International trade expert Leonardo Gonzalez Dellan, warns that “Latin America wants trade with China, welcomes trade with China, needs trade with China but it does not want to be bought by China.” Since 2000 trade between China and Latin America has multiplied 22 times in volume.
The Belt Road Initiative, a development strategy focusing on Eurasian countries, the land-based Silk Road Economic Belt (SREB) and the ocean-going Maritime Silk Road (MSR), has now extended to fully embrace Latin America. This includes the 19,000km trans-Pacific fibre-optic internet cable from China to Chile. Between 2015 and 2019, China planned to put $250 billion in direct investment into the region, and to reach $500 billion in trade. Before the current trade wars, it was well on the way.
Between 2010 and 2014 it invested $104 billion. China is the biggest trading partner of Argentina, Brazil, Chile, and Peru. Africa has a longer experience of the impact of Chinese investment and trade. The influential Zimbabwean politician and writer, Arthur Mutambara, has long accepted the need for Chinese investment but also warned of what he calls re-globalisation. He advocates four specific African responses. Dellan agrees, and has adapted them to the Latin American case:
- We must be proactive as opposed to reactive. Latin America needs its own grand strategy for the development of its economic future and China can certainly be a partner in that but cannot be allowed to dictate that future because of the size of its market.
- We must not engage China as individual countries. Latin American states need to work together to get the best deals from China. Individually, we cannot compete with its economic and growing political strength but together we can come to better trade deals.
- Latin America needs to get ahead of Web 3.0 and lead in the new era this will usher in. In less developed areas of Latin America the opportunity to leap frog generations of technology is there for the taking.
- Latin America has to embrace technology. The world may want us to stay a food basket but that is not enough for our future. To really compete we need manufacturing, interconnected supply chains and our own capacity across all sectors.
Leonardo Gonzalez Dellan is a free trade advocate and entrepreneur.