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In Caribbean and Latin America, Chinese dragon wakes up
Seis Continentes / Summer 2005

By Larry Luxner

Entering the spacious office of Roberto Pinto Ferreira Abdenur, Brazil's ambassador to the United States, the first thing you notice are the knick-knacks — dozens of them.

Typical of these tchochkes is a bronze key to the City of Coral Gables, not far from a scale model of a Brazilian-made Embraer jet.

But the object Abdenur treasures most sits on a special pedestal next to his desk: it's a beautiful inlaid copper vase commemorating the launching of CBERS, the Chinese-Brazilian Earth Resources Satellite.

That souvenir is a reminder of the four years Abdenur spent as Brazil's ambassador to China — during which time he helped develop bilateral relations to the point where China now vies with Argentina for the position of Brazil's No. 2 trading partner (after the United States). Earlier this year, Abdenur accompanied Brazilian President Luis Inazio "Lula" da Silva on a state visit to Beijing.

"The growth in Brazilian exports to China, and to a lesser extent our imports from China, is remarkable," said the ambassador in an interview in Washington. "No one could be happier about Lula's recent trip to China than I. Our bilateral relationship is going beyond the exchange of products. China is beginning to make important investments in our transportation infrastructure, and we are cooperating closely on science and technology."

Indeed, Beijing's influence is increasingly seen and felt throughout the region, from São Paulo to Santo Domingo. Among other things, the Chinese are building an oceanfront hotel in Havana, a container port in Panama, and a convention center in the English-speaking nation of Guyana, along South America's northern coast.

Likes its ties with Brazil, the region's largest and most populous country, Beijing's relations with Venezuela have improved significantly under President Hugo Chávez, whose nation is Latin America's leading oil producer. So have its political and trade ties with Argentina, Chile, Mexico and Peru. In fact, the only South American government that maintains diplomatic ties with the Republic of China (Taiwan) rather than the People's Republic of China is landlocked, impoverished Paraguay — a holdover from the rabidly anti-communist Stroessner regime that was overthrown in 1989.

That leaves only five Caribbean nations with ties to Taiwan: Belize, Haiti, St. Kitts-Nevis, St. Vincent and the Dominican Republic.

"Once largely absent from the region, China has emerged in recent years to become both a potent competitive threat and an important economic partner," says Dan Erikson, director of the Caribbean program at Inter-American Dialogue, a Washington think tank.

"While Mexico and Central America worry about losing jobs and investment to China, the commodity-producing countries of South America have seized upon the opportunity to supply their goods to a hungry new market," Erikson wrote in a recent paper.

"Since former Chinese Premier Jiang Zemin's landmark visit to the region in 2001, successive delegations of Chinese and Latin American officials have crisscrossed the Pacific Ocean to exchange pleasantries, discuss security concerns, and, most significantly, sign trade and investment deals and economic cooperation pacts. In the Caribbean, China's new strategy of engagement has already reaped important dividends for a number of small, poor countries struggling to navigate troubled economic waters."

This past January, tiny Grenada became the latest island to open diplomatic relations with Beijing. Erikson says the decision was motivated by a bid for Chinese assistance to help the country recover from the destruction wrought by Hurricane Ivan last fall.

After signing a joint communiqué declaring support for the "one China" policy, Grenada received support for rebuilding and expanding its national stadium for the 2007 Cricket World Cup; the construction of 2,000 housing units; new hospital facilities; agricultural support; a $6 million grant to complete projects previously financed by Taiwan; and an additional $1 million scholarship fund.

"I cannot see that the Caribbean has any other choice but to develop a relationship with China," said Prime Minister Keith Mitchell, whose country had been an ally of Taiwan for years before jumping ship after the hurricane.

Nearby Dominica has taken a similar path. Last year, Prime Minister Roosevelt Skerrit — who was only 16 years old at the time of the 1989 Tianenmen Square massacre — received a pledge of $112 million in Chinese aid for his country over a six-year period in exchange for switching allegiances from Taipei to Beijing.

Panama may be the next country to follow suit. The Central American nation's new president, Martín Torrijos, has indicated he would like closer relations with Beijing, which may become a major investor in the Panama Canal.

According to China's Xinhua news agency, Chinese trade with the Caribbean alone last year exceeded $2 billion, a 40% jump over 2003 figures.

"This growth partially reflects China's pursuit of raw materials, such as Trinidadian oil and gas, Jamaican bauxite, and Cuban nickel," says Erikson. "Although China has recently emerged as a major presence, the country has been laying the foundation for its Caribbean relationships for years. In 1997, the Bahamas became the envy of its neighbors when recognition of China was followed by handsome trade and aid packages. In 1998, China joined the Caribbean Development Bank, taking a 6% capital stake and establishing a special $1 million trust fund for Chinese experts to provide regional assistance. China presently accounts for about 4% of Caribbean trade, but that figure is poised to rise rapidly in the near future."

In February 2005, Chinese Vice-President Zeng Qinghong led a 120-member high-level delegation to Jamaica for the first China-Caribbean Economic and Trade Cooperation Forum to promote greater integration. The Caribbean is also well-positioned for the coming boom in Chinese tourism: Antigua, the Bahamas, Barbados, Dominica, Jamaica, and St. Lucia have recently been added to China's list of approved travel destinations.

But China's biggest regional ally by far is communist Cuba.

Last November, Chinese President Hu Jintao presided over 16 trade and cooperation agreements, including a $500 million investment in the island's nickel industry, which already provides half of China's nickel imports.

With $400 million in annual bilateral trade, China is now Cuba's third-largest trading partner, behind only Venezuela and Spain.

In early September, Cuba’s Ministry of Foreign Investment and Cooperation (MINVEC) presented 41 proposals for joint ventures at the 8th China International Fair for Investment and Trade. The event was held in the port city of Xiamen, one of China’s leading special economic zones.

Cuban proposals for investment opportunities for China are in areas such as the fishing industry, footwear and garments, wood and metal furniture, medical equipment and sugarcane by-products.

Some of these projects are targeting medium-sized businesses, but others require large amounts of capital, says Anaiza Rodríguez, chief of Cuba's Investment Promotion Center. Ten such ventures are already in operation — six in Cuba and four in China — as well as three "cooperative production contracts."

The four JVs in China are in pharmaceuticals, high-tech medical equipment, genetic engineering and biotechnology. The Biotech Pharmaceutical Corp. Ltd. is currently building a modern production plant in the Beijing Development Zone, one of China's most important.

Although Cuba's trade with China exceeded $600 million in 1990, it had declined to $268 million by 1995, largely due to the drop in Cuban sugar production. Up until 1990, Beijing was buying more than a million tons of sugar a year from Havana.

In the past few years, China's imports from Cuba have expanded to include nickel, biotech products, fresh and processed citrus products, steel, coal and tobacco.

Yang Shidi, economic and trade adviser at the Chinese Embassy in Havana, told the Cuban magazine Negocios that bilateral trade amounted to $254 million in the first half of 2004, representing a 28% jump over the year-ago period.

In addition, trade between the two countries is more balanced than in the past, with China exporting $139 million worth of goods to Cuba and importing $115 million.

Of the total trade balance in 2003, Chinese exports to Cuba stood at $236 million and Cuba’s exports to China at $121 million, said Shidi, who added that Cuba is one of his country’s top trading partners in Latin America.

Cuban products imported by the Chinese include tobacco, biorat (a biological rat poison), interferon (a drug that stimulates the immune system), high-tech medical equipment, vaccines and seafood. Among Cuba’s most significant imports from China were a shipment of more than a million TV sets, the machinery for manufacturing bicycles, and telephone terminals to upgrade Cuba's antiquated telecom system.

Since the late 1980s, China has revived cooperation with Cuba by granting soft government loans and donations, mainly for education and agriculture.

Cuba and China established diplomatic ties on Sept. 28, 1960, but bilateral relations have been chilly at times, depending on each nation's position within the former socialist bloc.

Analysts said the 2001 visit to Havana by then-Chinese president Jiang Zemin and Fidel Castro’s 2003 trip to Beijing confirmed that ties are now based on a footing of mutually advantageous trade interests and shared political values.

But that's not necessarily good news for the United States.

Gen. Bantz Craddock, head of the Miami-based U.S. Southern Command, recently told a Congressional panel that "an increasing presence of the People's Republic of China in the region is an emerging dynamic that must not be ignored."

Chinese defense officials made 20 visits to Latin America and the Caribbean. In 2004, China won observer status in the Organization of American States, and it hopes the Inter-American Development Bank will soon follow suit.

"China, mindful of Washington's anxieties, is taking measures to ensure that its increasing engagement is not seen as a challenge to U.S. interests. In the short term, China poses the most serious threat to Taiwan's tenuous grasp on its diminishing allies in the Caribbean and Central America," said Craddock. "Still, China's growing influence may compel U.S. policymakers to pay greater attention to Caribbean leaders when they complain about neglect from Washington. Ironically, it is China's diplomatic success that may ultimately place the Caribbean back on the U.S. radar screen as an important strategic concern."

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