U.S. Relations With the People's Republic of China (2008)

U.S. Department of State

U.S. Diplomacy in the Americas: A Conversation with the Diplomatic Corps

Thomas A. Shannon, Assistant Secretary for Western Hemisphere Affairs
U.S. Ambassadors to Western Hemisphere Countries
U.S. Chamber of Commerce
Washington, DC
December 5, 2008

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MS. ROTHKOPF: Thank you very much.

Our next question is for Ambassador Simons and Ambassador McKinley.

Ten years ago, China's trade with the region was negligible. Today China is one of the region's leading and fastest growing trading partners. At the same time the region is one of the primary destinations for Chinese foreign investment. Does this amount to a sea change in the orientation of the region? The beginning of a new period of competition for influence in the region among great powers, a reorientation of the economies of the region from East to West across the Pacific?

AMBASSADOR PAUL E. SIMONS (Chile): Thank you.

I also received this question at my confirmation hearing from two of the Senators, so I know there's great interest in the issue of China expanding in Latin America.

From on the ground in Chile I think the expansion of Chinese trade with Chile has been very beneficial to both countries in terms of economic growth. China is now the primary destination for Chile's copper exports, and in turn China supplies a lot of low cost manufacturers that have become accessible to the growing middle class in Chile. So I think it's been kind of a win-win for economic development in Chile.

I think more broadly throughout the hemisphere, I think the growth of China-Latin America trade is not dissimilar from the growth of China-U.S. trade. It's comparative advantage at work and it's raising living standards in both countries. So I don't see it necessarily as a competitive issue vis-à-vis the U.S. And particularly if you take a look at the type of exports the U.S. is sending now to Chile, a lot of high tech products, high intellectual property products, high value-added products. The Chinese are typically sending more manufactured goods but not necessarily direct competition.

I think it's healthy. It's part of the globalization process. The Chinese have not been that much of a major factor in terms of investment in Chile. I know in some of the other countries they've been more active. In Chile it's basically been a trade relationship, but I think it's been expanding and I think it's been good for the hemisphere, good for China, good for Chile. So I think it's something that should be encouraged.

AMBASSADOR MICHAEL P. MCKINLEY (Peru): I'm afraid I'm going to mirror Paul's remarks to a remarkable degree, so I'll keep it short. I'll just focus on key words of the question.

Competition for influence. I think if you take a look at China's role in world trade in any region of the world it's not a question of competition for influence. They're looking to have the raw material they need to grow their domestic economy.

If you look at China's role in world trade and our role in world trade across this decade, world trade has grown exponentially. The last five, six years have been the fastest period of growth in world trade since World War II so the pie is growing for everyone.

Coming down to the specifics of the relationship with Peru, to take this year which is a year in which China has figured fairly prominently in Peru with a projected $2 billion investment in an iron ore facility, U.S. exports to Peru have gone up 70 percent in the nine months to September, year on year. U.S. investment in Peru is up about $2 billion. So again, we're not facing competition. The pie is growing. It's a part of globalization. The U.S. continues to be Peru's primary market for both exports and imports. China has grown, but again has not cut into our ability to expand in what is a growing market, not just in Peru, but in the Latin American region.

MS. ROTHKOPF: I think I'd like to turn over the last work to Assistant Secretary Tom Shannon to say a few words in response to this question, but I'd also like to ask you to comment a bit on the relationship with Brazil.

ASSISTANT SECRETARY SHANNON: Happily.

In regard to China, one thing this administration has done is begin consultations with China on Latin America and the Caribbean. We've done this three years running, twice in Beijing and once here in Washington, D.C. We fully expect these kind of consultations to continue. It's an important opportunity for us to explain to each other what our interests are in the region, how we see our activities in the region, and to ensure that we don't get cross-wise in any unnecessary way.

I think the talks have been successful. They've advanced to a point where the Chinese themselves want to move beyond just consultations to determine whether or not we can begin to coordinate our activities in multilateral development banks and determine whether or not China's experience in poverty reduction and in disaster response could be of meaningful use to us as we work in the region on these issues with our partners.

But one of the striking things about how the Chinese understand what they are doing in Latin America and how it is related to us is that the Chinese view the U.S.-China relationship as not simply a bilateral relationship. They view it as a global relationship. They see their behavior around the world connected to a larger relationship with the United States. And this is a good thing for us because it gives us a degree of leverage and a degree of access that we might not typically have.

This does not mean there aren't problems, this doesn't mean there are not disagreements, because in many areas the Chinese presence is a fairly new one, or at least the presence it has taken now, especially in regards to its economic and trade pursuits and in many areas this newness means that it misses some nuances. But my own view is that these kinds of consultations are useful, they need to continue. There are things we can do in concert with the Chinese in the Americas, and we can help preserve a larger relationship with China by how we coordinate our activities throughout the region.

In regard to Brazil, regrettably our Ambassador to Brazil, Cliff Sobel, is at the Woodrow Wilson Center at a conference on Brazil. He was one of the keynote speakers this morning so he could not be with us. But as we look back over the accomplishments in the Americas over the past eight years, what has happened to the U.S.-Brazil relationship I think is one of the high points. I think President Bush and President Lula are to be commended not only by contemporaries, but they will be commended by historians for what they have done in taking a relationship which has always been understood to be important, always been understood to be full of potential, and actually made it real. They have done so through continual engagement, through a lot of discussion back and forth, both formally in meetings but also informally through telephone conversations, and then by directing their bureaucracies to make a leader's commitment to a positive relationship a reality.

Over time we have built a series of structures, both governmental, civil society based, and private sector based, that has really connected the United States and Brazil in an important way. And I think has done so in a way that recognizes that the two greatest, largest democracies of the Americas can work together in areas far beyond the political.

Our Memorandum of Understanding on Biofuels which has been expanded in terms of our third country engagement to include more countries in the Caribbean and Central America, but also African countries like Senegal and Guinea-Bissau, our cooperation in São Tomé and Príncipe to eradicate malaria and our cooperation in Guinea-Bissau on building of legislative institutions really is innovative. It really shows how these two large countries can work together, especially on issues that are related to economic and social development.

I believe that the scholarship programs that we have begun in Brazil, especially the English language programs that give Brazilians of lower middle class who do not speak English an opportunity to access U.S. universities are important.

I believe the Joint Action Plan to fight racism and to promote equality which Secretary Rice initiated in Brazil is also an important step forward, showing that the United States and Brazil can work on common social problems and exchange experiences. And it has created I think a level of confidence and trust in the relationship that also allows us to manage our differences, and there are differences, no doubt about it. That's just a reality in a world in which great countries are involved in global relationships.

This is an area where we're going to continue to focus, I think. Our relationship with Brazil is absolutely essential to the well being and success of South America, but it's also absolutely essential to our ability to present ourselves in South America as a helpful partner.

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