Red Dragon's southern strategy: capitalizing on growing anti-U.S. sentiment and its huge foreign exchange surplus, Beijing is making large inroads economically and diplomatically in Latin America.

While public attention has been focused on Iraq, Communist China has made astonishing inroads in Latin America. In early November, Chinese President Hu Jintao conducted a two-week tour of the region, sewing up several major trade agreements and laying the foundation for an anti-U.S. strategic coalition with several emerging leftist governments.

"While we've been so preoccupied with the Middle East and terrorism, China has really seized the strategic initiative in Latin America," William R. Hawkins of the U.S. Business and Industry Council told THE NEW AMERICAN. "Beijing is regarded in some circles as a strategic partner in the 'war on terrorism' and in our negotiations with North Korea. But while Washington has been focused on those distant issues, Beijing has been nailing down deals with left-wing governments in the Western Hemisphere."

In his recent tour of the region, "Hu offered capital investments everywhere," Hawkins continues. "He's promised to spend tens of billions of dollars, most of it on infrastructure and natural resources." What's really galling about this spending spree, notes Hawkins, is that "it's all paid for in recycled dollars from our trade deficit. Think of it this way. Hu promised to spend a total of $100 billion in Latin American trade and investment deals over the next decade. That amount is less than our bilateral trade deficit with China [in 2004] alone."

The overall strategy being pursued by Beijing in the Western Hemisphere follows "a classic mercantilist or even neo-colonial model," Hawkins contends. "China wants to buy food, as well as oil and raw materials--such as copper and nickel--from Latin America. And they essentially want to pay for them with exports of cheap consumer goods. In the long term, this means that China would continue to build its industrial capacity, while Latin America would remain under-industrialized."

And this has obvious negative implications for the United States as well. "The claim made on behalf of NAFTA and the proposed Free Trade Area of the Americas [FTAA] is that we're opening up new export markets throughout the hemisphere," observes Hawkins. "What we've actually seen, however, is that NAFTA has simply opened up our country to cheaper exports, as well as cheap unskilled labor, while accelerating the export of our manufacturing jobs. With China poised to underbid U.S. exports to Latin America, we stand to take a double hit."

But the U.S. also stands to take a strategic "hit," as Beijing develops close ties with leftist regimes in the region, particularly Brazil and Venezuela, both of which are resource-rich nations governed by

Marxist regimes.

Sobering Signs

Hu's Latin America visit included a stop in Santiago, Chile, to attend a summit of the Asia-Pacific Economic Council (APEC), a regional economic bloc. President Bush also attended the APEC forum. The twin visits offered Latin American leaders and populations a chance to view "two world leaders with different world outlooks," explained Dallas Morning News business columnist Jim Landers. "They preferred the Chinese guy."

At the APEC summit, commented Myriam Marquez of the Orlando Sentinel, "[it wasn't] Hu that Latin Americans were protesting.... On the contrary, Hu was being hailed as a progressive world leader. It's George W. Bush who's the object of derision, the focus of tear-gassed protesters."

According to a November 21 AP report: "The protests began after Bush flew into the Chilean capital Friday night for the 21-nation forum.... 'Bush, get out of our country!' many shouted while others ... burned American flags and protested the US-led war in Iraq with cries of 'Bush, murderer!'" No similar protests greeted Comrade Hu, the figurehead of a murderous Communist oligarchy. But this is to be expected, given that the "anti-globalist" rent-a-mob consists almost entirely of leftists who don't oppose globalism in principle; it's the global expansion of capitalism they abhor.

The regime Hu represents practices a form of capitalism, albeit of a corrupt and statist variety.

"What makes contemporary China such a vexing problem is the fact that it has become capitalist, after a fashion," William Hawkins explained to THE NEW AMERICAN. "I visited China last fall, and it was very different from what it had been in previous visits decades ago. It is enjoying great dynamism and growth, and there is a market system of sorts emerging there. But it's a system we'd have to call 'state capitalism,' in which nearly all of the really profitable ventures are controlled by a favored class with very strong ties to the [Communist] Party--the so-called 'princelings.'" While the Chinese economy is "booming" and a growing segment of the population enjoys more freedom now than it did under Mao or Deng, "the Party is still firmly in control," Hawkins concludes.

China's industrial growth, which is made possible in large measure because of its negligible labor costs and the eagerness of Western corporations to relocate there, has generated huge foreign exchange reserves. This, in turn, has given Beijing the means to begin courting not only revolutionary left-wing regimes in Latin America, but more "moderate" political figures as well.

"Operation American Backyard"

During his grand tour, Hu spent several days in Brazil and Argentina, visited Chile and Cuba, and conducted bilateral meetings with Mexico's Vicente Fox and Peru's Alejandro Toledo. Communist China also secured observer status at the Organization of American States--a Western Hemisphere body describing itself as a "regional agency" of the United Nations.

Beijing is also quietly working out bilateral and multilateral "free trade" accords with key Latin American nations. Lu Guozheng of the Chinese Ministry of Commerce predicts that China and Chile "are very likely to reach a free trade deal before the end of 2005."

In addition, reported the December 2 China Business Weekly, "the Ministry is considering launching a feasibility study on free trade with Mercosur," an embryonic EU-style economic union joining Brazil, Argentina, Paraguay, and Uruguay.

Of course, Beijing's influence in the region is almost entirely based on its abundant capital reserves. Hu's Latin America tour, which Hong Kong-based CNN Asia commentator Willy Lam dubbed "Operation American Backyard," included an entourage of hundreds of "princelings" representing Party-aligned corporations. Hu and his comrades racked up more than 400 business deals during the tour, most of them involving key natural resources and infrastructure.

"Mr. Hu put his money into railroads that will move greater volumes of iron ore to the coast; aluminum and steel mills; soybean fields; housing projects; and energy," writes the Dallas Morning News' Jim Landers. "The energy projects include a natural gas pipeline in Brazil and $45 billion in oil exploration in Argentina." While in Argentina Hu also inked a deal to invest $19.7 billion to develop mines, railroads, and other infrastructure projects--a prospect that sent the cash-strapped nation's stock market into the stratosphere.

China's most important Latin American investments, comments CNN-Asia's Willy Lam, are in the field of energy. "The Brazil state oil firm, Petrobras, expected that China would this year become the third-leading destination of Brazilian crude exports, with shipments of about 50,000 barrels per day," he notes. "At the same time, the Chinese state oil company Sinopec invested $1 billion in a joint venture with Petrobras for the construction of a gas pipeline linking south to northeast Brazil."

"There's no question in my mind they are trying to lay the path of the future," observed Cynthia Watson, who teaches strategy at the U.S. War College in Washington. "With all that petroleum down there, and the fact that the United States right now is looking off in another direction, it's a golden opportunity.... We can no longer take petroleum from Latin America as a given."

"New Economic Order"

The Chinese regime's "dollar diplomacy"--made possible, once again, by its growing trade surplus with the U.S.--has a strategic dimension as well. As Landers points out, Hu used his tour to promote "'a new international political and economic order' favoring the developing countries." In addresses before parliaments in Brazil and Argentina, Hu declared that Beijing would "forever stay on the side of developing countries" and seek to create a "democratic international order" that would benefit the relatively poor nations of the "Global South."

It was in the context of his "democratic international order" that Hu announced Beijing's intentions to pump $100 billion in trade, investment, and aid into Latin America over the next decade. Beijing's helping hand does come with conditions, however. "In addition to insisting on a 'one China' policy, Beijing now also calls on its trade partners to accord it 'full-market economy status,' which would strengthen its hand in anti-dumping disputes within the World Trade Organization," pointed out Frank Ching in the December 3 Japan Times.

During Hu's tour, Brazil, Argentina, Chile, and Peru agreed to join roughly 20 other nations in recognizing China's full-market economy status, with the EU expected to join soon. This helps fortify both China's power within the WTO and the Geneva-based trade body's role as the custodian of the global economy. It also creates a framework for a China-led anti-U.S, coalition within the global trade body, which is playing an ever-larger role in defining our nation's economic destiny.

For all of its subtle economic maneuvers, China's regime remains committed to the revolutionary aims of Marxism-Leninism, and Hu's tour abundantly illustrated that fact.

A November 15 report in the Mercosur Press added a dash of much-needed realism regarding the engaging Mr. Hu, whom it described as "an effective member of the Chinese Communist Party. He presided over the Communist Youth; as envoy to Tibet he ruthlessly repressed secession attempts and later accelerated economic reform and growth while maintaining tight political control over 1.3 billion citizens."

During his visit with Cuban despot Fidel Castro, confined to a wheelchair following an accident, Hu described China and Cuba as "not only friends, but brothers." That fraternal relationship was underscored by a promise from Hu to boost economic and technological assistance to the Cuban regime.

Significantly, the Chinese ruler spent five days in Brazil, cultivating a relationship with the government of Luiz Inacio "Lula" da Silva. Lula, head of the Brazilian Workers' Party (the renamed Communist Party), is a key player in the emerging coalition of Latin American Marxist rulers that also includes Venezuela's Hugo Chavez and Argentina's Nestor Kirchner. Lula and Castro attended Kirchner's inauguration in May 2004.

Hu describes Lula's regime as China's "strategic partner." The Beijing-Brasilia entente is rooted in the idea, carefully nurtured by China, that Brazil's "economic and political aspirations have been adversely affected by the giant shadow cast by the U.S., [and] China is ready to extend a helping hand," comments Willy Lain. China has also supported Brazil's bid for a permanent spot in an expanded UN Security Council.

Since 1998, China and Brazil have taken part in a joint space venture called the China-Brazil Earth Resources Satellite Program (CBERS). Two of the Earth-scanning satellites are presently in orbit, with a third scheduled for launch in 2006. Hu used a visit to Brazil's National Space Research Institutes in San Jose dos Campos to praise CBERS as "an example of south-south cooperation in new and high technology." While CBERS is, from all appearances, a peaceful application of space technology, it should be kept in mind that Brazil is a nuclear-capable nation ruled by a revolutionary Marxist party--and missile technology used to orbit satellites can be used for more aggressive purposes.

China Calling the Shots?

Although Hu's grand tour of Latin America garnered few headlines in the U.S. media, its significance did not escape the notice of at least a few foreign affairs analysts.

"China has been worming its way into Latin America, as more countries turn to socialist leaders for salvation and the Bush administration gets consumed on the terrorism front," opined the Orlando Sentinel's Myriam Marquez. "[A]s China continues to hold more U.S. investments and help sustain America's rising federal debt by buying up U.S. dollars, we must wonder: how sovereign is America? And how will China's growing influence in Latin America affect our hemisphere?" In short order, if present trends continue, "we will be dealing with China calling the shots in our backyard."

Although "China [is] an authoritarian, Communist Party-dominated state, [it] is moving in cultural influence to be accepted as the new country to emulate," added veteran foreign correspondent Georgie Anne Geyer. "At exactly the same time, because of the Iraq war and because of the execrable behavior toward other nations by the Bush administration, hating America has become a top sport."

Indeed, some observers might conclude that a bizarre role reversal has occurred, with the president of Communist China promoting "free trade" and the president of the United States promoting perpetual war and the imposition of police-state measures in order to combat terrorism. In a larger sense, however, the Hu regime and the Bush administration are pursuing the same objective: the creation of a world order based on large regional economic and political blocs.

Shortly before Hu began his jaunt to Latin America, Beijing signed an accord with the Association of Southeast Asian Nations (ASEAN). That regional group is the successor organization of the SouthEast Asia Treaty Organization (SEATO)--a UN affiliate under which the U.S. fought the Vietnam War.

China's agreement with ASEAN created "the world's third major trading bloc--a new open market of 2 billion people with an overall economic production of around $2 trillion," reported the Washington Times on December 9. "Overnight, the region has secured a degree of unification capable of matching the bargaining might of the European Union and [NAFTA]. Equally important, it has shifted the weight of strategic influence in the region away from Washington, perhaps permanently, to China."

How are we to combat the economic ascendancy of the EU and ASEAN? The obvious answer, according to Alan Stoga, vice chairman of the Council of the Americas, is to build our own "free trade" bloc in the Western Hemisphere. And we'd better hurry, he claims because China just might beat us to the punch.

"From the Latin point of view," Stoga said to the Dallas Morning News, "[Hu] is the first global leader of a large country that says, 'I want to work with you, I want to trade with you, I'm ready to sign long-term contracts.' They see China as a part of the solution, not part of the problem, and they see the rest of us, in an important way, as part of the problem."

The "solution" envisioned by Stoga and his associates can be inferred from the fact that the Council of the Americas describes the proposed Free Trade Area of the Americas as "the single most important multilateral undertaking, and the principal vehicle for free trade, in the Western Hemisphere today." This is to be expected, since the Council of the Americas--a creation of international power broker par excellence David Rockefeller--organized the 1994 Summit of the Americas in Miami at which the FTAA was launched. The purpose of the FTAA is nothing less than the integration of the entire Western Hemisphere into a single political and economic unit--a subsidiary of a WTO-supervised global economic order.

Melding the entire Western Hemisphere into a regional bloc will be to the advantage of authoritarian governments like Communist China, but injurious to relatively free societies such as the United States. Although China conceivably could develop the beginnings of a middle class, at present Beijing has no middle class to worry about. Since it remains essentially a slave labor state, it can't be undersold in terms of labor costs.

FTAA negotiations were originally intended to be completed in January of 2005. But these negotiations have foundered on opposition organized around Brazil's Lula. Like the "anti-globalization" protesters who greeted President Bush in Chile, Lula doesn't object to hemispheric integration. Rather, he and his comrades seek to create a more overtly socialist hemispheric order than that contemplated in the current draft of the FTAA pact.

As the resurgent Latin American Marxist movement grows--thanks, in no small measure, to Beijing's assistance--the FTAA will be presented to Americans as the only credible antidote. But as is so often the case, this is a lethal "antidote" concocted by the same people who created the poison.