China and Latin America:

Quest for Energy Security

17 Jun, 2013    ·   3995

Teshu Singh decodes the strategic implications behind Xi Jinping's tour of the LAC

Teshu Singh
Teshu Singh
Senior Research Officer

Xi Jinping toured through Latin America and the Caribbean (LAC) countries on 31May-6 June 2013. He visited Trinidad and Tobago, Costa Rica and Mexico. This marks a new chapter in Chinese foreign policy. Why did President Xi choose these three specific countries? What were the achievements of the visit? What does this imply for the future trajectory of China-LAC relations?
Importance of the LAC for China
LAC countries are one of the developing regions of the world and have immense potential for investments. The three countries Trinidad and Tobago, Costa Rica and Mexico are significant in their own way. Trinidad and Tobago is one of the wealthiest countries in the Caribbean, with large reserves of oil and gas they form a regional petroleum hub; often called as the pearl in the Caribbean. Costa Rica is well known for its renewable energy; more than ninety percent of its electricity is generated from renewable sources. It is working towards becoming world’s first carbon free economy. Mexico is the largest economy in Latin America and has a thriving oil industry. Overall, all these countries offer an alternative and reliable source of energy to satisfy China’s increasing demands.
Achievments of the Visit
Besides meeting the leaders of Trinidad and Tobago, the Chinese president also held talks with leaders of Suriname, Barbados, Guyana, Antigua and Barbuda, Dominica, Grenada, the Bahamas and Jamaica. During the visit he proposed stepping up energy co-operation between the two countries. Agreements were reached in key areas such as infrastructure development, energy and minerals, and in new areas of mutual and beneficial co-operation such as agriculture, telecommunications and new energy. Loan of USD 250 million was awarded and hundred volunteer medical professionals would be sent to over the next three years. Additionally, Trinidad intends to open an embassy in Beijing later this year.  

During his visit to Costa Rica, thirteen major agreements were signed on projects worth nearly USD 2 billion, in the areas of the upgrade of an oil refinery, a key highway and public transport.  Amongst these agreements, the biggest project will be the modernization of an obsolete oil refinery in the Caribbean port of Limón, which will be replaced with a new refinery capable of processing 65,000 barrels of oil a day. The USD1.5 billion venture will be financed with a USD 900-million credit from the China Development Bank, and the remaining USD 600 million will be put up by the China National Petroleum Corporation and Costa Rica's National Refinery (RECOPE). A group of thirty RECOPE officials will travel to Beijing in coming days to receive training for three months at China’s University of Petroleum. Another big project agreed to is the upgrading of Route 32, a strategic highway that links San José to Limón, a USD 400-million dollar endeavour that will be financed by China.

During the visit to Mexico, bilateral relations were upgraded to a comprehensive strategic partnership. The two heads of state agreed to push forward the China-Mexico comprehensive strategic partnership by working jointly in the following four aspects; by showing mutual understanding and support on the issue concerning each other’s core interest, improving practical cooperation in accordance with their development strategies, and agree to increase mutual investment in key areas such as energy, mining, infrastructure and high technology, encourage more exchanges between art troupes, promote tourism and strengthen communication among students, academics, journalists and athletes and  improving  multilateral coordination based on their common interests and responsibilities on major international issues.

Bilateral trade between LAC and China in the year 2012 was USD 261.2 billion. Thus visit further enhanced the bilateral ties to a much higher level.

The Future of Bilateral Relations between China and the LAC
Energy Security remains the prime agenda of its foreign policy; the new leadership is trying to project China’s ‘peaceful development’ to every possible place on the globe. The visit reveals regardless of the size and geographical distances China is keen on developing relations with these countries to boost its economic ties to secure its energy resources. Being in the developing stages, the LAC needs Chinese investments in its infrastructure and construction which has not come till now by the US

The agreements signed are an indication to the LAC countries that China has been taking them seriously and has responded to their gesture. Perhaps the strengthening of the China-LAC relations will help the international community better cope with global challenges and promote a multi polar world and democracy in the international relations.

President Obama and Vice President Joe Biden had already taken trip to exactly these three countries earlier this year. Thus it can decipher that the choice of these countries are no coincidence. However the burgeoning ties between China and LAC may cause discomfort to the US as it has brought China close to its doorstep.