That was the joke, the icebreaker Eric Farnsworth used at the start of his presentation last Thursday at the GBD colloquium on China's imports. Mr. Farnsworth, who heads the Washington office of the
Council of the Americas, was the third speaker at the GBD program
The Dragon Goes Shopping, 2013. His Twitter crack got the expected laugh, but he wasn't really joking. He continued:
"Washington couldn't care less about Latin America in the current environment. ... [I]f you contrast [U.S. engagement] with what China is doing in the Western Hemisphere, we are losing our lunch.
"And we are going to wake up in a couple of years, not far hence, and we are going to say, 'What happened to the hemisphere that used to be referred to as our back yard.'"
There isn't room here to go through all of the points Mr. Farnsworth made in support of these assessments, but here are a few of them.
The Beginnings. Implicitly, Mr. Farnsworth put the date for "China's modern engagement" as November 2004. That was the month when former President Hu Jintao traveled to the region with promises of $100 billion in foreign direct investment. As for China's goals in the region, Mr. Farnsworth largely discounted foreign policy considerations, including the goal of weaning Latin American countries form support for Taiwan. And he discounted rivalry with the United States as a driver of China's engagement in Latin America. China's focus in Latin America, he said, is primarily on commodities.
Commodities. Strong, continued domestic growth in China is a political imperative for Chinese leaders. To feed that growth, Mr. Farnsworth said, China needs commodities, lots of them. She needs copper, coal, oil, soy, and much more. She has scoured the world for them, and she has found a treasure trove in Latin America.
"This is the actual 'giant sucking sound' that Ross Perot talked about. It's not about NAFTA; it's about China's sucking sound of global commodities."Latin America, and specifically South America, is a region rich in natural resources. The countries there are in large measure "desperate to sell them" and China is eager to buy, Mr. Farnsworth said.
The results speak for themselves. China is the top trading partner for both Brazil and Chile, and she is the number two trading partner for Argentina and Cuba. These phenomena have both costs and benefits. On the plus side, China's imports from South America over the last several years largely explain why the region "did not slip into recession after 2008 the way the rest of the world did."
Deindustrialization. But the emphasis on commodity exports has come with a price. "What is happening in Latin America," Mr. Farnsworth said, "is actually a process of deindustrialization." In the Brazilian economy, for example, primary products count for a larger share of GDP - and manufactured goods a smaller share - than was the case a few years ago. Mr. Farnsworth sees these developments as "deeply ironic."
Why? Because for years, Latin American elites have railed against mercantilist arrangements - exports of primary products, imports of manufactured goods - with Europe and with the United States. They have done so even where the pattern didn't fit the argument. And yet, the same countries have rushed headlong into very mercantile relationships with the People's Republic of China.
