During the first week of June 2018, I had the opportunity to give a talk at the Fernando Henrique Cardoso Foundation in São Paulo, Brazil. During the trip, a Brazilian reporter asked me about former U.S. Secretary of State Rex Tillerson’s assertion, made during his February 2018 address at the University of Texas at Austin, that the United States is a better partner for Latin America over the long-term than the People’s Republic of China (PRC).

Secretary Tillerson’s remarks about Chinese engagement in Latin America and the Caribbean have come up numerous times in my interactions with colleagues. They are commonly (and in my opinion incorrectly) misunderstood as an attempt by the U.S. to assert a new version of the Monroe doctrine against the activities of extra-hemispheric actors in the region.

Yet the more I reflected on the question, the more I realized that it is also at the heart of an extremely important set of choices (explicitly or otherwise) not only by Latin Americans, but by political and business leaders and people across the globe. The conclusions they reach will profoundly shape the strategic position of the United States and the future of the Western world.

In contrast to the Cold War struggle between the U.S. and the Soviet Union, the PRC does not explicitly seek to impose a particular model of governance or economic organization on the world. Yet that does not mean that China’s engagement is benign or without significant adverse consequences. With self-interest that is understandable but stunning in its global implications, the PRC is seeking to leverage its growing economic weight and capabilities, through a combination of statecraft, trade, loans, investment, and other forms of engagement, to structure a world order in which global commercial flows, political relationships, and institutions support expanding China’s wealth and power.

What is worrisome is how the PRC achieves and maintains that wealth and power within the increasingly interdependent global environment.

China’s ambitions and implications for the global order

There is nothing wrong, per se, about China’s aspirations for prosperity and security, as expressed by President Xi’s “dream” for the rejuvenation of the great Chinese Nation, or his goal for the PRC to be a powerful developed country by the 100th anniversary of Chinese Communist rule in 2049. What is worrisome is how the PRC achieves and maintains that wealth and power within the increasingly interdependent global environment and what those activities and the position of Beijing means for the liberal world order, political and economic conditions, and rights and liberties of the rest of the world.

In the 20th century, the world’s would-be conquerors from Hitler, Mussolini to Stalin made no secret of who would rule, and who would be subjugated.

The new world order that the PRC’s rulers are constructing with frightening rapidity and success is deceptively dangerous because economic and political subjugation of the rest of the world is not their explicit goal, but simply an unavoidable consequence, that they insist on denying, of their ascension to the top.

Further complicating matters, because the U.S. and the West spent the last century at the political and economic apex of that global pyramid, the rest of the world has failed instinctively concern itself over negative implications of the shift. With persistent underdevelopment, injustice and inequality (as well as legitimate gripes about U.S. hegemony), it is understandable if less wealthy and powerful states are slow to bemoan the dethroning of the U.S. and worry about the future of the universal rights and principles that it has ostensibly stood for—particularly as its current leadership seems to be behaving so badly.

Is the United States up to the task?

To date, the U.S. has not made a good case even for the existence of the emerging struggle between the global order that China is building and the Western system whose future at stake, let alone defending the Western order. Specifically, the PRC is arguably employing the very infrastructure and institutions of the global order, including logistical systems, financial and information management, and laws and governance structure, to advance its strategic objectives, to expand its growing economic and financial might and transform that infrastructure and system of governance to its benefit.

Because the PRC is working through the existing system precisely as it seeks to transform it, it has strong incentives to conceal the conflict between the goals it is pursuing for itself, and the not always positive implications for the rest of the world should it achieve them. As a result, from the outset, the U.S. has found itself blocked in defining the struggle as one of competing sides, values, and objectives. U.S. efforts so far symbolically, if tentatively, as in its new National Security Strategy, have seemed annoyingly conflictual and resentful over the loss of its previous privileged position, rather than positively engaged. From the perspective of Latin America and other parts of the world, China’s respectful and reassuring diplomacy of “win win” engagement, in the context of the U.S. imposition of trade sanctions on partner nations, the withdraw from the Trans-Pacific Partnership and the renegotiation of NAFTA, and derogatory references to lesser-developed countries, have not helped the U.S. make its case for a civilizational struggle in which it is on the side of the light.

Beyond such perceptual issues, the definition of the struggle between a “Western” and “Chinese” world order is additionally complicated by the fact that the meaning of that order is hard to pin down, from the perspective of the “West,” as well as of China. On one hand, the countries of the West have often been less-than-perfect representatives of the values of that order. On the other, the PRC persistently maintains that it is not trying to impose any particular system on the world, even if its actions inescapably, if inadvertently, have that effect.

China’s few concrete encouragements for the rest of the world is for them to adequately plug into a system of commerce, such as the One Belt One Road initiative, that facilitates Chinese access to the rest of the world’s foodstuffs, factor inputs, and markets.

In The Spotlight

In contrast to the big philosophical debates of the Cold War that pitted the theories of Karl Marx against Adam Smith, the debate between a Western versus China-Centric future world system is competition between something that has never truly been (where all have a meaningful voice and vote in choosing their government, and all have equal rights under the law), versus one that its proponent refuses to define (the “win-win” utopia of the Chinese dream, where it is not clear who does the winning).

Despite such difficulties, as heads of state and business leaders continue to make choices regarding participation in China’s economic and political project, it is still possible—and vitally important—to examine the type of world implied by PRC growth and development and its current patterns of behavior toward political and business partners, especially in against the backdrop of the admittedly imperfect Western world that such growth is arguably replacing.

Chinese official scholars and government representatives would probably take issue with the term “China-dominated world order,” arguing that the PRC neither seeks dominance, nor to impose a world order. Yet if the PRC economy slows to grow at a rate of merely 5.5% per year between now and 2049, while the world continues to grow at 3%, the aggregate size of the PRC economy will increase more than five-fold, far surpassing the U.S. economy in aggregate size, and the percent of the global economy represented by China will expand from 15% today to more than 31 percent. That would return China’s mean weight in the global economy to where it was much of the past 2,000 years—albeit now in a much more highly interconnected world.

China’s expansion will inevitably bring corresponding increases in Chinese ownership of global financial assets and economic enterprises, as well as greatly expanded military capabilities, and political influence. Given how China’s growth over the past two decades has already transformed the global economy, its institutions, and its political and military dynamics, continued expansion over the next three decades will transform the world’s political and economic institutions.

Where the PRC loans money and invests, it employs a substantial portion of its own companies and workers. Where it is economically and politically powerful, such as Southeast Asia, it dominates and buys influence within governments. Where it is militarily powerful, such as in the South and East China seas, it deploys its military, builds islands, and otherwise acts as it wishes.

In other words, if the PRC continues to grow and follow present patterns of behavior, in 2049 it will politically and economically “dominate” the globe, even if it does not seek domination per se. The financial and production relationships of the rest of the world, and its political reality, will inescapably reflect its integration (willingly or otherwise) into that PRC-dominated reality.

The divergence

There are five ways in which a China-centric will arguably differ from a Western-centric one:

First, the location of professional and economic opportunities will be increasingly skewed toward the PRC. Sustained trade surpluses with the PRC are gradually transferring capital into the hands of Chinese institutions, while Chinese companies are controlling increasing portions of economic activity across a broad range of sectors, reaping the associated returns to capital, and making decisions about whom to hire, which companies to use in their supply chains, and where to locate management, design and high-value added production.

While Western companies, during their years of dominance, also traditionally located many of the most lucrative positions and high-value added operations in their home countries, Chinese companies have been even more ruthlessly nationalistic in doing so, reserving the most meaningful management authority and executive opportunities for themselves. In the same way that academic Immanuel Wallerstein criticized the Western-dominated capitalist system, the continued expansion of Chinese ownership in Latin America and elsewhere will likely deepen the “peripheral” status of those countries, generating wealth for the Chinese core, while the limited number of managerial and technical jobs in the region will principally serve the flow of value to the Chinese center.

As Chinese companies and banks become increasingly important investors and employers in the national economy, local governments will also arguably lose bargaining leverage to advocate for the rights of workers and communities over employers. Where governments attempt to confront Chinese practices, as the Argentine government attempted to do with anti-dumping penalties prior to 2010 (prompting the Chinese to cut off $2 billion/year in purchases of Argentine soy oil), the Chinese response to the local government will probably be far more face saving, yet far more heavy-handed.

Second, freedom of expression regarding maters of interest to Chinese companies and the Chinese government will likely suffer in a China-dominated world order. The U.S. and Western nations, on principle, have defended and even encouraged open expression by governments, academics and others, even when that expression is highly critical of the United States. Chinese culture, in contrast, emphasizes the public appearance of harmony, and the reservation of disputes and the application of pressure for private settings. Latin American governments courting trade with and loans and investment from China are obliged to publicly affirm adherence to the “one China” policy, and arguably feel implicit pressure to avoid provocative actions, such as official meetings with Tibet’s Dalai Lama, or criticizing China’s human rights practices or aggression in the South China Sea. Similarly, universities, think tanks and companies with business interests in China may tone down language critical of the PRC in reports, or inviting speakers particularly objectionable to the PRC to public events. The expansion of China’s political and economic weight will only increase such pressures and make open discourse regarding concerns about the PRC difficult and dangerous.

Third, a China-dominated world order will expand corruption in the business dealings of nations in the periphery, even while public corruption in the PRC itself comes under ever stricter control. The PRC strategic interest in maintaining in power anti-U.S. leaders (who are, by definition, more dependent on Chinese resources), will promote corruption; Chinese loans and investment often occur behind closed doors and help to make those leaders independent of democratic institutions and public accountability. Even in states with non-populist regimes, the PRC preference for government-to-government deals to secure its economic objectives tends to nurture corruption by circumventing established procurement processes and associated transparency. While the PRC does not officially condone corruption, such practices will likely expand in the states of the periphery as PRC power grows, since weak institutions and the ability to secure objectives by giving foreign leaders personal benefits serves the Chinese state. At the same time, any moral concerns China may have over propagating corruption through such practices are outweighed by its own emphases on allowing foreigners to govern themselves as they see fit.

A China-dominated order will likely feature more authoritarian governments.

Fourth, a China-dominated order will likely feature more authoritarian governments. Although the U.S. has sometimes aligned with undemocratic regimes in the Americas, its official policy, and the expectation of the U.S. public, is to support democracy. By contrast, although China officially supports democracy, it has funded and tacitly supported undemocratic regimes (including blessing May 2018 sham elections in Venezuela), both because they strategically benefit China in advancing a “multipolar” world order as counterweights to U.S. influence and because those regimes confer particular economic benefits on the PRC. Well-institutionalized democratic regimes present a threat to Chinese achievement of its objectives, including democratic alternation in power that may put agreements between the PRC and previous governments at risk. This is what happened with agreements reached between the Indo-Guyanese governments of Bharat Jagdeo and Donald Ramotar that were put at risk when their party lost the presidency in Guyana in 2015. Often times, transparent democratic governance means costly and unpredictable public bidding processes for public works contracts with the possibility that mobilized interest groups may block important projects in sectors such as mining, construction, or even retail.

Finally, a China-dominated world order will arguably weaken the regime of international law and meaningful authority by smaller states in international institutions. While the United States has, at times, refused to sign onto international agreements that it believed could conflict with its sovereign interests, the PRC arguably has an even stronger tendency to ignore the application of international law and multilateral bodies in areas where it is strong and the associated rulings conflict with its interests. China’s rejection of international court rulings and the United Nations Convention on the Law of the Sea, with respect to its territorial claims in the East China Sea, is but one example.

Decisions by multilateral judicial or arbitration bodies arguably represent a risk to Chinese interests. As a result, as China gains in influence and prestige, expect the Chinese government to seek to exert influence those bodies, by working through multilateral organizations and avoid the mandatory jurisdiction of uncontrollable multilateral or external bodies.

It is not clear how effective the United States will be in making the case for itself as a responsible partner and the value for Latin America of values such as transparency, rule of law, free speech, and democracy. Yet the choices that Latin American leaders and citizens make will define the future of the region and the role of the United States. Although the U.S. is only beginning to recognize that it is engaged in a fundamental global competition with China (while the PRC denies that such a competition exists) the battle lines have already been drawn.

This articles was published on Global Americans.
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Evan Ellis
About The Author Evan Ellis [Full Bio]
Dr. R. Evan Ellis is Research Professor with the U.S. Army War College Strategic Studies Institute and author of over 80 works on Latin American security issues, including his new book, "China on the Ground in Latin America.”




China on the Ground in Latin America


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