China's Growing Influence: Economic pressure on Latin America

As China expands its economic and political influence globally, Latin American countries find themselves navigating a complex web of pressures and challenges

by Sededin Dedovic
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China's Growing Influence: Economic pressure on Latin America
© Feng Li / Getty Images

For Guatemalan exporters, this news was shocking: as reported by local media, China has banned the import of coffee from Guatemala, as well as other goods from the country, reports DW. There was no official statement about it, but there were speculations from the Guatemalan President - Bernardo Arevalo suggested that it could be related to his country's relations with Taiwan.

"We will take care of it," Arevalo added. Guatemala, along with Paraguay, is the only country in Latin America maintaining diplomatic ties with Taiwan. Beijing regards Taiwan as part of China. In recent years, Honduras and Nicaragua have switched sides, distancing themselves from Taiwan and turning towards China.

Numerous minor conflicts

The blockade of Guatemalan coffee is just one of many (minor) conflicts casting a shadow over China's course in Latin America. China has long been pushing for stronger cooperation, growth, and expansion in that part of the world.

However, these conflicts are of different natures, says Vladimir Rouvinski from Universidad Icesi (Colombia): "In this case, it is clearly a means of pressure that China is now using. Not so much against Guatemala, but primarily against Taiwan." In Costa Rica, the government forced a manager of the state energy company ICE to leave the company because about 70 senior officials had attended a party organized by the Chinese technology giant Huawei.

President Rodrigo Chaves Robles of Costa Rica speaks to members of the press after meeting with U.S. President Joe Biden in the © Win McNamee / Getty Images

Unions were outraged, and ICE President Marco Acuna appealed for more sensitivity on these issues, particularly in the context of "procurement processes and some other legal disputes" that were ongoing alongside the party.

The behavior of those employees "can damage the institution's image and our reputation," he added.

Message sent to China

Relations between Costa Rica and Huawei have been tense since President Rodrigo Chaves made adherence to the Budapest Convention on Cybercrime a standard, or precondition for economic engagement in Costa Rica – a document that China has not signed.

The head of Huawei for Latin America criticized Costa Rica's move in an interview, calling it "unprofessional." "It is a message sent to Beijing, a message that even China must adhere to rules," says Vladimir Rouvinski. The Budapest Convention is the first international treaty on crimes committed via the internet.

Its focus includes issues such as copyright infringement, computer-related fraud, and violations of rules related to online security. There are other examples of economic conflicts between China and Latin American countries.

Among them is a dispute over cheap iron imports from China, which puts significant pressure on Latin American producers. In Brazil, fashion boutiques fear for their existence due to the import of cheap textile products from the Far East.

Debates also revolve around allegations that Chinese firms are harming the environment with their production.

Tariffs against imports from China

Brazil is defending itself against cheap imports from China by imposing a 2% tax.

This tax applies to all orders of goods valued at less than $50 ordered online. According to Brazilian media reports, the Chinese online giant AliExpress was "surprised" by this move. The tax will primarily affect the poorest people and could discourage foreign investments in the country, the Chinese company warned.

There is considerable anger in the textile sector toward Chinese suppliers because conglomerates like Shein can produce goods under very different conditions compared to small Brazilian producers, squeezing thousands of local businesses out of the market.

There is a growing sense in the local community that China's on-the-ground strategy is destroying local trade structures rather than benefiting them.

Challenges and risks

"In recent times, the challenges and risks associated with China's rise and its position as a dominant player in numerous economic and technological areas in Latin America have become increasingly clear," says Latin America expert Christian Hauser from Graubünden University in Switzerland.

In many Latin American societies, there is a growing perception that economic ties with China primarily benefit Beijing, Hauser notes. Therefore, criticism of China's trade strategy in the region could become louder in the future.

Furthermore, the geopolitical component must not be overlooked: "Latin American countries are increasingly exposed to tensions arising from the geopolitical rivalry between the US and China," Hauser points out. "In this context, the current tensions between a few Central American countries, such as Guatemala and Costa Rica, and China could be just the beginning of future relations marked by numerous conflicts." At least for now, there appear to be no problems in relations between China and Nicaragua.

The authoritarian government there has banned numerous non-governmental organizations, including many environmental protection associations. Media critical of the Nicaraguan government report that Chinese companies received 13 licenses for mining projects in the country in just six months. Source: DW

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