The Chinese investment game, India, and Latin America

If one was to go back a little in history, Latin America funded the immense wealth of Spain and partially that of Portugal posts the first wave of colonisation, became the primary reason for the flourishing of slave trade between Africa, Europe, and Latin America, the taking away of indentured labour from India, and Java and Sumatra.

chinese investment in latin america
The deep pockets and extreme willingness that China showcases has given the country open access to most of the global south. (Photo source: WEF)

By Dr Aparaajita Pandey

Latin America and the Caribbean have a penchant for playing a greater role in geopolitics than they are usually perceived to play. If one was to go back a little in history, Latin America funded the immense wealth of Spain and partially that of Portugal posts the first wave of colonisation, became the primary reason for the flourishing of slave trade between Africa, Europe, and Latin America, the taking away of indentured labour from India, and Java and Sumatra. It later became playground for cold war politics between the US and erstwhile USSR, and since then has seen military interventions, clandestine deals between Heads of States, the advent of China in the Latin American market space, and now with the Russia – Ukraine conflict, burgeoning China, the US fighting to keep its space in the region, and new oil fields in the Caribbean the region has once again become important for dynamics for global politics. While the list of events mentioned above might seem exhaustive, it is only a fraction of significant geopolitical proceedings related to the region. It is important to also understand that while the region of Latin America and the Caribbean has been the home to or the driving force behind such critical affairs; they are usually led by external forces.

A similar pattern is being followed in the Latin American and Caribbean region at the moment and can safely be predicted to prevail for some time in the future. The region’s geographical proximity to the US has translated to the US being intrinsically intertwined in most of Latin American politics and economics much to the chagrin of most countries in the region. During the cold war, the region was able to counterbalance US influence with the presence of or at least a slight tilt towards the former USSR. In the post cold war era, the region saw a greater presence of the US and then a slight waning of interest. However, as the Chinese influence started to grow around the world it also reached Latin America and the Caribbean. China has emerged as an all-pervasive force in the past few decades; its characteristic system of governance gives China the advantage of being able to invest large sums of capital for extended periods of time with the knowledge the return on investments would not begin for a long time. China’s lack of accountability to their own citizens while problematic also aids them in making massive investments in other countries with no overt signs of returns.

The deep pockets and extreme willingness that China showcases has given the country open access to most of the global south. Africa, Central Asia, South and South- East Asia, and Latin America are all home to Chinese investments in the most vital sectors like infrastructure, mining, oil and gas, defence and security; to name a few. Combined with this, the trillion-dollar Chinese infrastructural project called the Belt and Road Initiative (BRI) has also intertwined the economies of many member nations of the BRI with that of China. However, with passing time it is being recognised and accepted that though Chinese investments are vital for the economies of the receiving countries, they are also extremely predatory in nature. Dr Pooja Bhatt an expert on maritime security and Chinese affairs has referred to the NATO’s commentary on China which quite succinctly yet harshly sums up the perception of China in the west, which is also echoed by the countries that receive Chinese investments in phrases like – “Chinese opaque strategies, intentions, and military build-up”, “malicious hybrid and cyber operations and confrontational rhetoric”. Perhaps the most telling statement about China’s approach is to “control key technological and industrial sectors, critical infrastructure, and strategic materials, and supply chains”. This ultimate aim of control and a tacit economic takeover of the natural resources of countries usually puts the investment receiving countries in a catch- 22 situation.

Latin American nations are currently in the same situation, as they are stuck between a predatory China and an overbearing US. However, a small silver lining is now being identified by the nations in the form of India. As India has begun to show enhanced interest in the region and greater economic and political engagement; India provides a potential alternative to China for Latin American nations. The Indian approach to the region has been identified as benevolent and focused on greater cooperation and collaboration with no ulterior motives. India and Latin America and the Caribbean also provide each other with opportunities for trade, cooperation at the global level, people to people connection, and South- South Cooperation. India already has made significant headway in the pharmaceutical, IT, automobile sectors. The Latin American region and India are looking at collaboration in the fields of cyber security, space exploration, environmental conservation, education, and defence and security.

It is true that a comparison between the trading figures of China and India would show that China is far ahead of India at the moment. However, this niche that India is carving for itself is not to compete with China but to build robust long- lasting relationships between the two on the foundations of trust and mutual benefit. It gives Latin American nations an alternative not just from the predatory nature of Chinese engagement but also a safer option to lean towards in the greater geopolitical dynamics of China and the US. It is also a great opportunity for India to explore further opportunities in the region and carve out a space for itself in Latin American economics and politics.

(Author is an independent political strategist and has a PhD in Latin American Politics from the Centre for Canadian, US, and Latin American Studies, Jawaharlal Nehru UniversityViews expressed are personal and do not reflect the official position or policy of Financial Express Online. Reproducing this content without permission is prohibited).

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.

Photos