Forces in Latin America seeking national independence and socialism are increasingly interacting with China. Illustrating this was a recent speech by Dilma Rousseff, Brazil’s former president, organised by Brazil’s School of Latin American and Global Studies. Rousseff spoke about China’s economic development and its influence in Latin America – and criticised the harmful role of Brazil and Latin America’s submission to the United States. Key parts of the speech are below. The full Portuguese version of may be found here.
China and Latin America
Since the 2008 financial crisis, growing friction between China and the United States has become apparent. During the Obama administration, and even more so during the Trump administration, in an openly declared way, frictions increased. The Covid-19 pandemic accelerated these trends.
In this context, China has been using a more sophisticated management of so-called “soft power”. During the 73rd General Assembly of the World Health Organization (WHO) in May 2020, China proposed making Covid-19 vaccines a global public good. At the same time, it allocated two billion dollars in two years to the WHO, an institution boycotted by the United States under Trump.
The Trump government demonstrated a fantastic incompetence in dealing with the pandemic. China, in turn, had one of the best handlings of this exceptional crisis, with a low number of deaths and strict control of the infection rate.
The former US president’s decision to withdraw his country from the WHO contrasted with China’s more collaborative and proactive stance in the face of the pandemic.
I believe Covid-19 marks a turning point in the history of international relations, particularly in the conflictual relationship between the United States and China.
China’s development and its insertion in the international system
China has performed impressively since 1978, when Deng Xiaoping took over the leadership of the Communist Party of China (CPC), the Central Military Commission and the Chinese government, adopting a policy of reform and opening up. This is a strategic opportunity phase that spans more than three decades, and which was followed, with some modifications, by the following leaders and heads of the Chinese government, such as Jiang Zemin, Hu Jintao, Wen Jiabao and now also, somehow, expanded by Xi Jinping.
This process, which developed with the primacy and dominance of the CPC, aimed to accelerate four modernizations: agriculture; industry; defence; and science and technology. From 1979 to 2013, the Chinese economy grew at an average rate of 9.8% and exceeded 10% in two periods: from 1991 to 2001 and from 2001 to 2013. Chinese growth was not even affected by the Asian financial crisis of 1997, nor by the 2008 global financial crisis. What has happened since 2009 has been a strong injection of resources and stimulus by the Chinese government. In 2010, the Chinese economy grew 10.4%, while the developed world had very low or even negative growth rates…
In 2010, China replaced Japan as the world’s second largest economy. According to the International Monetary Fund, in 2014, the Chinese economy reached a new milestone by becoming the largest economy in the world according to the GDP purchasing power parity (PPP) criterion. China’s market exchange rate nominal GDP was $10.4 trillion, which puts it at about 60% of US nominal GDP. But, in any case, it is very significant to have reached 60% in nominal terms and surpassed parity in terms of purchasing power.
China, by the way, maintains its current growth rate and good relative performance. Therefore, it is expected to surpass the US economy in nominal GDP by 2030. Even before the Covid-19 pandemic in 2019, Chinese GDP grew by the equivalent of twice the rate of US GDP. The growth may be even bigger, due to the global effects of the pandemic and the mismanagement of it by the US government during the Trump administration.
China also enjoys the status as the world’s largest exporter and is distinguished by having the world’s largest foreign reserves, being the only large economy with a major capital surplus and which, therefore, is not burdened with external debts. In recent years, Chinese growth has started to slow down and is reaching a so-called ‘new normal’, with a rate between 6% and 7%, which is attributed to the exhaustion of the model driven by exports and investments in fixed capital, especially in infrastructure. With the five-year plan, it was already seen that it was necessary to combine this growth, driven by exports and investments, with a gain from the increase, expansion and dynamism of domestic consumption. However, even considering rates between 6% and 7%, China’s growth is still much higher than that of developed economies, which will be around a peak of 3.1%.
Xi Jinping is accelerating Chinese strategies derived from the five-year plans and decisions of the government and the CPC. One of the reasons is, without a doubt, to face the pandemic. The other is the conflict between the United States and China and the threat of decoupling between China’s and the US economies.
For example, in the “Made in China 2025” plan, President Xi Jinping proposes a strong acceleration of domestic semiconductor production, which is important because given the threat of a dislocation of the Chinese economy from the US, China has to try anticipate its near self-sufficiency in local production through the aforementioned plan. At the same time, President Xi Jinping launched a proposal called “dual circulation”, combining domestic demand-driven growth with foreign trade.
The Trump administration’s policy of “containing” China, was characterized by a tariff trade war and even even more so by an attempt to block technology – for example against Huawei in relation to the 5G network or with the pursuit of TikTok. The main strategy of the United States has been to promote the decoupling of both economies, in order to try to weaken China.
China and USA
This conflict between the United States and China impacts Latin America, of course.
China has established bilateral agreements with Argentina, Brazil, Mexico and several countries in the region, making it our largest commercial buyer and our main provider of foreign direct investment.
China’s support for the strengthening and recognition of the Union of South American Nations (UNASUR) and the Community of Latin America and Caribbean States (CELAC) was also very important. Also at the last BRIC summit, during my government, there was a meeting of almost all Latin American countries with China.
With regard to the United States, which is the largest economy in the world and the greatest military power, two major changes have affected the relationship with Latin America and world geopolitics in recent decades. On the one hand, the expansion of neoliberalism. On the other, the end of the Cold War with the fall of the Berlin Wall, which transformed the United States into an almost unipolar hegemonic nation. These trend forces have acted and influenced the economic and political structure so far.
Neoliberalism changed the very dynamics of the capitalist system
Since the financialization of the economy, the search for the minimum state, the adoption of a regressive tax system and a more radical deregulation of the labour market and banking and financial activity, there has been a great concentration of income at the top of the social sphere of the pyramid, reducing economic growth. These are processes that became models for the entire international order led by the United States. Credit and finance, which should be engines of the productive economy and facilitators of economic growth, have now become a real obstacle and a barrier to growth. A barrier whose centre is unbridled financial speculation from which all wealth is sucked.
The worst symptom of this pathology is the immense inequality that is introduced in the United States and also in Western countries. This is a product of a fantastic concentration of income and wealth, the imposition of precarious work and stagnant wages, which also produced an overwhelming economic fragility with its respective serious political consequences – for example, in the emergence of a wave of the political extreme right and the creation of bubbles and speculative crises.
I want to highlight a very serious issue: how the United States interferes in some countries today. Not only the wars in Afghanistan and Iraq, which were extremely disastrous for the US economy itself, but also all the processes of the so-called “hybrid war”, especially here on our continent: with the coups in Honduras, in Paraguay, and against my government in Brazil. Also, the economic blockade against Cuba and Venezuela, which I consider a disaster. We may also note what happened in Bolivia, with the Organisation of American States (OAS) serving as an instrument for this plot.
The challenge of Latin America’s insertion in the world economy
US pressures on Latin America, and against China, have increasingly spread into new fields. An example of this is the serious case of the attack on the Chinese company Huawei and the pressure on the 5G network.
The big problem with the 5G network is that today there is no alternative from other companies, besides Huawei, to establish a network with the best characteristics. This is mainly because Huawei’s network uses 4G LTE technology and upgrades it making it cheaper. But it’s not just cheaper, it’s much more efficient and consistent.
Today, two requirements are essential. The first is to have ultra-reliable, low-latency communication, necessary for critical uses – for example in autonomous cars where there can be no latency and the network cannot go down. These are also specific cases where delays in connectivity cannot be tolerated. The other is the ability to deal with the next explosion of the so-called “internet of things” (IoT), machine-to-machine communication, with interconnected devices transferring a multitude of increasingly intense and profound data. These features will require substantially new infrastructure and therefore will be widely exploited in this and the next decade.
Forcing Latin American countries not to adopt 5G technology is preventing them from having access to an essential ultramodern infrastructure.
It’s not that the US is saying “don’t buy this, buy another one.” What they are doing is simply blocking 5G technology. Worldwide, there is widespread recognition that both the latency and data capacity of this network developed by the company Huawei is very high.
The US trade, political and technological war against China requires us to answer a series of questions crucial to our region. What is the direction of Latin America and how will it enter the Fourth Industrial and Technological Revolution? The threshold of innovation is not Uber and Airbnb – which are merely platforms. The gateway to technological and economic transformations is infrastructure, in this case, the development of the 5G network. The key is to have access to an exchange of technology that allows reaching artificial intelligence, machine-to-machine communication and the development of new applications. Therefore, the discussion in Latin America is how to access technology in this conflict.
There is a preceding prejudice underlying a certain hegemonic geopolitical gaze that demonizes China. This prejudice is based on two premises. The first was that China, especially for the American establishment, would never be a threat to the economic dominance of the US, because China was an agrarian, almost feudal country, with a very precarious economy. This was a conceivable view in 1980, when the Chinese economy represented only 5% of the size of the US economy. But it is totally insane today. The only plausible explanation for this reading is a high ideological short sightedness. This, in turn, which is based on the second assumption – that China’s growth was unsustainable. This, it was argued, was because China’s political system was not defined by the liberal ideas of the United States, but by the doctrine of the CPC – which would allegedly be an insurmountable obstacle to national development.
We can see that there was a view of the CPC as bureaucratic and decadent – the same as the Communist Party of the Soviet Union in the late 1980s and 1990s. But this did not occur, despite political contradictions and internal conflicts of the CPC – both in the pre-Mao and post-Mao periods and especially in the period of reform and opening up after 1978.
Deng Xiaoping, Jiang Zemin and Xi Jinping, were viewed [by the West] as “Chinese Khrushchevs” or “Chinese Gorbachevs”.
But China attributed to Khrushchev and Gorbachev serious mistakes that were involved in the destruction of the Soviet Union. According to China’s leaders, political reform (Glasnost) should not have been done before an economic reform that produced growth and prosperity for the people..
We have to think about how to insert ourselves in a world where these tensions will intensify.
We know that the US has a fundamental characteristic: a great scientific base development, which is not, cannot and will not, at least in the short and medium term, be the object of significant dispute. This has an an international dimension through its universities, its laboratories and its public and private innovation centres. At the same time, China is moving towards training and strengthening its educational, scientific and technological base. I think it is very important for Latin America to realize that it needs to leave purely the sphere of commodity production and seek reindustrialization with other characteristics. We must have an autonomous and independent development position. Whoever is able to have a more constructive relationship with Latin America is who we should support and with whom we should relate.
Latin America must by no means be dominated by blind subordination to the United States.
We cannot condemn ourselves to scientific, technological and innovation backwardness. We cannot condemn ourselves to undue interference. I think the Biden administration opens up some perspectives. But to date, we have no evidence of major changes in US-Latin American relations during Democratic Party governments. I hope it’s different with Biden…
When Brazil joined the BRICS, along with China, India, Russia and South Africa, we had no subordinate alignment to anyone. We followed an independent policy. What is happening today in the Latin American world is a great weakening of the bargaining power of our economies.
Brazil is subject to Bolsonaro’s designs – I hope only until the next elections.
Argentina is going through its most difficult moment, as the debt left by Macri, to satisfy the IMF, had added to it the Covid-19 crisis – putting the Argentine economy in an extremely fragile situation. Alberto Fernández is working miracles.
And Mexico… so far from God and so close to the United States….
It is not possible to continue reproducing the inferiority complex of some elites and oligarchies that have done nothing but submit to the United States in a shameful way.
In addition to non-alignment, we must have our negotiation skills; an integrated common force like the one we had in UNASUR or we can have in CELAC..
China is extremely practical. Therefore, it is not in China’s mind to interfere in the way people internally choose their social, economic, political and cultural organization…
Our place is not with the United States. Our place is independent and alongside China.