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    China Widens Economic Role in Latin America

    Published: November 20, 2004

    SANTIAGO, Chile, Nov. 19 - The expected arrival here on Friday of President Bush, who personifies for Latin Americans the economic and political power of Washington, is being greeted with an uneasy mix of protests and hopes for greater growth.

    But while the United States may still regard the region as its backyard, its dominance is no longer unquestioned. Suddenly, the presence of China can be felt everywhere, from the backwaters of the Amazon to mining camps in the Andes.


    Driven by one the largest and most sustained economic expansions in history, and facing bottlenecks and shortages in Asia, China is increasingly turning to South America as a supplier. It is busy buying huge quantities of iron ore, bauxite, soybeans, timber, zinc and manganese in Brazil. It is vying for tin in Bolivia, oil in Venezuela and copper here in Chile, where last month it displaced the United States as the leading market for Chilean exports.

    While President Bush is spending the weekend here for the Asian-Pacific Economic Cooperation forum, President Hu Jintao of China is here in the midst of a two-week visit to Argentina, Brazil, Chile and Cuba. In the course of it, he has announced more than $30 billion in new investments and signed long-term contracts that will guarantee China supplies of the vital materials it needs for its factories.

    The United States, preoccupied with the worsening situation in Iraq, seems to have attached little importance to China's rising profile in the region. If anything, increased trade between Latin America and China has been welcomed as a means to reduce pressure on the United States to underwrite economic reforms, with geopolitical considerations pushed to the background.

    "On the diplomatic side, the Chinese are quietly but persistently and effectively operating just under the U.S. radar screen," said Richard Feinberg, who was the chief Latin America adviser at the National Security Council during the Clinton administration. "South America is obviously drifting, and diplomatic flirtations with China would tend to underscore the potential for divergences with Washington."

    Chinese investment and purchases are seen as vital for economies short on capital and struggling to emerge from a long slump. In Argentina earlier this week, for example, Mr. Hu announced nearly $20 billion in new investment in railways, oil and gas exploration, construction and communications satellites, a huge boost for a country whose economic vitality has been sapped since a financial collapse in December 2001.

    China is also increasingly willing to venture outside the economic realm. In March, for example, after Dominica, in the Caribbean, severed diplomatic relations with Taiwan, Beijing responded with a $112 million aid package, which includes $6 million in budget support this year and $1 million annually for six years. In Antigua, it has pledged $23 million toward the construction of a new soccer stadium.

    Political relations seem to be advancing most rapidly with Brazil, Latin America's most populous nation, where the left-leaning government has repeatedly floated the idea of a "strategic alliance" with Beijing.

    The Brazilian government has made clear that it views closer ties with China as a card that can be played to offset American influence and trade dominance. While not suggesting that China could soon replace the United States as Brazil's main customer and partner, the aim is to force trade and other concessions from the United States and rich industrialized nations.

    "We want a partnership that integrates our economies and serves as a paradigm for South-South cooperation," President Luiz Inácio Lula da Silva said in May during a state visit to China during which he was accompanied by nearly 500 Brazilian business executives. "We are two giants without historical, political or economic divergences, free to think only about the future."

    Before his visit, Mr. da Silva even hinted at negotiating a free-trade agreement with China, a step that Chile this week announced it would take. But China's impact in Brazil is already felt so strongly that the idea was quickly shelved after São Paulo business groups expressed fears of being overwhelmed by state-owned Chinese companies in their own domestic market.

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