On February 1, 2018, U.S. Secretary of State Rex Tillerson spoke at the University of Texas at Austin. Several members of the CDF team attended his speech, while the world listened in on a live broadcast. Tillerson spoke on a variety of topics and policies related to the Western Hemisphere. He highlighted economic development as a key to security in Latin America and unsurprisingly, the former energy executive, pushed for increased energy development. But, it was Tillerson’s comments on Chinese development and trade that caught our attention.
Tillerson warned of China’s growing influence in the region, stating that China is using “economic statecraft to pull the continent into its orbit.” He claimed that Latin America doesn’t need a new imperial power that only seeks to benefit its own economy at the expense of countries across the Pacific. “China’s state-led model of development is reminiscent of the past,” Tillerson said, implying that the U.S.’s influence in the region is more progressive and aims to develop Latin America’s own economic capacity and democratic governance.
Perhaps the U.S. feels threatened as it follows a more isolationist foreign policy put forward by the Trump administration. In contrast, by funding major infrastructure projects, China is increasing its access to Latin America markets, while establishing trade relations with the oil rich nations of Argentina and Brazil. One of our CDF team members, Felix Clevenger, wrote on China’s relationship with Latin America, asking whether Chinese investment in Latin America and the Caribbean comes from self-interest or goodwill.
After analyzing several investment projects across the continent, Clevenger came to the conclusion that most of China’s “ODA financing are a part of a greater economic agenda, and will serve Chinese self-interest and preservation as a major power.” Tillerson’s comments on Chinese investment echos many of the criticisms of Chinese development that Clevenger, and other CDF team members have found in their research. When nations accept funding support from China, they become linked to Chinese institutions through their “financial debt and obligation to be of service to China in the future.”
With that, let’s look back to Tillerson’s high profile comments on China’s role in Latin America and see how China reacted to the Secretary of State’s criticisms.
“At what price?” Tillerson asked his audience, and China answered. China’s response was captured in Reuters article posted just a day after Tillerson’s speech in Austin. According to the article, China’s Foreign Ministry disputed Tillerson’s claims, stating that “cooperation between China and Latin America is based on common interests and mutual needs.” The Ministry focused on the fact that Chinese investment in Latin America follows “commercial rules and local laws and regulations”, countering Tillerson’s remarks on China’s adherence to human rights and fair, equal trade.
As Tillerson embarks on his multi-stop diplomatic mission in Latin America and the Caribbean in the following week, the world will be watching and reacting to his statements. Meanwhile, the CDF team will continue following China’s development investments in the region in an attempt to answer the question: what is the price of accepting Chinese development finance?