has been translating its economic success -- and its search
for resources to fuel its economic development -- into greater
influence in Latin America and the Caribbean, Assistant
Secretary of State for Western Hemisphere Affairs Roger
F. Noriega says.
Roger F. Noriega
The United States will continue to closely
monitor China's outreach to Latin America to ensure that
this activity is compatible with the region's "hard-won
progress towards representative democracy," Noriega
testified before the House International Relations Subcommittee
on the Western Hemisphere April 6.
Noriega noted China's interest in Latin
America is driven by economic and political factors, including
the need to secure reliable sources of raw materials and
the desire to isolate Taiwan politically.
"Rivalry with Taiwan plays into China's
courting of Latin American countries," he said. "A
key Chinese political objective is to isolate Taiwan, and
China will actively court those 12 countries in this Hemisphere
that recognize Taiwan" diplomatically.
The assistant secretary noted that Dominica
and Grenada recently broke ties with Taiwan in favor of
China, and Jamaica has opened an embassy in Beijing.
"In the cases of Dominica and Grenada,
Chinese promises of assistance preceded recognition,"
The assistant secretary also cited a visit
by China's President Hu Jintao to Argentina, Brazil, Chile
and Cuba in November of 2004, during which the first three
countries agreed to recognize China as a "market economy"
for antidumping purposes. This status made it harder "for
their domestic industries to pursue antidumping charges
against imports from China," he said.
China's rapid economic growth has created
a dramatic increase in its demand for many raw materials
and foodstuffs and has led it to look to Latin America and
Africa as sources of key commodities, said Noriega.
According to the assistant secretary, China
is not only importing more raw materials from the Western
Hemisphere but is also making significant investments in
the region. Noriega said that China's investment in the
region reached $6.32 billion by 2004, but he noted that
the Chinese investment remains "well behind" the
total U.S. investment in the region of more than $300 billion.
The assistant secretary also questioned
whether Chinese investments truly benefit the region, citing
low-interest-rate loans requiring work to be done by Chinese
companies and investments that focus heavily on extracting
raw materials from countries rather than providing jobs
and opportunities for workers to build skills.
The United States has also noticed an increase
in military-to-military contacts between China and several
Latin American countries, the assistant secretary said.
"While these contacts are minimal,
we are watching them closely, and seek to ensure that they
do not undermine the commitment of Latin American militaries
to democracy and civilian control," he said.
Even as China's presence in the Western
Hemisphere grows, "the United States remains fully
engaged with our neighbors," Noriega said.
"Our policy is built upon a shared
commitment to democracy, free markets, and economic integration.
We believe the strong and growing partnership between the
United States and the Hemisphere is the foundation of the
region's security, prosperity, and freedom," he said.
Following is the text of Noriega's testimony,
as prepared for delivery:
ROGER F. NORIEGA
Assistant Secretary of State for Western Hemisphere Affairs
before the House Subcommittee on the Western Hemisphere
"China's Influence in the Western
April 6, 2005
I appreciate the opportunity to testify
on the increased presence of the People's Republic of China
in the Western Hemisphere and its implications for United
The prosperity and security of the United
States is inextricably linked to growing prosperity and
security around the globe, and not least with the prosperity
and security of our partner nations in the Western Hemisphere.
As in Asia and Africa, China's growing profile
in the Hemisphere reflects its broader emergence as a global
political and economic power. China is now the world's sixth-largest
economy, its third-largest trading nation, and a major destination
for foreign-direct investment from around the globe. As
economic globalization has expanded, so too have the linkages
between East Asia and Latin America. In the past year, Korea
has signed an FTA with Chile, and Japan an FTA with Mexico.
China has been translating its economic
success -- and its search for resources to fuel its economic
development -- into greater influence around the world,
including in Latin America and the Caribbean. In a March
19 speech in Tokyo, Secretary Rice noted that the U.S. welcomes
the rise of a confident, peaceful and prosperous China and
that we want China as a global partner, able and willing
to match its growing capabilities to its international responsibilities.
From de-nuclearizing the Korean peninsula to fighting terrorism,
HIV/AIDS, and SARS, the United States has found common ground
This is the context in which we view China's
increasing economic, diplomatic, and military contacts with
the countries of the Western Hemisphere.
China's interest in Latin America is driven
by several factors:
-- To secure reliable sources of raw materials
for its continued economic expansion through increased trade
-- To lessen its isolation in international
-- To showcase its emergence as a major
-- To pursue defense and intelligence opportunities,
-- To pursue its policy of isolating Taiwan,
which is recognized by twelve Latin American governments.
U.S. interests are clear: we seek to support
democracy, free markets, and economic integration in the
That being said, we continue to monitor
closely China's outreach to Latin America, as we monitor
it elsewhere. We seek to ensure that this activity does
not run counter to U.S. goals in the region and is compatible
with this Hemisphere's hard-won progress towards representative
democracy. We will remain actively engaged, here in our
own hemisphere and around the world, in pursuit of our core
interests and values. The Western Hemisphere is our home.
By virtue of geography, history, culture, demographics,
and economics, the United States is linked to our Hemispheric
partners in ways other countries cannot match.
China's Economic Outreach to Latin
Over the past year, the global economy grew
by almost five percent -- the fastest rate in two decades
-- and about half of this growth was generated by the U.S.
and China. For its part, China's economy grew at an average
real rate of about 9 percent from 1979; it grew 9.3% in
2003 and 9.5% in 2004. This rapid growth has resulted in
a dramatic increase in China's demand for many raw materials
China is now the world's second-largest
consumer of petroleum, and has become a net importer of
oil. China also imports large quantities of iron ore, copper,
bauxite, timber, zinc, manganese, tin, and soybeans. In
earlier years of its economic expansion, China sought critical
raw materials primarily from sources in Asia, but as the
economy has continued to expand, China has increasingly
look to Latin America and Africa as sources of key commodities,
most notably petroleum, copper and other minerals, and foodstuffs.
One impact has been to raise profits for
commodity exporters around the world, including in Latin
America, contributing in part to the region's improved economic
performance in 2004. This makes China an attractive market
for countries in the Hemisphere and, given China's interest
in resources, an investor worth courting.
In 1999, China exported about $5 billion
worth of goods to the Latin America and the Caribbean and
imported about $3 billion worth of goods. By 2004, exports
rose to $18 billion and imports, primarily soy products
and minerals, rose to $22 billion -- thus, the region now
runs a trade surplus with China, according to official Chinese
statistics. While exports from the Hemisphere to China are
concentrated in food and raw materials, China's principal
exports to the region include textiles, apparel, shoes,
machinery, televisions, and plastics.
The Latin American industries that have
benefited most from exports to China are concentrated in
soy cultivation and extractive industries that are not labor
intensive. Moreover, China's exports, especially in textiles,
apparel, and shoes, compete with Latin American and Caribbean
producers. Textile and apparel production have become an
important niche industry in the Hemisphere, providing critical
jobs and income. Major changes in these industries will
have a significant economic and social impact in the region
-- primarily in Mexico, Central America, and the Caribbean.
Since these producers utilize a substantial component of
U.S. yarn and fabric, it is in our interest to see that
their exports not be substituted by those from China. Implementing
the Central America-Dominican Republic Free Trade Agreement
is a key step in this direction.
It is also important to note that while
textile and apparel production tend to be concentrated in
Mexico, Central America, and the Caribbean, the main exporters
of raw material to China are concentrated more in South
China is not only importing more raw materials
from the Western Hemisphere, but it is also making significant
investments in the region. The Chinese Ministry of Commerce
estimates the cumulative total of Chinese investment in
Latin America as of the end of 2003 was US$4.62 billion,
accounting for 14 percent of China's total cumulative realized
outward investment. Preliminary Ministry figures estimate
that 46 percent of China's 2004 foreign investment was in
Latin America and the Caribbean, adding another $1.7 billion
to the total. We will continue to analyze this trend and
how it affects the region's economic balance.
There has been a significant increase in
Chinese commitments to invest in not only extractive sectors,
but infrastructure as well, as China looks to make transportation
of goods more efficient and economical. Most of the investment
in ports, roads, and docks are focused on countries producing
the basic commodities to be exported to China and in countries
on the Pacific Rim.
China has also entered into cooperative
arrangements in more technologically advanced industries
such as aircraft manufacturing with Brazil's Embraer, satellite
launches with Brazil, and telecommunications with Venezuela.
Many of these investments are still in preliminary stages
and have not yet borne fruit.
Despite China's increasing investment in
Latin America, it remains well behind the total U.S. investment
in Latin America of more than $300 billion, and the United
States remains by far the largest market for this region.
Additionally, there may be drawbacks associated
with Chinese investment in the region:
-- Several Latin American economists have
noted that Chinese investments often include low-interest-rate
loans that require the work be done by Chinese companies.
-- Others have noted that Chinese investments
in Latin America may make Chinese industries even more competitive
in the global market at the expense of Latin American and
-- Finally, the fact has not been lost on
regional leaders and economists that Chinese investments
focus heavily on raw materials, rather than on manufacturing
or other value-adding activities that generate jobs or boost
Diplomatic and Political Activity
-- The Contest with Taiwan and "Visit Diplomacy"
Rivalry with Taiwan also plays into China's
courting of Latin American countries. A key Chinese political
objective is to isolate Taiwan, and China will actively
court those twelve countries in this Hemisphere that recognize
Worldwide, only 25 countries officially
recognize Taiwan. Recently, Dominica and Grenada broke relations
with Taiwan in favor of China, and Jamaica opened an embassy
in Beijing. In the cases of Dominica and Grenada, Chinese
promises of assistance preceded recognition, with China
promising Dominica $112 million over six years. Taiwan has
sought to counter this with its own aid program in the region.
China also looks to regional organizations
as a channel for economic and political engagement. In May
2004, the Organization of American States granted China
permanent observer status. China also continues to pursue
its long-standing application for non-regional membership
in the Inter-American Development Bank. Before that can
happen, however, China must make a $200-300 million contribution
to the Bank, and pre-pay its International Development Association
loans. There will be no free rides for China in the IADB
and we will make every effort to ensure that there is no
politicization of loan considerations either.
The Chinese are also skillfully employing
"visit diplomacy." On the margins of the APEC
Summit in Santiago in November 2004, President Hu Jintao
visited Argentina, Brazil, Chile, and Cuba. Hu promised
tens of billions of dollars for improving infrastructure
-- again, mainly to improve access to, and transport of,
raw materials. During that visit, Brazil, Chile, and Argentina
agreed to recognize China as a "market economy"
for antidumping purposes, making it harder for their domestic
industries to pursue antidumping charges against imports
In December, Venezuelan President Hugo Chavez
visited Beijing, signing agreements that would increase
China's investment in Venezuela's oil sector and boost bilateral
trade, which, as Chavez stated, could reach $3 billion in
2005, more than double the total for 2004.
In January and February 2005, Vice President
Zeng Qinghong visited Mexico, Venezuela, and Peru, and attended
the opening ceremony of the first ministerial-level meeting
of the China-Caribbean Economy and Trade Co-operation Forum
2005 in Kingston.
China has also deployed police to Haiti
as part of a UN Security Council-authorized mission.
China is also expanding its military-to-military
contacts in the Hemisphere. In previous testimony before
Congress, General Bantz Craddock of the United States Southern
Command noted that national-level defense officials from
China made 20 visits to Latin America and the Caribbean,
while defense ministers and chiefs of defense from nine
regional countries have visited China. In addition, we have
noted an increase in educational exchanges between China
and several Latin American and Caribbean countries. While
these contacts are minimal, we are watching them closely,
and seek to ensure that they do not undermine the commitment
of Latin American militaries to democracy and civilian control.
We note that the political dimension of
China's contacts with some governments in the Hemisphere
appears to be more important than China's contacts with
other governments. In these cases, the nature of the contacts
will become clearer with time. We will be attentive to any
indication that economic collaboration will feed political
relationships that could run counter to our key objectives
for the region.
China's contacts with Cuba are particularly
problematic in this regard. Chinese economic influence in
Cuba grew through the 1990s. After a November 2004 visit
by President Hu to Cuba, the PRC sharply accelerated its
economic cooperation with Cuba, including in the strategic
nickel sector. Castro predicted Chinese investment would
double Cuban nickel output. The Chinese also offered sweeping
debt restructuring, delaying payment on old loans for a
decade. China has provided an estimated $700 million in
loans and credits to the Castro government. It appears that
Chinese economic support for Cuba serves as a prop for Castro's
decrepit and bankrupt regime; indeed, in a February speech,
Mr. Castro referred to China as "a new motor"
for his "revolution."
However, because the countries of the Western
Hemisphere share many key common political values, it is
unlikely that Chinese trade and investment or efforts to
develop military contacts will translate into significant
political support in the Hemisphere on the broad range of
multilateral issues. We are confident that the Hemisphere's
commitment to democracy, human rights, and market economies
will not be compromised for short-term economic interests.
The United States in the Western
As China's presence in the hemisphere grows,
the United States remains fully engaged with our neighbors.
Our policy is built upon a shared commitment to democracy,
free markets, and economic integration. We believe the strong
and growing partnership between the United States and the
Hemisphere is the foundation of the region's security, prosperity,
I want to be clear: we do not take the status
quo for granted, and we are constantly looking for opportunities
to strengthen and expand these relationships with our partners
in pursuit of our shared goals and objectives.
President Bush has outlined a strategy for
the Western Hemisphere that rests upon four interdependent
and mutually reinforcing pillars: bolstering security, strengthening
democracy, promoting prosperity, and investing in people.
And the key to implementing our agenda rests on multilateral
This is reflected in our commitment to the
Summit of the Americas process and the Inter-American system,
primarily in the form of our work within the Organization
of American States. We seek to constantly deepen bilateral
relationships with old friends and establish new partnerships
with emerging regional leaders.
While Chinese military-to-military contacts
and peacekeeping activity may be growing, it is starting
from a relatively low baseline. Moreover, these contacts
are occurring at time of unprecedented cooperation between
the United States and the countries of the Western Hemisphere
on security matters. In 2005, we are providing more than
$112 million in Foreign Military Financing (FMF) to the
region, making it the third consecutive year that FMF assistance
has exceeded $100 million. Our assistance has played a critical
role helping the Government of Colombia meet the challenges
posed by drug traffickers and terrorists.
Four countries from the region joined the
Coalition for the Immediate Liberation of Iraq and sent
troops to Iraq. El Salvador is on its fourth rotation. Ten
countries from the Hemisphere are participating in operations
to help stabilize Haiti; Brazil is leading the UN peace-keeping
We improved the basis for security cooperation
in the Hemisphere by concluding fifteen Article 98 Agreements
in the region. Through our efforts in the Special Summit
of the Americas and the 2004 meeting of the Inter-American
Committee Against Terrorism (CICTE), the political will
of the hemisphere to combat terrorism was strengthened.
The Special Conference on Security produced a declaration
that provides a practical guide for resolving interstate
border tensions, lowering pressure for arms spending, and
fostering a climate of confidence, trust, transparency,
The nations of this Hemisphere share a commitment
to promoting freedom and the dignity of the individual.
As President Bush said in his State of Union Address, "Our
aim is to build and preserve a community of free and independent
nations, with governments that answer to their citizens,
and reflect their own cultures. And because democracies
respect their own people and their neighbors, the advance
of freedom will lead to peace." Our shared values and
common traditions provide a crucial foundation for closer
political and economic integration. Promoting that integration
in a positive way is what U.S. policy is about -- especially
since the first President Bush launched the far-sighted
Enterprise for the Americas Initiative in 1990.
In this quest, it is imperative we have
strong, democratic, stable partners working with us to defend
our common interests -- in this Hemisphere and around the
world. That is why we are working hard to help the region's
elected leaders confront the challenge of making democracy
work for the general welfare of all of their people.
Today, nearly every country in the Hemisphere
has democratically elected governments. Guatemala, Nicaragua,
and El Salvador -- three countries just two decades ago
embroiled in bloody civil wars -- now routinely hold free
and fair elections. Haiti will return to our family of democracies
when it holds elections later this year, leaving only Cuba
as the odd country out.
When popular unrest recently unseated the
presidents of Haiti and Bolivia, the transfer of power in
both nations occurred within the parameters of democratic
institutions. And OAS efforts -- supported by U.S. diplomacy
-- helped to preserve constitutionality in Venezuela, despite
enormous challenges. To help hasten a peaceful democratic
transition in Cuba, we are implementing a major new initiative
including the recommendations of President Bush's Commission
for Assistance to a Free Cuba. At the January 2004 Special
Summit of the Americas, all democratic governments in the
Hemisphere agreed, at U.S. urging, to deny safe haven to
corrupt officials and their assets.
As set out in our unique Inter-American
Democratic Charter, democracy is the only legitimate form
of political organization in our Hemisphere. While we work
to increase freedom throughout the region, we will place
special emphasis on those nations where democracy is most
at risk: Haiti, Bolivia, and Venezuela. Our goals also include
achieving a peaceful democratic transition in Cuba, and
strengthening democratic institutions throughout the Hemisphere.
We will redouble our efforts to fight corruption
and promote transparency region-wide. Corruption undermines
political institutions, economic development, and public
confidence, and is one of the biggest threats to democracy
and stability in our region. Our initiatives are directed
largely at anti-corruption and democratic institution building
The U.S now imports $225 billion in products
from Latin America and the Caribbean each year, and in 2004
we exported $172 billion -- more than to the European Union,
and five times our exports to China. Half of our oil imports
come from Western Hemisphere countries; this includes three
of our top four suppliers (Canada, Mexico, and Venezuela.)
Trinidad is our largest supplier of liquid natural gas.
Our stock of foreign direct investment in
the region totaled $304 billion at the end of 2003. These
trade and investment numbers dwarf those of any other country.
In addition, our assistance programs make a crucial difference
above and beyond private sector flows -- precisely because
they help our neighbors to open their markets, educate their
citizens, deepen the rule of law, and undertake macroeconomic
reforms that lay the foundation for sustained and broad-based
While we are proud of our successes, we
will not succeed in achieving or sustaining progress toward
prosperity as long as much of the Hemisphere's population
remains mired in poverty. While the percentage of the population
living in poverty is decreasing, because of population growth
the number of people in poverty is increasing, and the distribution
of income remains more unequal in Latin America than in
any other world region. Therefore, reducing poverty and
increasing regional competitiveness is a key objective,
and one that we are pursuing aggressively on bilateral and
multilateral fronts. One example is the Security and Prosperity
Partnership with our neighbors to the North and South.
One element that is often overlooked when
we talk about our connection to Latin America and the Caribbean
is the intensity of people-to-people ties. Hispanics are
the largest and fastest growing ethnic group in the United
States. The 2000 Census reported that 35.6 million people
identified themselves as Hispanics, almost 13% of our population.
And the Census Bureau projects that by 2010 Hispanics will
be around 48 million, about 16% of our population. These
communities sent back to their home countries more than
$35 billion in remittances last year. And those remittances
are expected to continue to grow quickly.
Another indicator of the intensity of those
ties is travel. The FAA estimates that total passenger traffic
to and from the U.S. to Latin America and the Caribbean
was 43 million trips last year, almost as many as across
the Atlantic (48 million) and almost twice the number across
the Pacific (24 million).
U.S. educational institutions have a powerful
impact on the region through exchanges of students, teachers
and professionals, and through institutional partnerships.
And the cultural linkages within the Americas are also intense,
one example being the growing popularity of Latin art and
music in the U.S.
While we believe that our ties to the region
remain solid and unshakable, we recognize that strengthening
these bonds and solidifying democracy and economic growth
are essential if we are to maintain this posture. One of
the keys to this process -- and where we hope to partner
with the legislative branch -- is in our trade agenda, and
particularly the approval of the CAFTA-DR agreement.
We can send no better message to our Latin
neighbors of the U.S. commitment to a strong and vibrant
partnership than this free trade accord which will make
our economic and commercial ties closer than they have ever
been, and will solidify Central America's transformation
toward democratic governance and free market economies.
Central America and the Dominican Republic
make up the 2nd-largest U.S. export market in Latin America,
behind only Mexico. CAFTA-DR will not only allow all parties
to it, including the U.S., to increase prosperity through
the opening of markets and increased investment flows, but
it will also strengthen democracy in the region, encourage
critical second generation economic reforms, and contribute
to anti-corruption and poverty alleviation efforts.
Closer trade ties are a signal of friendship
and commitment, and they serve our mutual interests. With
Congress' support, approval of CAFTA-DR and conclusion of
the ongoing talks with the Andean countries and Panama will
make clear that the Hemisphere has no greater and more committed
partner than the United States.
Our commitment to the region's well-being
is also reflected in our assistance programs. Most governments
in our Hemisphere are trying to do the right thing; and
that is why we are such active partners. The money we spend
in our region enjoys great marginal return, preserving momentum
for reform, supporting countries' efforts to achieve self-sustaining
growth, and buttressing the political stability of nations.
If the choice is between healthy economic partners or exporters
of drugs and terrorism, it is obvious where we will stand.
Furthermore, our assistance helps reinforce multilateralism
directed at practical advances, with the countries of the
region moving together as a community with shared values.
Our assistance helps countries develop the
capacity to govern with accountability and transparency,
to implement policies that allow economic freedom to flourish,
and to invest in their people. These priorities echo the
core criteria of the Millennium Challenge Account (MCA),
President Bush's bold new initiative that substantially
increases our aid flows. We are actively promoting economic
and political reform through the MCA by rewarding countries
that make the commitment to rule justly, invest in their
people, and encourage economic freedom. Three of the poorest
Western Hemisphere nations -- Nicaragua, Bolivia, and Honduras
-- have been designated by the MCC as eligible to apply
for assistance. We are hopeful that Guyana and Paraguay
will qualify for the threshold country program.
Our public diplomacy efforts build support
for U.S. policies by delivering a consistent message that
presents the U.S. as an engaged and reliable partner, ready
to work with our hemispheric neighbors to create a true
inter-American community. In particular, we are expanding
our outreach to our neighbors to strengthen democratic institutions
by showing how greater access to the political process,
a government free of corruption, and strict adherence to
human rights can improve the lives of average citizens.
We will advocate for open markets and free trade and concretely
address how a market economy can produce benefits for even
the most marginalized segments of society. We are always
working to better publicize U.S. assistance to the region
and its impact on the lives of ordinary people. In short,
we are constantly looking for ways to demonstrate the ways
in which U.S. engagement adds value in the form of better
governance, more economic opportunity, and an improved quality
China's growing presence in the region reflects
its growing engagement throughout the world. It does not
necessarily constitute a threat to U.S. interests. Nonetheless,
we remain keenly aware that China's growing economic ties
to the Hemisphere includes a political dimension.
In the meantime, we will continue our historically
strong and close ties in the Hemisphere and to advance our
agenda by focusing on the pillars identified earlier --
bolstering security, strengthening democracy, promoting
prosperity, and investing in people. To advance this agenda,
we will need the continued support of Congress for the initiatives
that support our agenda.
Our challenge is to remain actively and
effectively engaged in Latin America, and continue helping
our friends transform their societies and extend the benefits
of democracy and economic reform to all their citizens.
China is a growing presence in the Western Hemisphere, but
it is safe to say that the United States has been, and will
continue to be, the long-term partner of preference -- a
preference not based on short term-term economic deals,
but based on shared values and common long-term objectives.
The Administration's policies aim to ensure that this remains