China`s resource diplomacy in Latin America

Abstract

China`s involvement in Latin America serves multiple interests- to extract raw materials, to reduce Taiwan s international presence and to counter-balance U.S. dominance in the region. China`s rapid economic growth requires almost unlimited energy supplies and essential metals to sustain the current development. In 2004, with 4.4 percent of the world`s Gross National Product (GNP), China consumed 7.4 percent of the world`s oil, 31 percent of coal, 30 percent of iron, 27 percent of steel and 40 percent of cement. China is likely to consume more of each item in the future, especially petroleum. China`s energy insecurity derives from its inability to secure enough supply in the international market and its seemingly unlimited appetite of its citizens. Insecurity and growing demand for energy have turned China`s national companies into scramble for energy around the world. Latin America is supplying China with rich reserves of oil and important minerals. However, China`s engagement with Latin America can also advance political objectives. This paper argues that (1) China s conduct of foreign relations in Latin America constitutes resource diplomacy to serve its interests through national companies in acquiring petroleum and other commodities. (2) While China s main purpose is to extract resources, engaging with Latin America will also serve other foreign policy objectives such as isolating Taiwan and counter-balancing US influences. This article also stipulates that while isolating Taiwan continues to be an explicit policy for China, challenging the U.S. dominance in the region remains to be an implicit one. Capability determines China s policy preferences.