A Country with Vast Designs

On November 3, 1903, the territory of Panama declared independence from Columbia.  The Columbian gunboat Bogota responded by lobbing shells into Panama City.  Only a few shells were fired, mind you.  And a donkey was killed.  However there was one fatal human casualty.  A Chinese shopkeeper was killed in his sleep.

And with that I begin the tale of the slow domination of China over Latin America.  If one simply thinks about it, calmly for a moment, one will see the logic of it all.  Ever since the natural abilities and entrepreneurial spirit of the Chinese has been unleashed since the 1990’s, the Chinese have been able to find their natural calling; business.

Still lots of folks see the slowly creeping economic influence of China in black and white terms.  Yet another zero sum game between America and China.   Yet Latin America is simply another soft target for China.  If one understands where the Chinese already have historically dominated, one would not be surprised at all by what is inevitably happening in Latin America.

The Chinese minority already to a great degree has much sway over the economies of the Philippines, Malaysia,  Indonesia, Cambodia and Thailand.   And is also very strong in Vietnam.

What in my view do these societies all have in common, with the exception of Vietnam?   These are all leisure societies.  That is, they lack a strong entrepreneurial class.   They don’t invent things.  They are not innovative.   And of course they are all corrupt.

Alas, it is the misfortune of these societies to be so near China.  Thus easily dominated by uber aggressive Chinese entrepreneurialism. China, due to its historically large population perhaps, and early seafaring traditions, inevitably landed upon these shores.  The sense of unity among the Han led them to grow strong within each of these nations.

In my view, Latin America has a lot in common with these Pacific nations.  I won’t beat around the bush.  They are mostly in debt and hopelessly corrupt.   They are constantly in need of funds.  With a huge, utterly tremendous gap in wealth between the rich and poor.   While I refuse to use the word “lazy”, they lack the strong entrepreneurial sense the Chinese have. 

I need to be careful here when I use this word, because frankly all nations are corrupt.  We simply only have different shades of such, from country to country.  Still, this particular fondness of avarice is especially well-known south of the Rio Grande.

During the Mexican War, as General Scott is closing in on capturing Mexico City, a proposition is offered to simply pay off Santa Anna (of Alamo infamy).   The quicker to end the war.  Scott goes on to elaborate that “such payments were customary in dealing with dysfunctional nations such as Mexico”. 

The above quote comes from the book, “A country of Vast Designs”.   This book described the efforts of the then American President James Polk to not only keep Britain from gaining a foothold with Oregon, but also induce the bankrupt and (again) dysfunctional Mexican government to sell the Great American West south of Oregon territory to America.  Which is exactly what happened.

My point is one can hardly tell apart the ambitions of America in the 1840’s south of the Rio Grande and China today. 

However, Latin America and China are made for each other.   When South America suffers under crushing debt and high taxes, the Chinese tend to find a willing recipient of their influence.

You see, America and the West, long since burned by Latino debt crisis upon debt crisis have simply given up.  And as one would guess, their economic conditions for further help are simply too onerous.

This is where the Chinese Enter Stage Left.   China today practices a form of predatory capitalism that would be downright illegal if another country tried the same tactics within China today.  I say “today” because these same tactics are similar to what the West did to China 150 years ago.

The Chinese gained entrée to Latin America thanks to the well intentioned government of Chavez in Venezuela. While some call Chavez a simple dictator, one must not forget he was imprisoned for his beliefs.   But thanks to Venezuela’s oil supply, they found a willing economic partner in China.  

Nevermind the Venezuelan experiment has failed.  One by one, with each socialist government that takes power in Latin America, all in need of money and with nowhere else to turn, China is always there, waiting for its summons. 

China has become South America’s “lender of last resort”. 

And what does China gain from all this?  Natural resources of course. 

China controls 90% of Ecuadorean oil exports.  This is not a bad thing. Almost.  Countries like Ecuador (see Australia) help to feed China’s industrial economy, but by default find they can no longer wean themselves free of China’s influence unless they wantonly risk damaging their economy.

Besides, where is America?

And that is the whole point.  Where is America?

It’s not that America has “given up” on Latin America, but one would not blame it if it had.

Afterall, how many times has America or any other Western country tried to invest in Latin America but with mixed results?   Unlike the IMF or the World Bank, China makes no societal or economic reformist conditions on its loans.  It simply wants the oil, coal and exotic minerals available.  Mostly.

And with it the intangible benefit of “influence” and propaganda.

Without China Latin America would be in far worse shape.   China comes and builds roads and dams.   The complaint about China of course is that it writes the contracts in a way that favors the Chinese, putting Latin America in a “take it or leave it” situation.   They’ve taken it. 

Which no doubt is why China specializes in the “indigent” among us.

China’s forte is dominating countries soft on rule and law, with a history of being governed by a despot.  No, only tongue partially in cheek, I am not talking about America.

China wrote the book on how to enter the economy of such nations. 

Broke, deep in debt, corrupt?

 “I can help you.“

True America has low tariffs for Latina imports…..wine, fruit, etc.  Unfortunately, there just isn’t much of a manufacturing base to speak of.    A little more than a year ago I landed in Santiago, Chile on a business trip.   While in line I heard Mandarin.  I turned and saw a horde of Chinese behind me.

I wondered why they were there?

Then as I took the long drive to the factory I was to visit, I passed grape vineyard upon grape vineyard.  The Chinese were coming to buy, and the Chileans welcomed them. 

China is simply too damn big, the people too entrepreneurial and willing to take risk, to not be anywhere a buck is to be made.   And that’s good for the global economy.  The planet increasingly no longer has to rely upon the wealth of America, or its buying habits.  It has China now.

If one were to argue China is playing the “long game”, I would say without question you would be correct. Because when all is said and done, China does play a zero sum game with America.  Your loss, my gain.   And China, correctly, has decided it can slowly economically “squeeze” Latin America at America’s expense. 

China has no illusions of trying to confront America militarily in Latin America.  But it doesn’t have too.  The Latinos are all too happy to have a counter against America.  In Latin America, Uncle Sam will always be the villain, wrong or right.  Like the Japanese with China.  The bully.  America’s shadow will never leave.

Oh by the way, where did China get all that money to loan to Latin America?  From its export profits of course.   And those exports go to….where?  America!  Many of those Chinese exports come from American owned factories, actually.

Another example of how the American Capitalist, long devoid of any loyalty to the American Nation itself, if simply given enough rope will hang himself.  Don’t believe me?  I give you China’s rise in Latin America, and the role American Business has conducted indirectly funding China’s rise to power.

Within a generation China will economically dominate Latin America.  It is an unstoppable train addicted to cheap credit.   And if Latin America can finally stick Uncle Sam in the eye, all the better. The West to an extent should welcome this.  Why?  If someone else is “stupid” enough to take the risk so be it.

It’s not like the Free Press in China will say anything.   Except China knows all too damn well Latin America will not be able to pay back its loans, and countries such as Argentina with no oil to offer in return will be between a rock and a hard place.

And once they become addicted to the modern day opium called Chinese Trade and Investment, only then is it finally revealed what China is really after.   This is when China makes an offer “that can’t be refused.”  Just ask Argentina.

When China came calling to build a mere $50 million space satellite tracking station, the deal was unbelievably negotiated in secret.  Socialist to Socialist.   America thinks the worst; it will eventually become a military installation with listening capabilities.  And methinks America is probably right.

But the price for Argentina is simply too small to pay.  Afterall, China provided Argentina with $20 billion in loans.   What’s a $50 million favor from a new friend? 

But if the game plan as such continues, one can expect perhaps within a decade or two to see Chinese installations suddenly dotting all of South America.    Not soon after comes the inevitable Chinese naval base.   Afterall, with all of China’s investment, would it really be unreasonable for China to ask for such a concession?

And that’s when things get interesting.  We all know China took control of a vital port in Sri Lanka with a 99 year lease, right next to India.   (It’s funny how China still brings up the humiliation of ceding Hong Kong to Britain for 99 years while not mentioning its own tactics as well.)

When the rubber hits the road will Latin America “dare’’ to allow  a Chinese base or control by China of a port on its territory?   How will the American Navy react to such an event?

Navy base or not, China’s merchant class will surely have a big say in the decision making of the local economy.  Every single one of Latin America’s economies is in danger of going the way of the Philippines, Indonesia, etc.  Dominated by a small but highly unified and entrepreneurial Chinese minority.  Within a generation if not sooner, these economies with the possible exception of Chile and Brazil will be economically held hostage by China.

I argue this is a natural event, and only something the local populations can deal with themselves.