viernes, 16 de abril de 2021
jueves, 4 de marzo de 2021
China´s foreign policy
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 will be 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, it
aims was to fight against the hegemonism, both of United States 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 a member of the five country 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 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 so that this does not distract it
from its goal of economic development. At the end of the 1980s China settled its
problems with the Soviet Union (who 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 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). China 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 Made in China 2025 (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
stands as 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 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. Let´s focus in Latin America region.
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 the main investors and the main lender.
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 recognition from
Taiwan. Of the 16 countries in the world recognizing Taiwan, several of them (and
the biggest ones), are in Latin America, like Paraguay and Nicaragua.
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 its copper (its 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, 19 countries in the region have joined China Belt and Road
initiative (BRI).
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.
Also, the
COVID-19 pandemics in a sense is getting China closer to the region as many of
them will rely in the Chinese vaccines. China Sinopharm and Sinovac, two of its
companies manufacturing them, are becoming main providers of the vaccines[3]
for some countries, like Peru.
China growing
presence in Latin America rose suspicion in the US as the region is considered its
backyard. One area of possible conflict will be when the countries in the region
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 form the US to
prepaid Chinese loan with the condition that it excludes Chinese technology in
this field[4].
But it seems that the next President of Ecuador could be a protégé of former President
Rafael Correa, Andres Arauz, a good friend of China, and things could reverse.
*Carlos Aquino is Director of CEAS
[1] See US White House: “Interim
National Security Strategic Guidance”, march 2021: https://www.whitehouse.gov/wp-content/uploads/2021/03/NSC-1v2.pdf
[2] China´s MOFA website: The Five Principles of
Peaceful Coexistence: https://www.fmprc.gov.cn/mfa_eng/wjb_663304/zwjg_665342/zwbd_665378/t1179045.shtml#:~:text=They%20include%3A%20mutual%20respect%20for,mutual%20benefit%2C%20and%20peaceful%20coexistence.
[3]Latin America turns to
China and Russia for COVID-19 vaccines:
[4] Financial Times: US development bank strikes deal to help Ecuador
pay China loans.
https://www.ft.com/content/affcc432-03c4-459d-a6b8-922ca8346c14
domingo, 21 de febrero de 2021
Peru's relations with China at present
See also:
https://www.slideshare.net/carlosalbertoaquinorodriguez/peru-relations-with-china-at-present
Peru's
relations with China at present
Carlos Aquino, Director of CEAS[1]
2021 is a
special year in Peru's relationship with the People's Republic of China as it
marks (in November) 50 years since the establishment of diplomatic relations
with that country. China is increasingly important for Peru (and the world as
well), as it is the country's largest trading partner, it is becoming the
largest investor, and at the present juncture of the pandemic, it is the
country that actually provides and will provide Peru with the largest number of
vaccines to face the COVID-19 pandemic.
For this
reason, Foreign Minister Allan Wagner said that "The relationship with
China must be taken with much care"[2].
In this article we will review the state of Peru's relationship with that
country, to see what makes it special and why it should be taken with much care.
An
introduction will be seen first, where a brief review of the history of
relations with that country will be made, then the current commercial
relationship will be seen, then the status of Chinese investments in Peru, the
political and diplomatic relationship, then the topic of the vaccines, and
finally some conclusions will be given.
1.
Introduction. -
We have a
long history of relations with China, with the Manila Galleon, of the great
ships that made the Acapulco - Manila (then Spanish colonies) crossing, which
existed from the second half of the 16th century to the early 19th century.
From Manila other ships went to Macao, and this allowed a relationship with
Asia, and China in particular. There was an exchange of goods, and even people,
in that period.
Then a
massive Chinese immigration to Peru began, since 1849, the first in South
America, when they came to work on the coastal farms, and which created the
largest Chinese community in Latin America in our country[3].
And in 1874 Peru established relations with the then Qing Empire, the first of
China with a country in Latin America.
2. Trade
relations. -
Before 1990
the commercial relationship with China was less important. With the opening of
the Peruvian economy from 1990 onwards and China's growing appetite for natural
resources, trade (and investment) between Peru and China increases. Of course,
there was also the vision of the Peruvian State of projection to Asia Pacific
from 1990 onwards, which, for example, made it possible for the country to also
join the APEC forum in 1998. Being in this forum brought us closer to China.
Let's
remember that China is the second largest economy in the world. It grew at
rates of almost 10% annual average for 33 consecutive years from 1979 to 2011.
Afterwards it has grown on average at 6.5% annually. China retakes the place it
has had in the world, in which it was the largest economy until even the
beginning of the 19th century[4].
China is
now the engine of the world economy, it has been since the second half of the
2000s. In 2020 the world economy fell -3.5%, but China grew 2.3%. This year
2021 the world economy will grow 5.5% and China 8.1% according to figures from
the International Monetary Fund (see attached table).
That is why
China is our biggest trading partner today. The year 2020 represented 28.7% of
our foreign trade in goods (although we sell almost only raw materials and
import manufactured goods). The second is the US, but far below China, with
only 17.1% of the total. 28.3% of what was exported to the world went to China,
and 28.5% of what was imported from the world came from China. See next
Table.
Source: MINCETUR:
Reporte Mensual de Comercio Exterior, diciembre 2020
China is
also important because 42% of all the minerals that Peru exports go to that
country, and let's remember that mining represented 57.7% of everything that
Peru sold to the world in 2020. Moreover, the main product that Peru exports is
copper, which represented 28.6% of everything exported in 2020, and China is
the main buyer, since 62% of all Peruvian copper went to China.
Source: MINCETUR:
Reporte Mensual de Comercio Exterior, diciembre 2020
The
importance of China is growing as a market for our products more and more, and
it will continue to grow in the future. In 2010 we exported 15% of the total,
at the end of the last decade it reached almost 30%. See Table below. Among
other reasons, because Peru mainly exports raw materials, and China is still
the one that most demands these products for its industrial machinery, for its
urbanization process, and, although not as much as a few years ago, as it has
already built an important part of it, for the construction of its
infrastructure.
Exports of merchandise of Perú to Asia by main
destination, million dollars, and as a % of total, years 2010 to 2019
|
(Ranking* en el 2019) |
2010 |
2011 |
2015 |
2018 |
2019 |
|
China (1) |
5,436 (15%) |
6,961 (15%) |
7,333 (22.1%) |
13,237 (27.6%) |
13,503 (29.4%) |
|
Corea del Sur (5) |
896 (2.5%) |
1,695 (4%) |
1,077 (3.2%) |
2,467 (5.1%) |
2,228 (4.8%) |
|
Japón (6) |
1,792 (5%) |
2,175 (5%) |
1,118 (3.4%) |
2,181 (4.5%) |
1,974 (4.3%) |
|
India (7) |
219 (0.6%) |
248 (0.5%) |
676 (2.0%) |
2,481 (5.2%) |
1,787 (3.9%) |
|
Taiwán |
293 (0.8%) |
369 (0.8%) |
270 (0.8%) |
289 (0.6%) |
201 (0.4%) |
|
Total, Asia |
9,163 (26%) |
12,191 (27%) |
11,043 (33.2%) |
21,982 (45.8%) |
21,755 (47.3%) |
|
Total, mundo |
35,806 (100%) |
45,726 (100%) |
33,245 (100.0) |
48,014 (100.0%) |
45,978
(100.0%) |
*Ranking como
principales mercados para el Perú.
Soruce:
MINCETUR, Reporte Mensual de Comercio Exterior, y Reporte de Comercio
3.
Chinese investment in Peru. -
China's
investment represents almost 25% of the accumulated FDI in the country (31 billion
dollars already invested, and several billions of dollars more to invest, -only
in mining there is a project portfolio of 10.4 billion dollars -)[5].
At the end of 2019 there was a cumulative stock of $ 115 billion of foreign
direct investment in Peru. And only from 2005 to 2020 it is estimated that
China had invested 29.3 billion dollars in Peru. What's more, just in mining
Chinese investment in the coming years will be important. See following charts
and graphs.
Stock of foreign direct investment, million dollars
Source: UNCTAD: World Investment Report 2020, page 244
Source: https://www.aei.org/china-global-investment-tracker/
Source: MINEM: 2020 Cartera de Proyectos
de Construcción de Mina, noviembre 2020
Traditionally,
Chinese investment has been in the extraction of natural resources, but in
recent years investment in infrastructure projects has increased. The
importance of Chinese investment in mining is remarkable, for example, as its
companies produce 100% of the iron (Shougang), almost 30% of the copper (Las
Bambas and Toromocho), and 34% of the oil (CNPC and its subsidiary SAPET ), 14%
from fishmeal and fish oil (the CFG company). (2019 figures).
The
importance of Chinese investment is also beginning to be seen in other sectors
such as electricity generation and distribution, and in port capacity. The fact
that Peru joined the Chinese Belt and Road initiative in 2019 is expected to
further promote that country's investment in Peru.
Chinese
investment will continue to increase, as Peru needs foreign investment and the
Chinese want to invest here. Peru offers a favorable environment for foreign
investment, and this is particularly appreciated by the Chinese.
Large-scale
Chinese investment was the first in Latin America. They had some problems, in
the mining and hydrocarbons sector in particular (mainly environmental problems
and with the local community).
Peru will
need 5G telecommunications network technology and Huawei will be a candidate.
Chinese investment should be attracted to manufacturing, but that depends on
Peru. It should be added that most of the Chinese investment is made by state
companies.
4.
Political and diplomatic relationship. -
As said in
1874, Peru established relations with the then Qing Empire, the first with a
country in Latin America. After the establishment of the People's Republic of
China in 1949, Peru was the third country in Latin America to establish
diplomatic relations with the new China, in 1971.
Since then
the political relationship has advanced a lot. This was driven by the growing
economic and commercial relationship from 1990 onwards. Thus, in 2009 a Free
Trade Agreement was signed with that country, which enters into effect in 2010
(and at the moment a modernization, an adaptation to the new times, is being
negotiated).
In 2013
Peru and China sign a comprehensive strategic partnership[6],
and in 2019 Peru joins the Chinese initiative of the Belt and Road[7].
5. Peru
and Chinese vaccines. -
The
COVID-19 pandemic affects the whole world, and until a country vaccinates the
majority of its population, it will not be safe, and economic activities will
not be able to start 100%.
For various
reasons, which is not the case to analyze at this time[8],
Peru has been one of the countries most affected in the world by the pandemic.
We became the country with the highest number of deaths per million
inhabitants, now we are the 15th country, and the second in Latin America after
Mexico (see table below), although if we include the real number of deaths we
would continue to be the first in the world.
Coronavirus (COVID-1)) Deaths in the world
Source: https://www.realclearpolitics.com/coronavirus/?fbclid=IwAR0ZgG-ghP_Xp9rXMPN07jiPIisIr_dggoLyDaUSYg1k27aqqMS3YTt8n0w 21 de febrero 3pm.
Not only
that, Peru´s economy has been practically the most affected in the world in
2020. The Peruvian economy fell almost 12% that year[9].
Another major reason to urgently get vaccines for Peru.
So far,
only one million Chinese vaccines have arrived in Peru, from the Sinopharm
company, and there is a contract for 37 million more to arrive in the course of
the year (of a total of 38 million that was agreed with that country). See Table below.
Source: https://www.facebook.com/CancilleriaPeru/photos/a.771856589562239/3720650081349527/
And Health
Minister Oscar Ugarte declared on Saturday, February 20, that at the beginning
of March another two million Chinese vaccines would arrive, from Sinopharm, and
probably a million vaccines from Pfizer[10].
Then, also
in the subject of vaccines China is increasingly important, in fact, it is the
only country from which we have received vaccines, and which has assured
vaccines for half of the Peruvian population, at a time when most developing
countries in the world do not have secured vaccines.
6.
Conclusions. -
The
relationship with China is increasingly important in various aspects. On the
subject of trade, it is our largest partner (28% of the total), on that of
investment it is likely to be soon the most important (and already a quarter of
all foreign direct investment comes from China), on the political and
diplomatic side there is a very close relationship and of the highest level,
and in that of vaccines it is our greatest source and the only one secured so
far.
There is a
very old relationship with China, and the immigration of citizens of that
country to Peru, the oldest in South America, has made Peru the seat of the
largest community of that country in Latin America. And China is the fastest
growing economy, and will be the world's largest economy by the end of this
decade[11].
Due to all
of the above, we need to carefully manage our relationship with that country,
and try to get more out of it, something that still needs to be done, and the
latter also requires knowing more about this country.
February 21, 2021
[1] CEAS, Centre for Asian Studies, San
Marcos National University, Lima, Peru
[2] El Comercio newspaper, page
4, sunday 21, february 2021.
[3] For a detailed analysis see: https://www.slideshare.net/carlosalbertoaquinorodriguez/relaciones-de-peru-con-china-inmigracion-china-y-la-ifr
[5] See the Conference of CEAS in
january of this year about this theme: https://www.facebook.com/CentroDeEstudiosAsiaticos/videos/263108838490448
[8] For a detailed analysis see: https://asiapacifico-carlosaquino.blogspot.com/2020/07/peru-y-latinoamerica-frente-la-pandemia.html
[10] El Comercio newspaper, page
13, sunday 21 february, 2021.
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