total LAC	184.6	1%
Total Non regional members	23,073

Source: https://www.aiib.org/en/about-aiib/governance/members-of-bank/index.html

China have tried to work with Latin American countries through the China-CELAC forum, but it has not been easy. The first forum of the China and the Community of Latin American and Caribbean States (CELAC) was in 2015 in Beijing, but the region does not have a common voice vis a vis China. That is why, most of the relations between China and the region is done bilaterally.

Given the economic structure of the region, dependent in the export of primary goods, its economic reliance in China will increase. Also, as China invests more in infrastructure projects and the region is in much need of this kind of investment, China involvement in the region in this aspect will increase, helped by the BRI to which most of the countries have joined.

At the beginning of the COVID-19 pandemics China got closer to the region as many of them had to rely in the provision of the Chinese vaccines. China´s Sinopharm and Sinovac, two of its companies manufacturing them, becoming the main providers of the vaccines[3] for countries like Peru. But from the second half of the 2021, as other vaccines become available, and their efficacy was shown to be better than Chinese vaccines, like of Pfizer and Moderna, China position as provider become less important.

China growing presence in Latin America rose suspicion in the U.S. as the region is considered U.S. backyard. One area of possible conflict will be when countries in the region will adopt the 5G technology. US has pushed other countries, like United Kingdom and Australia, to exclude Chinese companies like Huawei, from participating in the nationals 5G network. Ecuador under Lenin government got a loan in January 2021 from the US to prepaid Chinese loan with the condition that it excludes Chinese technology in this field[4].

Chile also adopted for the lying of a Transpacific submarine fiber optic cable a proposal different from the one offered by Huawei and Chinese companies, that would have directly linked Chile to China. Instead, it chose a proposal from Japan, in part it is said because of US concern[5].

Diagrama

Descripción generada automáticamente

Source: Nikkei Asia: https://asia.nikkei.com/Business/Telecommunication/Chile-picks-Japan-s-trans-Pacific-cable-route-in-snub-to-China

US and western countries in the G7 are trying to offer an alternative to China financing in infrastructure under its Belt and Road Initiative. In the last G7 meeting in June 2022 they launched the Partnership for Global Infrastructure and Investment and plan to raise 600 million dollars for investment in low- and middle-income countries in the next five years[6].

D. Conclusions

The invasion of Ukraine by Russia and the support that China is seen giving to Russia has hardened the position of US to compete with China. As Secretary of State Anthony Blinken said in a May 2022 speech “China is the only country with both the intent to reshape the international order and, increasingly, the economic, diplomatic, military, and technological power to do it”[7].

In this regard, competition between the two superpowers will increase, and the Latin American region is becoming one of the battlegrounds of that competition.

July 21, 2022