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Countering Chinese Investment and Rights Abuses in Latin America Image courtesy of Wikipedia, "Mineral Industry of Peru"

Countering Chinese Investment and Rights Abuses in Latin America

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China’s economy grew rapidly at the turn of the 21st century, an event which has shaped Chinese—and American—national security priorities ever since. With extensive resources, Chinese companies have actively invested in infrastructure and energy projects across the globe. Because the largest Chinese companies competing for foreign deals are state-owned companies, Chinese companies’ activities abroad are a proxy for the Chinese government’s intentions. These activities form the One Belt, One Road (“OBOR”) initiative, an ambitious foreign policy project to position China in economic and political competition with the US.

As the US grapples with isolationist sentiments at home, China’s OBOR has made increasing economic and diplomatic forays into Latin America, a historical zone of heavy US economic and political involvement. China’s growing presence in Latin America is a looming threat to US national security. Investments in telecommunications and commercial infrastructure have expanded China’s influence, while Chinese companies continue to accumulate a long list of human rights abuses in the region. Faced with these challenges, the US should highlight Chinese companies’ human rights violations to dissuade future Latin American-Chinese cooperation and explain how US foreign policy presents a viable alternative.

 

China’s Promises and Impact in Latin America

A core area of Chinese investment in Latin America is the energy and infrastructure sector, often fragmented in rural areas and informal urban settlements. Energy and infrastructure are visible, cost-effective sectors for China to serve vulnerable Latin Americans’ needs while establishing a logistical foothold in telecommunications and shipping close to the US. They are an ideal medium to partner with governments, build citizens’ support for Chinese investment, and to fortify Chinese national security interests.

Despite lofty language of collaboration and support, as well as China’s signing of international human rights treaties, Chinese companies frequently violate human rights in Latin America. In past years, Chinese companies have also underscored their eventual goal of rejecting Latin American business partnerships in favor of majority-Chinese project control. These contradictions between promises and actions are revealed by the Mirador mining project in Ecuador and CPFL, a utilities company in Brazil.

 

Human Rights Violations and Aggressive Economic Consolidation

Across Latin America, China’s human rights violations have been so numerous that a consortium of South American environmental groups created a map with case-by-case documentation. The most commonly ignored rights by Chinese contractors are indigenous rights, including (1) the right to participate and be consulted [in investment decisions], (2) the right to land, territory, and adequate housing, (3) the right to live in a healthy environment, (4) the right to life, integrity, liberty, personal security, and peaceful assembly, and (5) labor rights, right of association, and the right to union liberty. Another NGO detailed how for the 2019 Mirador mining project in Ecuador, Chinese companies engaged in “irregular practices of land acquisition […] arbitrary claims to the rights of mineral exploitation and the [assertion] of demands against families without property titles” that “with the support of security forces, […] provoked the forced displacement of 42 indigenous families”.

Prior to tangling with human rights advocates, in 2017 China bought CPFL, Brazil’s largest private company in the electric sector. By 2018, disputes emerged between China’s State Grid, CPFL’s new parent company, and Brazilian minority shareholders of CPFL over the price of a tender offer. The dispute, whose unpublicized outcome required the intervention of Brazil’s Securities Commission, underscores how rapidly and deeply Chinese state-backed companies seek to consolidate decision-making power over key utilities in the region. While China’s investment in Latin America should concern the United States, growing Latin American pushback against Chinese economic consolidation tactics and against human rights abuses provides the US with a diplomatic opening to reshape regional partnerships.

 

US Policy Recommendations

To address the root of Latin American reliance on China and dissuade Chinese abuses of power in Latin America, US policymakers should adopt a two-fold approach. First, to increase regional employment and trade, the US should prioritize public-private partnerships focused on microfinance and business consultation between US entities and local companies. Examples could include MIT’s D-lab, which is currently collaborating with Colombian miners. To bolster the vocational training of Latin American countries’ workforce, the State Department should provide scholarships for American STEM students to travel to Latin America and teach courses, mirroring the Fulbright ETA program. Relatedly, the State Department should provide scholarships for Latin American students to study as exchange students at US institutes of technology or engineering schools. Finally, the State Department could collaborate with the IRS to provide tax incentives for US companies to invest in Latin America, although such plans should also be weighed against the common critique that the US is outsourcing jobs to non-citizens abroad.

Importantly, the US should draw a clear distinction between our current diplomatic values and the human rights abuses committed by Chinese-government-affiliated companies. Senior American policymakers should candidly address the US’s historical record of human rights abuses at home and abroad, particularly in Latin America during the Cold War. This is a crucial first step in restoring credibility and avoiding allegations of hypocrisy. Secondly, the US should make Latin America a bipartisan high priority in foreign policy planning. Data from the past four presidential administrations suggest that Democratic presidents visit more Latin American countries than their Republican counterparts (Bill Clinton visited 13 Latin American countries in two terms; George W. Bush 10 countries in two terms; Barack Obama 12 countries in two terms; and Donald Trump visited one in his current term).

To further enforce a written commitment to human rights and particularly labor rights in Latin America, the State Department should promote collaboration, conferences, and the exchange of best practices between US unions and their Latin American counterparts. Finally, the US should support international arbitration by Latin American countries who wish to enter into dispute with Chinese companies for human rights violations and trade disagreements through the International Court of Arbitration, under the auspices of the International Chamber of Commerce.

In sum, Chinese infrastructure investment in Latin America challenges US national security while harming the vulnerable Latin American populations China purports to help. Through a shift in messaging, concrete investment, and bilateral technical and cultural exchanges, the US can strive to restore cross-hemispheric cooperation and present an alternative vision for the region.

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