China Sells Arms and Gains Influence in America’s ‘Backyard’

A commentary by Dan Southerland
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china-latam-0727282017.jpg China's President Xi Jinping (L) chats with Cuba's President Raul Castro before a meeting of leaders of Latin American and Caribbean states in Brasilia, Brazil, July 17, 2014.

Venezuela’s national guard chief said on July 2 that that the Latin American country was “saving lives” by using riot-control gear supplied by China when confronting anti-government protests.

This public mention of China reminds us that China has also in recent years sold self-propelled artillery, armored vehicles, rocket launchers, helicopters, and fighter planes to a variety of Caribbean and Latin American nations.

As R. Evan Ellis notes in Latin America and the Asian Giants, a book published last year on Latin America’s evolving ties with China and India, Venezuela provided China with its first opportunity to sell sophisticated military systems in the region in 2005.

Within a few years, China then began selling sophisticated weapons to Bolivia and Ecuador. Bolivia had already received Chinese donations of rifles and anti-aircraft weapons.

Partly because of its oil reserves, Venezuela was once the richest country in Latin America. Today, thanks to arms purchases from China and guidance from Cuban military and intelligence advisors, it has become a well-armed military force. At the same time, due to corruption and economic and financial mismanagement, the country is impoverished. Its Cuban-backed government has become highly unpopular.

China’s early moves in Latin America more than a decade ago appeared designed to support left-leaning socialist or populist regimes, such as Venezuela, which had banded together in an eight-nation, anti-U.S. ”Bolivarian Alliance of the Americas.”

That would explain China’s early loans and arms sales to Venezuela, Bolivia, and Ecuador, all key members of the Alliance.

But in recent years China’s trade, arms sales, and influence have grown not only in these three nations but also across the continent. China has accomplished this through loans, major infrastructure projects, contacts with Latin American military officers, and arms sales to a wide range of countries.

While in earlier decades the U.S. was a major supplier of weapons to military regimes in Latin America, China now has the advantage by offering low prices for weapons with few strings attached.

The United States, however, is prohibited by law from selling weapons to a number of Latin American countries, including Venezuela.

Regarding weapons sales to Venezuela, Ellis told RFA that “China…has effectively supplanted the Russians in the past two years as the country’s major arms supplier.”

“And China has often beaten out Russian competitors in Peru and elsewhere,” says Ellis, a research professor of Latin America Studies at the Washington, D.C-based U.S. Army War College Strategic Studies Institute.

But China’s arms sales to Latin America make up only a relatively small part of its overseas weapons transfers. As an article by Allan Nixon published last August in The Diplomat makes clear, the arms sales have to be seen in the context of China’s long-term goal of achieving great-power status and influence.

A growing Chinese military presence

In recent years, Ellis says, China has regularly deployed military forces to the South American region to conduct combat exercises and humanitarian missions. While the People’s Liberation Army (PLA) has yet to establish alliances or basing agreements in the hemisphere, its 2015 white paper on Chinese defense strategy lists the protection of its global commercial interests as an important mission for the PLA.

Ellis concludes that China’s relationships with the region’s militaries  “undercuts the traditional role of the United States as the security partner of choice, and opens the door for the PLA to operate from the region’s ports, airfields, bases, or other facilities on very short notice….”

China is also financing and building ports, highways, and railroads in Latin America. Improved transportation networks will make it easier for China to import natural resources from Latin America, such as copper and iron, but also facilitate Chinese exports to Latin America.

In the end, Ellis believes that China has been “cautious in avoiding the appearance of Cold War-style military alliances in the region that would threaten the U.S. It has always led with loans and commercial projects of strategic benefit.”

Ellis says that “China’s arms sales not only benefit China’s development of its domestic arms industry and military ties of future value but, along with economic support, also help to keep anti-U.S. regimes alive.”

Ellis argues that regimes such as Venezuela, Bolivia, and Ecuador act as a “strategic distraction in the region and inhibit the achievement of a consensus in the region around U.S.-style democracy, transparency, and the rule of law.”

Not every project pans out

But not everything has worked out as planned.

A Chinese-backed transcontinental railway meant to link Brazil, on the Atlantic Coast, with Peru on the Pacific Coast triggered criticism because it failed to take environmental concerns into account. It would pass through sensitive ecosystems in the Amazon region.

A transcontinental highway through Brazil has also been plagued by bad construction work.

According to “The World Mind,” an American University website focused on relations with Latin America, the highway project, begun in 2006, was never fully completed because parts of it weren’t structurally sound. Some sections remain damaged or impassable.

In 2014, a Reuters news agency investigation found that “as many as two thirds of Chinese projects in Brazil faced lengthy delays or failed to get off the ground.”

In 2011, a Chinese company signed a contract in Brazil to build a soy processing plant valued at $2 billion. But the project’s site remained an empty field, with Brazilian companies eventually planning to do the work.

According to Reuters, “the stalled plans are an example of the difficulties facing once-promising Chinese investments in Brazil.” These difficulties, Reuters said, included Brazil’s bureaucracy, its slowing economy, and “a deep-seated mistrust of China’s hunger for land and commodities.”

In his book Ellis describes how resentment against growing Chinese communities led to violence against Chinese living in Venezuela, Suriname, Argentina, and the Dominican Republic between 2004 and mid-2013.

Some Latin Americans, including shopkeepers, perceived the increasing Chinese presence as a threat to their livelihood.

China’s long-term goals

China’s President Xi Jinping has made three trips to Latin America in his five years in power.

On his second trip in 2014 he announced a goal of making $250 billion in direct investments in Latin America and the Caribbean with the aim of eventually achieving $500 billion in two-way trade with the region.

In a report written for the Foreign Policy Program at the Washington, D.C.-based Brookings Institution, David Dollar recognizes China’s goals as “ambitious” but raises questions about a lack of environmental standards and social safeguards for many of the projects involved.

Dollar is a senior research fellow at Brookings and worked previously at the World Bank and as an economic and financial emissary for the U.S. Treasury Department in Beijing.

Dollar notes that between 2007 and 2015, Venezuela was the biggest borrower from China and that Venezuela ranks low on a “rule of law index.”

He quotes Ricardo Hausmann, an economist and former planning minister of Venezuela who wrote in an op-ed piece for Project Syndicate that “Venezuela has tried to finance itself with the help of the China Development Bank (CDB), which does not impose any of the kind of of conditionality that IMF bashers dislike.”

Instead, Haussmann says, “the CDB lends on secret terms, for uses that are undisclosed and corrupt, and with built-in privileges for Chinese companies” in areas like telecommunications, appliances, automobiles, and oil drilling.

“The Chinese have not required Venezuela to do anything to increase the likelihood that it will regain creditworthiness. They merely demand oil as collateral,” says Hausmann.

China stopped making loans to Venezuela in 2016, and Dollar concludes that China is “not willing to underwrite a bad regime in perpetuity.”

China’s activities, he says, “sustained poor governance for a while, but eventually practical economic considerations won out.”

With Venezuela in deepening economic and humanitarian crisis, Dollar wonders whether China will be able to work with traditional lenders, such as the International Monetary Fund, Inter-American Development Bank, and the United States to implement any proposed rescue package for Caracas.

According to Dollar, China’s best hope of recovering some of the money that it is owed by Venezuela would be to cooperate with international lenders.

Dan Southerland is RFA’s founding executive editor.


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