PRC/LATIN AMERICA: CHINESE ECONOMIC INTERESTS

C O N F I D E N T I A L SECTION 01 OF 02 BEIJING 002995

SIPDIS

E.O. 12958: DECL: 10/29/2029
TAGS: PREL PGOV KDEM ECON ETRD ENRG EINV AR XM CH
TW
SUBJECT: PRC/LATIN AMERICA: CHINESE ECONOMIC INTERESTS
GROWING, BUT WILL NOT TRUMP U.S.-PRC TIES, SAYS PRC EXPERT

REF: BEIJING 989

Classified By: Political Minister Counselor Aubrey Carlson. Reasons 1.4
(B/D).


1. (C) Summary: Politics, economics, Taiwan and common
interests in social development drive China's interest in
Latin America, according to a PRC scholar. Notwithstanding
China's deepening relationship with Latin America, China will
not develop its Latin America connections at the expense of
its relationship with the United States. Although publicly
the Chinese government claims that it pays equal attention to
all Latin American countries, in reality priority is given to
the resource rich countries, our contact said. China would
like an improved investment climate in Latin America that
would allow it to increase its foreign direct investment in
the region. China is "very practical" and simply wants
access to Latin America's natural resources and export
market, though economic and trade conflicts will grow as
China increases its trade with Latin America. A lack of
cultural and language understanding remains an obstacle in
the development of Sino-Latin American relations. End
summary.

Key Areas of Interest
--------------


2. (C) The key drivers behind China's interest in Latin
America include politics, economics, Taiwan and social
development, Chinese Academy of Social Sciences (CASS)
Institute of European Studies Deputy Director Jiang Shixue
told PolOff October 23. Politically, China wished to build a
new international political paradigm based on the concept of
a "Harmonious World," and Latin America could play an
important role. Economically, China needed Latin America's
abundant natural resources to sustain economic development.
With a population of approximately 560 million, the region
was also a significant potential export market for
manufactured goods. Turning to China's "core interest" of
Taiwan, Jiang noted that out of 23 countries in the world
that still officially recognized Taiwan, 12 were in Latin
America. These Latin American countries were mostly small
nations that did not understand the importance of China.
Lastly, Jiang said, China and Latin America nations were
developing countries that could benefit from each other's
knowledge and experience on social and economic progress.

Social Calls
--------------


3. (C) Deputy Director Jiang commented that although
publically the Chinese government claimed that it paid equal
attention to all Latin American countries, in reality
priority was given to the resource rich countries of Brazil,
Venezuela, Mexico, Argentina and Peru. In a separate
discussion, MFA Latin American and Caribbean Affairs
Department Argentina Division Director Fu Xingrong told
PolOff September 17 that China valued its relationship with
Latin American countries and had worked toward deepening
relationships with countries in the region. Fu noted, for
example, that Argentine Foreign Minister Jorge Taiana's
September 5-8 visit to China was a "routine and normal visit"
aimed at promoting future high-level exchanges between the
two countries. PRC President Hu Jintao was expected to visit
Argentina, Brazil, Chile and Cuba in November, according to
Fu.

Trade and Economics
--------------


4. (C) Increased trade tensions had resulted from the
increase in Sino-Latin American economic and trade ties,
according to Jiang, and were likely to grow as China
increased trade with Latin America. Some Latin American
countries already complained that China sold cheap goods in
exchange for raw materials. Jiang surmised that China would
have to change its export structure and sell more value-added
goods to address those concerns. China should "sell fewer
potato chips and more computer chips," said Jiang.


5. (C) China would like to increase its foreign direct
investment in the western hemisphere, but Latin America
needed to improve its investment climate first, Jiang
averred. According to media reports, in August, the China

BEIJING 00002995 002 OF 002


National Petroleum Corporation and the China National
Offshore Oil Corporation had proposed a $17-billion deal to
buy out the Argentine unit of the Spanish oil giant Repsol
YPF. MFA's Fu offered no information on the proposed deal,
stating that the topic had not been discussed during FM
Taiana's meetings with FM Yang Jiechi or Vice President Xi
Jinping.

U.S.-PRC-Latin America: A Balancing Act
--------------


6. (C) The United States paid too much attention to China's
relationship with Latin America, remarked Jiang. The U.S.
was China's top foreign policy relationship, and China would
not develop its Latin America connections at the expense of
relations with the United States. China was "very practical"
and simply wanted access to Latin America's natural resources
and export market. Jiang admitted that it could be "tricky"
for China to balance its U.S. and Latin American
relationships, noting, for example, that Venezuelan President
Chavez had in the past used his nation's relationship with
China to make inflammatory remarks toward the United States.
In Jiang's opinion, China would be "smart" to stay away from
any dispute the United States might have with Latin American
countries.

Confucius Institutes
--------------


7. (C) The Chinese government had taken steps to increase
cultural and civil exchanges with its Latin American
neighbors, said MFA's Fu. After the first Confucius
Institute in South America was opened in Chile in April 2008,
China launched two more Institutes in Argentina in 2009. The
institutes would focus on Chinese language and cultural
education. Cultural exchanges between China and Latin
American countries would become "more and more important" as
bilateral relations expanded, and the Confucius Institute was
just one example of China's commitment to its Latin America
"friends," Fu said.

Nascent Cultural Links Have a Way to Go
--------------


8. (C) CASS Latin America scholar Sun Hongbo shared with
PolOff September 9 a CASS survey indicating that a large
percentage of PRC citizens thought of Latin America as the
"backyard of the United States" and "full of soccer players
and beauty queens." Sun said he was not surprised by the
survey results as "there is still a long way to go" in the
development of cultural understanding between Chinese and the
people of Latin America. The interest for Chinese people to
learn about Latin culture and language had not developed in
the same way as it had for U.S. culture and language, because
U.S. pop culture in the form of movies, clothing, fast food
and the like had been much more pervasive in China, said
Jiang. Jiang, who despite having dedicated the past 30 years
of his research to Latin America did not speak Spanish or
Portuguese, told PolOff that in the late 1990s there had been
less than 20 universities in China that offered Spanish
classes; now there were 40-50 universities that offered
Spanish as a major or as an elective.
HUNTSMAN