Beatrice Rangel: Understanding China's Interests in Venezuela and Latin America
By Beatrice E. Rangel
Latin American Herald Tribune
February 11, 2019

The crisis in Venezuela has polarized the world thereby projecting negative images of countries who are supporters of the totalitarian regime headed by Nicolas Maduro.

One such country is China which has refused to recognize the interim President Mr Juan Guaido thereby attaching to Mr Maduro the label of legitimate ruler.

To all those who carefully listened to the Chinese Ambassador's remarks at the United Nations Security Council during the session on Venezuela held on January the 26th, China came through as an enigmatic power that defined the Venezuelan crisis as a domestic challenge which needed to be addressed by Venezuelans but that could also be treated through international means.

China stood open to both courses of action and would choose which at an appropriate time.

In short China took the biblical posture of Pontius Pilate.

According to people who are back room masters, China's statement infuriated the Americans, the Russians and the Venezuelans. And believe me that it takes a lot of diplomatic muscle to have these four countries on the same corner about any issue.

The question thus arises why China took such position in lieu of taking sides with Russia in defense of the Maduro regime.

This question cannot be properly addressed without undertaking a historical review.

From 1949 through the late seventies, Latin America carried little interest for China.

Knowledgeable as its leadership has been for several millennia of the secrets of geopolitics from the early revolutionary days until the 1960s, the primary concern was to make the motherland secure.

The seventies were the stage for diplomatic recognition and China joined the Third World movement at the United Nations with special emphasis on Africa, which happens to be the largest voting bloc. During that decade Chinese investments in Africa rose to compete with development aid.

By 1975 when the US recognized the People's Republic of China and Taiwan was dislodged from the Security Council, the country began to prepare a redeployment of its international relations which aimed at democratizing international institutions and building a new trade corridor.

Indeed, by the 1980's when the export muscle took off at full speed, China was more interested in opening markets for its affordable products than in exporting ideologies.

This led China to a confrontation with Cuba that had mustered the Soviet Union support.

By the late 1990s when China initiated a new development approach that gives preponderance to internal aggregate demand as development engine, the concern was that the industrial complex would always have access to primary products, commodities, strategic minerals and of course oil.

This pointed to Latin America as international partner and can be ascertained in trading volumes. In 1990 trade between China and Latin America was about $5 billion. By 2000, bilateral trade had jumped to $10 billion and by 2012 to $270 billion.

Today trade with China has surpassed the $430 billion mark while mergers and acquisitions represented $5 billion in 2017. Many Latin American countries have also joined the Belt and Road one trillion dollars initiative created by China to finance infrastructure.

These upgraded economic exchanges seek to create bridge heads in Latin America for Pacific trade led by China.

China therefore will actively follow Latin American political developments, especially in countries that have benefitted from Chinese loans.

This brings Venezuela into the picture. For China, the country presents two very significant economic interests. The first is oil. But it also is coltan, a rare earth element abundant in Venezuela and a fundamental input for the manufacturing of semiconductors.

China suspended exports of rare earth elements in 2003 and is avidly seeking coltan depositories to preserve the long-term economic viability of its electronics industry. This led China to reject the US position on Venezuela without siding with an ideological position that is untenable for a country that is positioning itself as the worlds most promising economic power.

This was incredibly well elaborated by President Xi Jinping during his state visit to Mexico in 2011 when he said "China does not, first, export revolution; second, export poverty and hunger; third, cause troubles for you."

Understanding China's motivations in its exchanges with Latin America is essential to developing relationships that are of mutual benefit for both parties.

Latin America needs to penetrate the Asian market where China reigns supreme. And China needs to secure inputs for its growing industrial complex.

Keeping both sides focused on their trade and development goals can extract great advantages for both parties. Indeed, Latin America's lack of development infrastructure could be reversed while China could get from Latin America a steady and secure flow of commodities to feed its urbanization drive. But Latin trading partners should understand that whenever internal conflicts arise, China will take a stance in favor of protecting its investments and trade exchanges while refraining form joining the political battle.

In a sense China in this respect seems to have adopted the Howe dictum. Sir Geoffrey Howe, when he was Foreign and Commonwealth Secretary under Margaret Thatcher summarized the British position vis-a-vis internal conflicts as "faced with an internal conflict, the best policy is to abstain from intervening. Should the UK be forced to intervene then one must make sure that the intervention is with the winning side."

To China the winning side is the one securing Beijing's investments.