The People’s Republic of China’s (PRC) “One Belt, One Road” (OBOR; 一带一路) 2018 efforts in the Americas, including the poaching of Taiwan allies, comes during a highly contentious time in U.S.-China relations and suggests that Beijing sees its current struggle with Washington extending to the region. More recent proof is the PRC’s decision to effectively back Nicolas Maduro’s regime in Venezuela while the United States, not to mention the majority of Latin American countries, has backed interim President Juan Guaidó. While the Chinese foreign ministry did not outright say that Beijing supports Maduro, a ministry spokesperson on January 29th signaled as much when he repeatedly answered questions about China’s position by stating that a special envoy of President Xi Jinping attended Maduro’s presidential inauguration on January 10th.
The implications of the struggle extending to Latin America are serious. The PRC has made extensive economic and diplomatic political inroads in Latin America. While an armed conflict between the U.S. and the PRC is extremely unlikely, Beijing’s degree of connectedness with the region would serve to its advantage; in World War Two, Germany had agents across Latin America operating out of commercial entities to supply key intelligence, including on U.S. and allied shipping and military movements.
Until early 2018, while it could reasonably be expected that OBOR would eventually extend to Latin America, how rapidly and to what extent it would was unclear. Until then, for example, the region did not show up on any official OBOR maps. The January 2018 China-Community of Latin American and Caribbean States (CELAC) summit appears to have presaged the signing of multiple OBOR bilateral cooperation agreements with a special declaration by the PRC inviting the region to join OBOR. Until that point, Panama was the only Latin American country to have signed such a document and to be featured on the OBOR website. Fast forward to February 2019, and the website now includes the profiles of fifteen Latin American countries.
It is also interesting that El Salvador and the Dominican Republic, which signed OBOR agreements with the PRC in November 2018, recently ruptured ties with Taiwan, in August and May of 2018 respectively. Panama made the switch in 2017. Before the three changes in allegiance in 2017/8, the most recent Taiwanese allies to switch recognition to the PRC were Costa Rica in 2007, Grenada in 2005, and Dominica in 2004. But while the gap between 2008 and 2016 is most likely attributed to the so-called diplomatic truce that Beijing and Taipei observed while the unification-friendly Kuomintang was in power in Taiwan, the frequency of the recent switches—including two in one region just a few months apart—compared to the slow trickle before the diplomatic truce suggests a ramping up of efforts to constrain Taiwan’s international ties and solidify the PRC’s presence in Latin America.
In the event…
Taiwan matters here because it could very likely be the factor that leads to a U.S.-China conflict. As a recent CSIS report suggests, in the event of a conflict over Taiwan that goes global the PRC “would likely use its significant commercial presence in Latin America to place and support agents and special forces to gather intelligence and disrupt U.S. deployment and sustainment activities, or even to disrupt the supply of food and other critical goods supplied by the U.S. economy from nearby partners like Mexico.” If the PRC decides to leverage its commercial foothold in Latin America in a military confrontation with the United States, what might that look like?
A good place to look are ports, which are key trade nodes that, if they are deep enough, could host naval vessels. Chinese state-owned enterprises (SOEs) have been involved in building, renovating, and operating ports in Latin America. These include the Margarita Island Port on the Atlantic side of the Panama Canal, TCP Port of Paranaguá—Brazil’s second largest port—the Posorja Deepwater Port in Ecuador, and the Santiago de Cuba Port. With the exception of the TCP Port of Paranaguá, which China Merchants controls, these ports are being upgraded by the state-owned China Communications and Construction Corporation (CCCC) and its subsidiary, China Harbour Engineering Company (CHEC). Regarding the Margarita Island Port, an ostensibly private Chinese company, Landbridge Group, acquired the port, but it is CCCC that is performing the expansion work. This is not the only project CCCC and CHEC have on the canal. In July 2018, CCCC and CHEC won a contract to build the fourth bridge across the canal. CCCC also has a record of supporting the PRC military and Beijing’s broader geostrategic interests; is the same company that supplied dredging services for the PRC’s island building efforts in the South China Sea.
Despite Beijing’s advances, Chinese commercial activities are welcomed by much of the region, and it would be unwise for the United States to attempt to block these inroads. Instead, if the United States is not comfortable with the strategic implications of Beijing’s OBOR push into Latin America and its increased success in poaching Taiwan’s regional allies, it should work constructively, in concert with private industry, to find new ways to engage with the region in addition to advancing diplomatic and security ties.
Gabriel Alvarado is a senior manager at Pointe Bello, a research and advisory firm focused on global markets. He previously worked as an analyst in the U.S. government.