US, China rivalry poses risks, benefits for Latin America

MENDOZA, ARGENTINA: As the trade dispute between the United States and China was gaining steam last month, a half-dozen Chinese dancers and a person in a panda bear suit paraded across a stage inside a hotel lobby in the heart of Argentina’s wine country.

The March 24 ceremony celebrated the Washington-based Inter-American Development Bank’s (IDB) choice to hold its next annual meeting in Chengdu, China, a decision criticized by the United States, whose regional influence has been increasingly challenged by the Asian economic superpower.

Just over a week later, China imposed tariffs on a range of US products from frozen pork to wine in response to US President Donald’s Trump’s decision to place tariffs on steel and aluminium from countries including China.

The trade fight, which escalated further on Wednesday with China targeting key American imports including soybeans, planes and cars in retaliation for proposed US tariffs on US$50 billion in Chinese goods, has left Latin America in the middle, analysing risks and opportunities.

“The US is forcing countries in the region to choose between the US and China,” said Margaret Myers, director of the Latin America and the World program at the InterAmerican Dialogue. “It’s putting Latin American countries in a very challenging position while at the same time not offering a particularly attractive policy.”

China, whose demand for raw materials increased during rapid economic growth the past two decades, is already the top trade partner for countries ranging from Brazil, Latin America’s largest economy and the world’s top soybean exporter, to tiny Uruguay.

Rather than celebrating a chance to gain market share, Brazil and Argentina responded cautiously to the tariffs on Wednesday. Brazil’s Agriculture Ministry declined to comment. Argentina, the world’s No. 3 soy exporter, said it was “analyzing the situation.”

Analysts in both countries said, however, the tariffs could force China to purchase more soybeans and soy-based products from South America.

Latin American countries’ turn to China for financing has alarmed Washington even as its own policy toward the region shifts.

Trump’s December 2017 national security strategy said China was seeking to “pull the region into its orbit through state-led investment and loans.” — Reuters