Are China and the United States Competing for Influence in the Western Hemisphere?

With Chinese Foreign Minister Wang Yi now in Latin America for a nine-day visit to four countries, the White House has just recently announced that Vice President Joe Biden will travel to Brazil for the World Cup this summer. If previous patterns hold, the Vice President will also visit one or two additional countries, as well, expanding his role as President Obama’s informal envoy for regional issues. Although the World Cup is an appropriate reason for travel, such a high level visit to Brazil in the run up to Brazilian elections in October is in reality the continuation of a year-long effort by the United States to restore relations with Latin America’s largest economy.

Relations have been complicated since revelations by Edward Snowden of US spying on Brazil’s President Dilma Rousseff, which led to the cancellation of a planned State Visit to Washington last autumn by the Brazilian leader and a parade of senior-level US officials traveling to Brazil including the Secretaries of State, Treasury, and Agriculture, among others, and Biden’s own visit to Brazil one year ago. Undoubtedly, the Obama Administration hopes that the Vice President’s pending visit will be the capstone of this effort that will lay the groundwork for a re-launch of the bilateral relationship, most likely after the elections.

It is a significant and worthy effort, independent of anything that China may be doing and, coupled with the Vice President’s recent travel to Chile for the inauguration of the new president and his high-profile role with Mexico and other regional partners, shows the Obama Administration’s interest in preserving US influence and finding new ways to engage the region.

At the same time, there can be little argument that US leadership in the region is no longer unchallenged, if it ever was. Regional leaders are taking an increasingly active role and in some high-profile cases, such as the ongoing crisis in Venezuela and the peace negotiations in Colombia, the United States is not even at the table. This is a dramatic and historic shift, the implications of which are not yet fully understood or appreciated.

Other, non-regional actors are also increasingly active in the region, with China in the lead. Although the modern Chinese relationship with Latin America and the Caribbean is barely a decade old, nonetheless China has already risen to be the top trade partner of Brazil, Chile, and Peru, and the second largest trade partner of Argentina and Cuba. Chinese loans and economic largesse has underwritten populist political projects in Ecuador, Nicaragua, Venezuela, and various nations in the Caribbean, among others. Recent estimates put Chinese economic commitments to the region at some $15 billion in 2013, much of which has gone to Venezuela in exchange for energy supplies.

To this point, Chinese influence in the region is primarily based on economic connections, and Beijing has bent over backward to be seen as non-threatening, particularly to the United States, emphasizing economic relations while refusing to be drawn in to the region’s political arguments or ideological debates. Nonetheless, when China’s economy slows, as it is doing this year, commodities markets are affected and South America exporters get nervous. Chinese currency issues have challenged Latin American manufacturers. And China can be uncompromising in pursuing self-interest, as Argentina found to its chagrin in 2010 when China temporarily suspended import licenses for soy in response to various anti-dumping investigations Argentina was then pursuing.

As a result, at this point Chinese influence in the region is significant, because the economic leverage that Beijing has gained in both Latin America and the Caribbean has ballooned. So long as the basic outlines of the economic relationship remain constant, relations can be effectively managed. But the nature of China’s state-led economic engagement in Latin America and the Caribbean ensures that commodities exporting nations that have become dependent on China may not have the same policy levers they otherwise could use to rebalance relations. This is particularly true for countries that lack the economic and political weight of Brazil, and for those which, like Venezuela, have accepted and already spent billions of dollars in loans collateralized against future commodities sales.

China’s political presence in Latin America and the Caribbean is also growing. Last June, new President Xi Jinping traveled across the region for a week, a highly symbolic gesture, and was welcomed with open arms in Trinidad and Tobago, Costa Rica, and Mexico. Since he began in office, he has also led a strategic effort to develop closer ties with Mexico, which had been strained for several years previously. Next, he plans to travel to Brazil in July for the World Cup and a meeting of BRICS leaders; in anticipation of this visit, Chinese Foreign Minister Wang Yi is traveling to Argentina, Brazil, Cuba, and Venezuela from April 18-27, 2014. This is a significant amount of time for the Chinese Foreign Minister to be in the region, and shows the importance that Beijing places on developing regional ties.

Does this put China in competition with the United States for the hearts and minds of Latin America and the Caribbean? Not necessarily, since both governments appear to be taking steps—or not—based on their own internal calculations and priorities, and not in competition with each other or as a means to build relations at the expense of the other. Indeed, the United States has little influence with those countries where China’s leverage is highest: Argentina, Cuba, Ecuador, Venezuela, and possibly one or two others. But that doesn’t mean that Washington and Beijing will not cross each other’s path in the hemisphere. Nor does it mean that their interests are necessarily aligned. What it does mean is that Washington increasingly needs to contend for the Americas in a manner that shows the benefits of closer political and economic relations or it will fall behind. The future of the region is being written today.