Toward a Strategy for Responding to the PRC in Latin America

Originally publishes by Global Americans.

As the People’s Republic of China (PRC) expands its engagement in Latin America and the Caribbean, a common refrain in Washington is to lament the lack of an effective U.S. strategy in response, as well as the lack of U.S. government attention to the region in general. Having served on the Policy Planning Staff of the U.S. State Department (S/P), as well as engaging with U.S. government colleagues over the years, in an academic capacity, I can attest that many talented people in both republican and democratic administrations have given serious thought to the challenge. The problem is not the lack of strategies, but the adequacy of the concepts behind them, their resourcing and coordination, and ensuring that the chosen instruments and messages are sufficient for the challenge.

Sources of Concern from PRC Advance in Latin America

Many governments in the region, businesspersons, and others view engagement with the PRC as an opportunity. Most are aware of the sometimes predatory and unreliable nature of Chinese companies but hope they can manage the risks to secure the benefits. Many do not embrace PRC authoritarian practices but prefer not to think about how expanding PRC economic leverage in their own countries may have adverse consequences for their governments’ economic or political options in the future. By associating U.S. expressions of concern with historical U.S. attempts to exclude other powers from the region, they eliminate the imperative to seriously evaluate such concerns and free themselves to take the Chinese money.

Despite the predominant orientation in the region to downplay the risks of expanding engagement with the PRC, such engagement not only fundamentally threatens not only U.S. interests but those in the region, including questions about who benefits from the region’s resources and economic activities, creeping limitations to the region’s freedom to openly question PRC behaviors, and indirectly, the health of democratic governance and rule of law in the region. For the U.S., the advance of the PRC is not just a matter of “influence,” but about its ability to work with the region, and the economic and political health of the region of the world with which the U.S. is most intimately tied by bonds of geography, commerce, and family.

The trajectory and impact of the PRC’s advance in the region are the function of both slowly unfolding, largely economically driven dynamics, as well as potentially significant international events which could dramatically change the dynamics of PRC engagement in the region and global affairs in general.

Setting aside, for the moment, the question of events that change the direction of world affairs, the trajectory of the PRC’s challenge is principally driven by economics. The advance of PRC-based companies in the region’s value chains, supported by the PRC government‘s political and institutional maneuverings, acquiescence in or support to technology theft, and other improper sources of advantage, contributes to a growing PRC presence as owners of Latin American industries, realizers of the associated value-added gains, and sources of influence. Compounding such effects, Chinese dominance in strategic technology sectors such as telecommunications, artificial intelligence, cloud computing, the Internet of Things (IoT), surveillance systems, and “smart cities,” gives it both commercial intelligence and leverage to further its interest in other areas.

Over the long term, China’s expanding role as a key purchaser of the region’s goods, investor, employer, and loan provider, helps it to intimidate into silence businesspersons and politicians who would dare speak out about its repression of its own people, including the internment of Uighur Muslims in Xinjian, the repression of protests in Hong Kong, its militarization of contested reefs and shoals in the South and East China Sea, and the use of its Coast Guard and Maritime Militia to intimidate its neighbors in areas where it asserts its sovereignty.

As a compliment, the PRC has also undermined Latin American democracy through its loans, commodity purchases, and security and digital architectures support populist-authoritarian regimes, including Venezuela, Ecuador under Rafael Correa, Bolivia under Evo Morales, and leftist Peronist governments in Argentina, leading indirectly to a region that is less democratic, more corrupt, and with fewer guarantees for the rights of the most vulnerable where they clash with those of the PRC.

Potential Game Changers

Although China’s advance in Latin America and elsewhere poses multiple sources of concern, that trajectory could change, for both better or worse, as a function of any number of worrisome global events currently on the horizon. The most significant of these include a global economic crisis, a nuclear war, and a PRC military invasion of Taiwan.

A global economic meltdown is only a possibility, not a probability. Such a crisis could arise from the interaction between the suppression of economic activity from China’s zero-COVID policy, cascading financial default from its inability to manage its significant debt overhang in the context of economic weakness, the interaction between an economic crisis in the PRC and fragile post-COVID-19 economic and financial systems in the West, the inflationary impact of Russia’s Ukraine invasion obliging Central Banks to impose recession-inducing interest rate hikes, and a possible collapse of the economic and political stability of the Global South, including significant food shortages as the current lack of fertilizer causes an extended wave of poor harvests across the developing world. In the context of a global economic shock, such conditions could lead to widespread political mobilization, violence, and regime collapse. On the other hand, if the Chinese economy is not also paralyzed by such crises, it could also create opportunities for the PRC to expand its influence by assisting, consistent with its new “Global Development Initiative” (GDI), to the extent that it was not itself paralyzed by economic and political crisis.

With respect to nuclear war. As Russia’s Vladimir Putin becomes increasingly desperate and politically vulnerable over his failed Ukraine invasion, his employment of tactical nuclear weapons, leading to nuclear escalation, is no longer unthinkable. Such an event would not only be transformative for the security environment but would likely ensure the global economy plunged into the type of chaos noted previously as well.

Finally, a conflict of global proportions arising from a PRC invasion of Taiwan is a realistic possibility in the next five years. President Xi has telegraphed his intention to forcibly incorporate Taiwan into the PRC prior to the end of his unprecedented third term in 2027. If the PRC incorporated Taiwan through threatened or actual use of force and the West did not come to Taiwan’s aid, such a change would transform the calculations of all of the PRC’s neighbors in Asia regarding its power. At the same time, if such a gambit led to a war involving the U.S. and other Western powers in Asia, it would likely be fought in all major theaters. The People’s Liberation Army (PLA) might, for example, seek to deploy forces into the Western Hemisphere to disrupt U.S. deployment and sustainment flows, create diversionary crises, or put the U.S. homeland at risk. To do so, it would leverage the relationships and familiarity with the region’s operating environment built up through years of low-level military diplomacy with the region, institutional visits, warship deployments, and operations by Chinese commercial logistics and other companies in the region.

Components of U.S. Strategy to respond to the PRC in Latin America

Any U.S. strategy to effectively respond to the advance of the PRC in Latin America must be integrated across government, as well as done in coordination with like-minded U.S. democratic partners. It should include creative and well-resourced solutions in at least five core areas: 

• Holding ground through Western companies committed to transparency and market principles
• Preventing global domination by PRC-based entities in strategic technologies
• Effectively competing in the information and ideological space
• Preventing PRC domination and exploitation of multilateral institutions of the global liberal order
• Addressing multidimensional PRC challenges in the security domain

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