For the past several years, China has worked to build trade relationships with African and Latin American countries --
Argentina, for example, as well as
Sudan,
Nigeria and
Peru.
It's motivated (as we've discussed in the IB class) by China's growing need for raw materials -- such as
recycled paper (for the cardboard boxes that Made-in-China TV is shipped in),
soybeans,
iron ore and
gold. China has an advantage over Europe and the US here -- China isn't a former colonial power (not that the US really was a colonial power or anything, but who cares?). It's been a successful relationship. Even though
Japan, South Korea and Taiwan are the biggest source of Chinese imports, China is now Brazil's largest export partner (ahead of the US); Angola, Chile, Democratic Republic of the Congo and Kazakhstan are among the countries sharing that honor.
One of the Chinese trade relationships that is currently troubling to the US is the Chinese relationship with Iran, based, of course, on
oil. It goes beyond imports and exports;
China has invested heavily in refineries and pipelines in Iran. Moreover,
the Iranian government has proposed a system of rail links between China, Iran, Afghanistan, Tajikistan, Kyrgyzstan.Trade sanctions (banning trade in strategic materials) against Iran have
slowed, but not
stopped trade between China and Iran.
What exactly can the US do here? Not much. The
UN can make agreements, but China is going to act in their own interests. Neither the US nor the EU wants to see Iran with nuclear weapons, but it doesn't appear that the Chinese care.
Don't forget that the
Chinese own a lot of US government debt [1]. And, the US exports a lot to China as well -- luxury products [2] such as
wine and
ginseng roots, but also basic raw materials, such as
recycled paper and
soybeans.
The batteries in my crystal ball need to be recharged, but I don't see much changing here. It's a tenuous balancing act between the EU [3] and the US, first, China second, and Iran, third. One solution might be for the US to take out Iranian nuclear facilities, making sure to give China plausible deniability. That could get very very messy, though. There's some indication that the
Iranian government isn't all that stable, and changes there could very well make a peaceful solution possible. The US would probably have to concede in principle on Iran's right to peaceful nuclear use, though, which would be politically suicidal for the current administration.
Taking a broader and more long-term perspective, though, look at China's trade strategy overall.
China's motivations here are complex. At first glance, the whole point is access to resources. For example, the
Democratic Republic of the Congo has copper,
Iran has oil,
Brazil has wood pulp, etc. China is also investing heavily in infrastructure development in its African and Latin American trading partners. They're thinking long-term. Remember, the Chinese are the folks who have kept track of the (
more than 3 million) descendants of Confucius over a 2,500 year span.
Not everyone sees China's growing ties with Africa/Latin America to be a Big Problem;
some believe that US influence in Africa is broader based and more likely to be lasting.
But, as we remeber from
The Godfather, "it's only business." Trade appears to be the real motivation, with politics being only a means to an end.
It's clear that China isn't in this for their health;
China cut off imports of Argentine soybean oil after
Argentina imposed retaliatory tariffs in response to accusations that China is dumping textiles and kitchen appliances in the Argentine market.
Another indication that the Chinese government isn't seeing these relationships as one-sided are developments earlier with loans to Zimbabwe:
Deputy Prime Minister Arthur Mutambara says the Chinese want all loans to
be repaid before loosening its purse. According to the Mutambara the Chinese
President Hu Jintao revealed to him during a brief meeting at the World Economic
Forum in Switzerland that he considers Beijing relationship with Harare as
’business partners’ and not ’friends’.
If nothing else, the complexities of trade and politics between China and the rest of the world will give us something to think about for a very long time to come.
Notes[1] There is some indication that
Chinese purchases of US debt declined after the late 2008 economic meltdown. They still hold a lot, though by now China holds enough Treasury securities that it's
probably unlikely that they could afford to unload them.
[2]
Western luxury products are big in China, though most of these are imported from Europe.
[3] Europe trades a lot with China, too.
Next. I'd never heard of AvtoVAZ before, but seems that they are the top Russian auto manufacturer. Renault owns 20% of AvtoVAZ.
