China and Latin America: Dependency in the 21st Century?

International relations expert Barbara Stallings spoke with Diálogo Chino about her new book that breathes life into an unfashionable idea

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China and Venezuela signed backroom deals with little transparency, international relations professor Barbara Stallings told Diálogo Chino (image: Alamy)

Frustrated at earlier assumptions that Latin American economies and societies would eventually develop and become ‘modern’ just as rich countries had, some scholars in the 1960s argued that a dynamic of dependency had existed between them for centuries – and that this kept poor countries from developing.

The dependency theorists posited that since Latin America’s integration into the capitalist world economy in the 16th Century, principally as a commodity exporter, its destiny had been in the hands of elites in the industrialised ‘core’ and in its own ‘peripheral’ countries. Europe represented the first centre and after World War II, the US emerged as the global hegemon.

Dependency theory made important contributions to the study of international relations, especially those of Chile’s Enzo Faletto and Brazil’s Fernando Henrique Cardoso, who would later become the country’s president. Yet it fell out of favour in the 1980s and 90s as consensus on the need for open markets and political liberalism spread worldwide and critics slammed it for negating developing countries’ own agency.

dependency theory China-Latin America in C21

But in her new book Dependency in the 21st Century? The Political Economy of China-Latin America Relations, Barbara Stallings argues that with China’s rise, the unfashionable theory can provide insights anew into the new global superpower’s relationship with Latin America.

Stallings, a professor at Brown University in the US, spoke with Diálogo Chino about her reasons for revisiting dependency theory, why China’s big Venezuela bet hasn’t been quite as disastrous as it seems, and what the upcoming US elections means for geopolitical tensions over Latin America.

 

Diálogo Chino [DC]: What made you want to return to dependency theory as a way of improving our understanding of contemporary China-LAC relations?

Barbara Stallings [BS]: I received an invitation from the editors of a Cambridge University Press series of short books called “Elements”. The series I was involved in wanted to have their first books on concepts that originated in Latin America and travelled to other regions. Dependency is clearly a prime candidate. They were interested in reviewing the dependency literature and seeing to what extent it’s useful today. I decided at the end of the day that dependency does indeed provide a useful framework for looking at China and Latin America.

 

DC: Is there a prime example of a Latin American country that has a dependent relationship with China right now?

BS: One of the things I did in the book was to divide Latin America into two groups. In one group it’s clear that Venezuela is the prime example. It was quite willing to follow whatever rules China put on the table and sign backroom deals with no transparency.

On the other side are countries that pride themselves on rule of law of which Chile would be an example. Chile prided itself on having rules for procurement. If, for example, a Chinese company wanted to build a bridge, Chile would say: “Get in the list and bid for it… If you win the bid, that’s fine. If you don’t, we don’t need you.” But recently they’ve got into a bit of trouble with their underwater [fibre optic] cable, which was supposed to go from Chile to Asia and be built by a Chinese company. But one way or another they were persuaded by the US that it was a bad idea and now a Japanese company is going to build the cable. China also bought into the main Chilean lithium company and is trying to get Chile to export raw, or at best refined lithium, but certainly no batteries.

 

DC: How desirable is a situation of dependency for China in cases such as Venezuela? Is there an optimum level of dependency that China would like?

BS: I think China had a very different idea when this all started with Hugo Chávez. They knew a lot less about Latin America then than they do today. Here was a major oil source that they could tie debt repayments to in a very smart way. The US, through the bond market, and China through the policy banks, basically lent Venezuela the same amount of money – US$60 billion. Now, China’s exposure is $20 billion and the US’ exposure is $60 billion. Somebody was smarter than somebody else.

What the Chinese did not want to do at all was to get into a political relationship. Chavez wanted to drag China into his anti-US capers. China clearly saw tying Venezuela to the oil-for-money mechanism – and I don’t know if they ever thought of the word dependency – as a way of trying to get some control and make sure they got their money back.

 

DC: How prevalent is dependency in the thinking of Latin American institutions today in their dealings with international partners such as China?

BS: The term dependency fell into disrepute in the 1990s. There are some people who have begun to use the term again. But economic policymakers especially would not want to be caught dead using the term dependency. That said, the idea behind dependency that people are very concerned about is to what extent these big Chinese investment projects and the heavy reliance on Chinese markets are leading to the same kinds of things we used to call dependency – so that the Chinese have a big say on what kind of economic policies are followed and they manage to get the raw materials they need, as happened in earlier periods with Europe and the US.

Xi Jinping wants to be as open as he can that China has the best model for developing countries.

One of the interesting things is the political relations between China and Latin America. Lots of people think its mainly economics. I agree it’s mainly economics at this point but I think it’s useful to try and look at the more traditional kinds of diplomatic relationships and even military relationships. All of those fit in to what the Cardoso and Falletto dependency approach talked about in terms of networks between LAC countries and in this case China, but earlier the US and EU.

 

DC: In the book you talk about these “linkages” that enable situations of dependency to form. What is required for China and LAC to build connections in a way that doesn’t result in dependency?

BS: There are two Chinese white papers on Latin America. Are there any Latin American countries’ white papers? The Chinese clearly see this exchange as one they can manage. They bring journalists or students, legislators or businesspeople to China and show them around and show the things China wants them to see. They give them the narrative of “win-win” and how they can work together. Exchange is an important issue here.

When I first started teaching in China five years ago, at Beijing Normal University, it was in one of many programmes across China set up through the foreign aid mechanism to bring students from developing countries to do an MA [postgraduate degree] in China. These were mainly African students, there was one Latin American. They were there for two years with the idea that they would go back to their countries and have a positive view of China and help to build relationships.

Another thing that is important is the Confucius institutes, which the US is trying to close down at home, and elsewhere if they can. But language is one of the key blockages. China is trying to provide language training to people from developing countries. There are also increasing numbers of Latin American programmes at universities and think-tanks in China. They’re trying to create expertise on their side, and just like we [the US] do, trying to create expertise in Latin America of a particular type.

 

DC: Dependency theorists imagine a system of core and peripheral countries and China envisages and promotes a world order based on multipolarity. How do these two ideas fit together?

BS: China really imagines ‘unipolarity’ or ‘bipolarity’. Dependency, at least the more sophisticated version, had core, semi-periphery and periphery in mind. The course I teach sees China as both a successful developing Asian economy and at the same time an important global actor that helps shape the fate of others, in this case Latin America. Back in 1949, China was part of the periphery. It rose into the semi-periphery and is now trying to make its way into the core. The contrast between China’s per capita income and its aggregate GDP is the best demonstration of this two-headed version of China in the world economy. They’ve abandoned Deng Xiaoping’s [mantra] “be modest and hide your intentions”, and now Xi Jinping wants to be as open as he can that China has the best model for developing countries.

 

DC: The consensus on the need for open governments and free trade was supported by Washington-based financial institutions. How do you see the changes China has made to the global development finance architecture playing out in Latin America?

BS: One of the really interesting things about this is that if the US and the West more generally had been more welcoming to China, none of the [new Chinese-initiated] institutions would exist, probably. I happened to be at the Inter-American Development Bank [IDB] meeting when the Chinese thought they were buying floating shares, only to be told: “No, we’re selling them to Korea.” The Chinese were furious. They made an incredibly bitter attack on the IDB because they couldn’t get in in the way they expected. In a similar way if we [the US] had been willing to up their shares in the IMF and the World Bank, then who knows if the AIIB and the BRICS bank would even exist? Is China creating a new global financial architecture? I think it’s more interested in bilateral relationships. It wants to claim it is taking over the mantle of multilateralism since Trump has dropped it.

 

DC: What sort of changes in China’s relationship with Latin America do you envisage if a new US president is elected on November 4?

BS: I expect moderate changes, more in terms of style than in substance. One of the few things the left and right agree on in the US is that they’re against China – that they need to take a tougher position. Biden may even be pushed into taking a tougher position than he is now. He’s tried to resist it. There will not be a big change in terms of us being friendlier with China.

What I do think might happen is there’ll be a stylistic change. Probably, the US will stop trying to badger LAC countries, as [secretary of state Mike] Pompeo has with his “China is a horrible actor, out to do you all in” act. This is partly because Latin America will go back to where it was under the Obama administration – not very important. To use a phrase that is popular in the US right now in another context, “they’ll take their knee off the neck of Latin America”, certainly as far as sending the secretary of state out to try and eliminate their relationships with China. They may go back to the idea that China can help Latin American countries grow because they’re really going to need it now. In the best of cases it will be a more “benign neglect”. The leverage Trump has gone back to, similar to the bad old days, if it doesn’t disappear altogether, at least will become much less up front.