Secretary of State Rex Tillerson warned Latin American governments Thursday to be wary of Chinese attempts to invest heavily in their states and make their economy dependent on Beijing. He criticized “unfair trading practices” China uses to trap smaller states.
Speaking at the University of Texas at Austin, Tillerson noted that “today, China is getting a foothold in Latin America.”
“It is using economic statecraft to pull the region into its orbit; the question is at what price,” he noted, according to Reuters. “While this trade has brought benefits, the unfair trading practices used by many Chinese have also harmed those countries’ manufacturing sectors, generating unemployment and lowering wages for workers.”
Tillerson warned against “new imperial powers” taking over the region “only to benefit their own people” and not the people of Latin America. “China’s state-led model of development is reminiscent of the past. It doesn’t have to be this hemisphere’s future.”
Tillerson made the comments before departing on a tour of the region, stopping in Mexico on Friday and then heading to Argentina, Peru, Colombia, and Jamaica. He will arrive on the heels of Chinese Foreign Minister Wang Yi, who was in Santiago, Chile, last week to promote economic cooperation between the Community of Latin American and Caribbean States (CELAC) and China.
Tillerson has warned the developing world that China has adopted “predatory” lending policies to ensnare them in long-term debt commitments with Beijing in the past. In October, Tillerson specifically identified “fledgling democracies” as China’s economy prey.
“We have watched the activities and actions of others in the region, particularly China, and the financing mechanisms it brings to many of these countries, which result in saddling them with enormous levels of debt,” he argued. “Financing is structured in a way that makes it very difficult for them to obtain future financing, and often has very subtle triggers in the financing that results in financing default, and the conversion of debt into equity.”
President Donald Trump’s recently released National Security Strategy also identified China’s economic colonialism as a threat to the developing world. “China is a strategic competitor using predatory economics to intimidate its neighbors while militarizing features in the South China Sea,” the document read.
By Friday morning, Chinese state outlet Xinhua had published a column condemning Tillerson’s remarks.
“Defaming China can not [sic] help change the bad image of the United States in Latin America or stop countries in the region from seeking cooperation elsewhere to spur economic growth,” the Xinhua piece argued. “The Trump administration needs to understand that scapegoating China for its fading charisma in the region, a cheap political stunt, would help little to restore Washington’s influence in Latin America.”
Xinhua concluded that it is Washington, not Beijing, who is “insulting the autonomy of Latin America countries” by warning that China is attempting to control their economies and exploit their resources.
“Instead of wasting time on blaming China, it might be a good idea for Washington to dial down its hostile rhetoric, review its foreign policy, and drop its backyard thinking,” the piece concludes.
Foreign Minister Wang’s visit to Latin America last week was intended to promote Chinese investment in Latin America and, specifically, to find a role for Latin America in China’s sprawling One Belt One Road (OBOR) problem. OBOR is an infrastructure and colonization project that spans from Beijing to western Europe in which China will invest billions in constructing new, advanced infrastructure in developing countries to recreate the ancient Silk Road. China claims the projects – bridges, roads, ports, and transport stations – will bring employment to the nations it enters. In the long-term, however, China will retain control of territory in these areas and have the ability to use these ports for profit.
Chinese officials have also begun to argue that any territory where the Chinese build infrastructure must be governed by communist law.
Wang reportedly claimed during his visit that Latin America must be a natural part of OBOR because Mexico “was a crucial junction on the ancient maritime Silk Road.” While UNESCO notes that the Spanish did import Asian silk through the Philippines to Mexico, the Spanish did not arrive in the Americas until 1492, far later ancient times.