EL TIEMPO, September 19, 2020
(Translated by Eunice Gibson, CSN Volunteer Translator)
The blue and white airliner, with a gold swathe in the middle, that landed Friday night at El Dorado airport carrying United States Secretary of State Mike Pompeo, ended a long drought of ceremonial welcoming. As observers have pointed out, it was the first visit in more than six months of a top line foreign official to our national territory.
Even so, masks and distancing confirmed that the new normal covers international relations, relations that now are taking place in other scenarios. Because the pandemic has reduced personal contact to its most minimal expression, face to face diplomacy now requires at least two meters of space when you don’t adapt to virtuality, as happened at the United Nations where the annual general assembly took place in cyberspace.
That event made the presence of Donald Trump’s envoy more significant. Pompeo closed out a tour that took him to Surinam, Guyana, and Brazil, stops where he sent the same message several times. He directed his most resounding message to Nicolás Maduro, who once again received an invitation to step down from his position. But his warning about China was also clear, which led Beijing to say that Donald Trump’s right hand is trying to “sow discord” in the region.
Even though the exchange of salvos between the two great powers on the planet seems routine after a while, it’s clear that the tension extends to Latin America. Washington does not look kindly on China’s getting involved in its back yard, and least of all now when the White House continues to stoke the fire with actions and words directed at its now great adversary on the other side of the Pacific Ocean.
Commercial warfare, prohibition of investment, closing of consulates, and limitation of the frequency of flights are some of the weapons being used in what promises to be a long-term standoff. For the experts, what’s in play is nothing less than world supremacy throughout the 21st century.
While the battle won’t necessarily take place in military, armaments, or ideological terrain, as took place with the former Soviet Union, but rather in economics and technology, it will be intense and it could leave collateral damage. The biggest risk is that it will impede the flows and interchange of goods and of capital, limiting access to diverse markets and to possibilities for progress.
If it should rain there . . .
A similar scenario might sound remote in Colombia, whose immediate needs are of a different sort. Nevertheless, statistics confirm that the Asiatic nation is not only our second commercial partner, but also, for a relatively short time, this country has begun receiving important Chinese investments that not only extend to a wider and wider group of businesses but also in a number of projects of considerable magnitude.
The list is a long one and it starts with the Bogotá metro, the costliest infrastructure project in the history of this country. The Regiotram in Cundinamarca is of the same status, as well as the Mar 2 expressway, one of the fourth generation concessions, to which might be added those of the unsuccessful Solarte Group.
In another area, there appears to be a strong presence in telecommunications, with well-known names like Huawei—a provider of cell phone and networks for mobile phones—ZTE, Hytera, TP Link, Vivo or Xiaomi. In energy we see Hydro Global, which is developing a hydroelectric project in Chocó, while Zijin Mining paid $1,400,000 for a company that is mining a deposit in Buriticá in Antioquia.
To these we have to add CMIG International, which was left with the stock of Old Mutual in the area of finance; and Didi in transportation of people; or vehicle brands like BYD—specializing in electric buses–; as well as JAC, Chery, Haima, Changan, and DFSK. The number of companies is easily more that seventy.
Although you run the risk of adding pears and apples, you could say with a high grade of certainty that there is nearly USD 10,000,000,000 involved in operations of different kinds. Not all that money has arrived yet, because in certain cases there are start-ups that will take years to mature.
According to the Bank of the Republic, the accumulated flow of direct investment from China in Colombia increased by USD 277,000,000 between January 2000 and June 2020. As a proportion of the total, that figure represents only 0.14 percent, which is a low number. Those who know about such things warn that the explanation is that the records identify the country that the money comes from and not where the decision to send it was made, so that in more than one case it seems to be Panamá or some tax haven, so the sender might be a firm with capital belonging to the People’s Republic.
There is no doubt that we are in the crosshairs. In the opinion of Margaret Myers, Director of the Asia and Latin America program in the Inter-American Dialog in Washington, what has happened “reflects the work of certain Colombian institutions to make connections, and it also reflects an important learning process on the part of the Chinese companies.
And it means that after several years, in this part of the world there has been an adaptation toward more sophisticated arrangements. We see “taking part in public-private associations (APP) with growing frequency, instead of being supported by credit that’s tethered. That leads to joining together with international companies when that makes sense, such as in the case of the metro in Bogotá,” adds Myers.
For Lan Hu, China’s Ambassador in Bogotá, “the growth of Chinese investment in Colombia is the result of increasing opening and attraction of a country that enjoys favorable conditions such as political stability, economic development, and a solid legal system.” The Ambassador says that what firms of his country do “is not a simple investment of capital or engaging in building projects, but rather through APP projects and others bringing more advanced technology and administration, with a view to collaborating with the Colombian people for better development.”
At the same time, we notice a strengthening of commercial connections. “The economic interchange has become important in the last ten years, but most of all in the last four years Colombian exports to China have increased by 300 percent,” Guillermo Puyana, President of the Colombo China Association, points out.
That kind of evolution is a reflection of how the economic power pendulum has moved toward the Asia Pacific area. Several nations from that part of the world have been leading growth indicators, but there is no doubt that, because of its size, China is in a separate category.
It’s worth remembering that it generates 17% of the global gross domestic product, and that it has almost 1,400,000,000 consumers. Their quality of life has changed substantially in less than four decades. Besides being the largest exporter of goods, it is also an enormous purchaser of raw materials, with a great regional impact: it acquires 78% of the sales of soy in Brazil, or 41 percent of all the copper that’s mined in Chile, just to cite a couple of statistics.
As a result, it’s one of the principal destinations for export sales by Latin American countries, which concentrate on food and minerals. This surge has taken place throughout this century and has definitely been two-way.
The accumulated surplus and the very size of their companies make it logical that Chinese investment would be more and more relevant on the planet. In many cases, the capital has been focused on guaranteeing supplies for a nation with a shortfall of primary goods. Other countries are trying to promote transnationals in sectors that are more diverse.
That evolution ought to be more rapid now because of the pandemic. At a time where nearly 90 percent of the economies in the five continents are going into recession, the Chinese economy is headed for positive numbers in 2020, even if they are below the average that we have seen since the beginning of the ‘80’s.
Added to that is the rollout of what several analysts are calling “the mask diplomacy”. Just at the moment when the United States seems to be pulling back and assuming a more confrontational attitude, even with its closest allies, Beijing was able to leave behind the stigma of being identified with the Covid-19. To achieve that, it multiplied its donations of protection equipment or medical ventilators, besides promising to share the vaccines they are developing.
In response, Washington scowls and talks tough, but it doesn’t have much to show besides a project for promoting investment in the Americas, portrayed as something that’s fizzing. The foregoing does not ignore the fact that the tensions are causing important changes that could turn into opportunities for the countries in this hemisphere.
On the one hand, the United States cut back its purchasing of Chinese products, but that diminution benefited Latin American exporters. On the other hand, China also imposed barriers, and that leads it to searching for other suppliers.
At the same time, it’s likely that some industries will decide to locate in these latitudes, hoping to lessen the geopolitical risk and gain access to the United States market. The lower labor costs and less distance are factors that work in favor of the region.
This being the case, the message is that it will suit Latin America to be neutral in the confrontation of the superpowers. As Margaret Myers has said: “I hope that the nations of this area won’t have to choose between pleasing the United States or pleasing China.”
That means we have to maintain good relations with everybody, and not lend ourselves to power games, and we have to defend the principles of open regionalism. In case Trump is re-elected and tries to turn into reality his threats to disengage from his antagonist on the other side of the Pacific Ocean, we will have to keep cool and use diplomacy.
Getting back to Colombia, it will be best to diversify markets and try for a greater participation in this part of the world, because our peers in the region have advanced faster than we have. In that regard, the Minister of Commerce, José Manuel Restrepo, emphasizes that “China, which ten years ago didn’t even appear in the top ten destinations for Colombian exports, now is in second place. There is much more dynamism there than in the rest of the world and less dependence on mining and energy.”
Coffee, avocados, bananas, fruit pulp, dried fruit and chocolate are the items that are really showing dynamism right now The challenge is to broaden the variety, and I hope it can be done with articles with more value added and with the objective of equalizing a commercial balance that continues to show losses.
In another area, we can see that the investments keep on coming and that eventually, once the pandemic is behind us, the tourists. Nothing like that could have been foreseen when Bogotá and Beijing established diplomatic relations.
Things have changed a great deal in that time, but we have to recognize that the story is just beginning. And even though Uncle Sam doesn’t like it, everything points to the Chinese dragon continuing to beat its wings in this part of the Pacific basin.