China is outmanoeuvring US in Latin America and the Caribbean, senators are warned

The United States is increasingly outmatched, outfinanced and outmanoeuvred by China for influence in the Western Hemisphere, lawmakers, government officials and regional experts said at a Senate hearing on Thursday.

"China has a plan. We don't have a plan," Senator Edward Markey, Democrat of Massachusetts, said. "We are not at the table saying what we're actually doing. You cannot preach temperance from a bar stool."

The situation is even more concerning given that China did not even consider Latin America and the Caribbean a priority target for its signature Belt and Road Initiative (BRI) until recently, witnesses told a Senate Foreign Relations subcommittee focused on the region.

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Officials with the State Department, Agency for International Development and International Development Finance Corporation (IDFC) said they were working to blunt China's enormous investments, manpower and political initiatives in the region by promoting and publicising projects with strong labour, environmental and anti-corruption standards.

"This is our hemisphere that we're talking about," said US Senator Bill Hagerty, a Tennessee Republican. "China is literally eating our lunch." Photo: Reuters alt="This is our hemisphere that we're talking about," said US Senator Bill Hagerty, a Tennessee Republican. "China is literally eating our lunch." Photo: Reuters>

That includes highlighting the often hidden costs of signing with Chinese partners, they said, citing the example of Coca Codo Sinclair, an Ecuadorean dam located astride an active volcano, built and financed by the People's Republic of China.

Since it officially opened in 2016, Coca Codo Sinclair has suffered more than 7,600 cracks, ruptured a major oil export pipeline, disturbed indigenous communities and is still not fully operational- despite leaving Quito saddled with billions of US dollars in debt.

"The PRC prioritises only the prosperity of the PRC, often to the detriment of the prosperity of the local people," said Andrew M. Herscowitz, the IDFC's chief development officer.

Witnesses also cited a huge increase in illegal fishing by Chinese vessels - which increased 13-fold in the region from 2009 to 2020 - in waters controlled by Argentina, Chile, Peru, Ecuador and several Caribbean nations.

A report last week by the civic group C4ADS cited the 2017 detention of a Chinese ship found fishing illegally in the Galapagos Marine Reserve. On boarding, the ship was found to hold 6,620 sharks, 300 tons of fish and sacks of fins ripped from newborn and unborn sharks, some of the cargo involving protected species.

Many of the views expressed by witnesses at the hearing disrespect Western Hemisphere countries, Beiijng's Washington embassy spokesman Liu Pengyu said.

"What China brings to these countries is an opportunity," he said. "The United States has regarded Latin America and the Caribbean as its own 'backyard', and has been putting pressure and threats at every turn.

"Who is a real friend, who is a fake friend, who ignores the rules and spreads chaos," Liu added. "I believe the relevant country will make a correct judgment."

But US administrators also acknowledged significant impediments in countering Chinese influence. The IDFC, for instance, is limited to financing projects in the poorest countries, even though most Latin American nations enjoy middle income status; China has no such funding constraints.

Furthermore, senators were reminded, being there is more than half the battle, with Washington too often distracted - Congressional bickering is holding up eight regional ambassador spots and four spots remain empty _ and its programmes underfunded.

China, by contrast, is seemingly everywhere, investing in strategic technologies, embedding itself in sensitive 5G networks and other infrastructure, building military alliances, working political relationships and joining projects early to gain influence.

In the past two decades, Beijing has invested more than $US160 billion regionally and now counts 20 of the region's 31 nations as BRI members - including Argentina last month - with 25 of the 31 hosting Chinese-backed infrastructure projects.

Senators were told there have also been 44 heads of state meetings between China and the region since 2015, while total Chinese trade with Latin America increased to US$318 billion in 2020 from US$18 billion in 2002, mostly involving minerals, natural resources and agricultural goods.

"Unless we play even more in the Latin American region, we have little chance of competing effectively," said Margaret Myers, programme director with the Inter-American Dialogue think tank.

Unless the US increases its activity in Latin America, it will "have little chance of competing effectively" with China, Margaret Myers of the Inter-American Dialogue said. Photo: Handout alt=Unless the US increases its activity in Latin America, it will "have little chance of competing effectively" with China, Margaret Myers of the Inter-American Dialogue said. Photo: Handout>

Under economic and diplomatic pressure from Beijing, the region has seen a growing number of countries drop diplomatic relations with Taiwan, raising alarm bells in Washington. Eight of the 14 nations that still recognise the self-governing island are in the region but that continues to drop, with El Salvador, Nicaragua, and Panama recently changing camps.

"One of our top goals remains countering the PRC's aggressive campaign to induce countries to switch recognition to Beijing," said Kerri Hannan, the State Department's deputy assistant secretary for the Western hemisphere.

Washington has seen an improvement in its regional standing as China's vaccine diplomacy has backfired and word has spread of shortcomings in Chinese-backed projects.

According to Vanderbilt University's AmericasBarometer survey, regional trust in China declined by 18 percentage points between 2012 and 2021, now standing at about 38 per cent; over that same period, the US saw an 18 percentage point increase, to 55 per cent.

"They oftentimes distrust the Chinese. But so much of the Chinese soft power comes with the informal or formal expectation of benefit," said Evan Ellis, US Army War College professor and Centre for Strategic and International Studies associate, said of the region's governments.

"That often leads our partners to say, 'Well, we know we have to worry about the Chinese but we think we can take the risk because we want the Chinese money.'"

China's growing footprint is all the more daunting given that it is a relative latecomer to the region. In 2021, only around 9 per cent of BRI spending was in Latin America and the Caribbean. In a 2016 White Paper, China called for the creation of a regional "Comprehensive and Cooperative Partnership" built on multipolarity and collaboration.

"This is our backyard. This is our hemisphere that we're talking about," said Senator Bill Hagerty, a Tennessee Republican. "China is literally eating our lunch."

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.

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