What are the implications of the Chinese investments in Latin America?
When relations between countries are discussed, this affects their commercial and trade agreements as well as their political cooperation. In the approaching years, there has been a discernible increase in the number of investments made by Chinese capital in the Latin America region. As of right now, China is the region's second-biggest trading partner with a share of 18%, meanwhile, the US continues to be the first-biggest trading partner holding 38% of shares. When it comes to China’s transactions, the two main areas of significance are resource extraction, with a particular emphasis on minerals and agricultural commodities, and infrastructure development, including building highways and railroads.
As a rule, economic agreements set the goal of profitability and benefits for both countries. For instance, China stands to gain from more access to basic resources, while Latin America stands to gain from increased exports, which would improve the region's balance of payments. However, some concerns have been raised regarding the real implications of these relations on human rights in the Latin American region. In that respect, China publicizes that the bilateral agreements are based on “equality, reciprocity and inclusiveness”. It is therefore asserted that both parties involved are in a win-win cooperation collaboration. Furthermore, China claims that concerns and critics have arisen merely from the US, which used to be the only business partner of the region before the Chinese escalation. Even though other countries such as Germany or Japan also trade with Latin America, their shares are insignificant compared to the impact of the US or China. Thus, the race for the top spot in exports is between these two powerful entities.
In addition, these investments have a tendency to lead to economic dependency with social and environmental consequences. Along these lines, as previously said, China's position in Latin America is built on the exploitation of natural resources, particularly oil, iron, copper, and soybeans. Hence, the negative side of the China – Latin America relation can be the overexploitation of those resources and an overuse of them due to the extraction of raw materials and agricultural commodities to be used for the benefit of China. The latter is exposed in the last report made by the International Service for Human Rights and the International Federation for Human Rights. Moreover, this report pointed out the need for solid regulation regarding social and environmental rights, which is lacking nowadays in the Latin American region. This mismanagement can result in environmental disasters, thereby compromising the human rights of individuals residing in natural parks, particularly indigenous communities where resource extraction is common. The lack of stakeholder involvement in decision-making processes is pointed out by NGOs and indigenous organizations.
In conclusion, notwithstanding the prevention of the so-called “debt trap diplomacy” human rights and environmental rights should be considered in legislation. This concept refers to the practice of a strong lending nation or organization partially or entirely financing a borrowing country in order to gain political influence. As a result, caution is required when assessing the future consequences of present investments in terms of social and environmental impact.
Image Credits: IE University/Germán Ríos | Edited by GorStra Team