China has gradually expanded its economic and political presence in Latin America1 over the past ten years. Though trade between China and Latin America continues to remain a relatively small share of their respective global trade, it is an increasing source of new economic growth for both. Resource acquisition remains a cornerstone of Chinese trade and investment in the region. China has also sought to use investment and funding to encourage Latin American countries to officially recognize China instead of Taiwan, thereby weakening Taiwan's global support for a role in the international arena. In addition to investments, China has sought to improve its diplomatic presence through an increasing number of high- level visits, military cooperation and exchanges, and involvement in several regional organizations. Although China is currently not a major player in the region, China's appeal as an additional source of investment and a potential new export market for Latin American goods will ensure the growth of its political and economic influence in the region. (From China in Latin America, page 3).
Brazil's Growing Trade Relationship with China
Brazil is one of China's largest trading partners in the region. From 1998 to 2008, trade between the two countries increased 1,838 percent.32 This rapid growth in trade and investment has fueled Brazil's economy and provided needed demand in a slumping global market. However, similar to the rest of the region, Brazil exports mainly raw commodities and imports manufactured products from China. In 2009, 77 percent of Brazil's exports to China consisted of raw materials and commodities while industrial products were only 23 percent. Of Brazil's total exports to China, iron ore accounted for approximately 40 percent and soy beans and soy oil accounted for an estimated 23 percent. In contrast, Brazil's imports from China are 98 percent industrial products.
While these exports have led to further economic growth in Brazil and improved quality of life by providing low-cost products, competition in manufacturing sectors has led to the outsourcing of factories to China or an inability of domestic firms to compete with the lower prices of Chinese firms.36 According to a study of 1,529 firms conducted by Brazil's National Industrial Confederation, one-fourth of Brazilian manufacturers face competition from Chinese firms in the domestic market, and two-thirds of Brazilian exporters have lost foreign clients to China. The Federation of Industries of the State of Sao Paulo estimates that this competition with China has led to the loss of approximately 70,000 Brazilian manufacturing jobs in 2010 and $10 billion in expected earnings for local industry.
As these two countries compete in the same manufacturing sectors, the results of this competition have led to some recent political tensions. For example, in statements with union leaders, Brazilian President Rousseff stated that "There is a misbalance in our relations with China. Brazil exports commodities and imports too many knick-knacks. This happens particularly between Christmas and Carnival. I'm told that 80 percent of this year's  Carnival costumes came from China." (From China in Latin America, page 8-9.)
In addition to arms sales and contacts between the PLA and Latin American militaries, select commercial interactions must be considered as part of its military engagement. In Latin America, this includes collaboration between the Brazilian aircraft manufacturer Embraer and China Aviation Industrial Corporation (CAIC) II to produce ERJ-145s business jets in Harbin, China, as well as sales of Y-12 turboprop aircraft to Venezuela. In the space industry, ties include four major ongoing space-related projects in Latin America, the China-Brazil Earth Research Satellite (CBERS), Venesat-1, the Venezuela Remote Sensing Satellite, and the Tupac Katari satellite, as well as other projects in development and more modest collaboration initiatives. In the telecommunications industry, Chinese firms such as Huawei and ZTE are major players in the leading nations of Central and South America. (From R. Evan Ellis, China-Latin America Military Engagement: Good Will, Good Business, and Strategic Position, Strategic Studies Institute, Aug. 2011, pp. xi-xii)
Ellis seeks to put together Chinese economic and military strategies, tying both to the protection of the Go Out Policy. "Growing Chinese military contacts with Latin America are, in some ways, an understandable part of the expansion of the PRC as key global actor with global interests." (Ellis, supra, at p. 43). These interests include:
1. securing access to reliable sources of primary products in support of manufacturing activities and capital formation,
2. assuring the ability to feed the Chinese population as it both urbanizes and consumes more protein,
3. establishing and protecting markets for Chinese goods as its producers continue to expand production and move up the value-added chain,
4. securing access to technology and global information flows,
5. maintaining a presence in institutions key to China’s global economic transactions, and
6. avoiding the consolidation of an international coalition opposing the “rise” of the PRC.
Chinese military engagement with Latin America supports each of these imperatives, albeit often in in- direct ways. (Ellis, supra, at 2-3).