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Foreign Policy

China: Elephant in the Room

Jan 19, 2023
  • Chen Jimin

    Guest Researcher, Center for Peace and Development Studies, China Association for International Friendly Contact

The 10th North American Leaders’ Summit, held in Mexico City on Jan. 9 and 10, focused on promoting economic development, building a more resilient supply chain, addressing climate change, tackling immigration and combating transnational crimes such as drug trafficking.

The United States sees the Western Hemisphere as its backyard, and North America is clearly at the center of its backyard agenda. In its National Security Strategy report, the Biden administration stressed that “no region has more direct influence on the United States than the Western Hemisphere.”

The U.S. is blessed with a strategic advantage, thanks to the geopolitical landscape: No dominant power lies to its north or south, allowing it to devote more energy to regions of more strategic consequence, such as Europe and the Indo-Pacific. From this perspective, it’s clearly true that the U.S. attaches importance to the Western Hemisphere, but not to the degree that it is seen as essential to maintaining global dominance. Hence the U.S. does not devote significant energy and resources to the region.

Perhaps it is for this reason that Mexico’s President Andres Manuel Lopez Obrador publicly stated before his meeting with U.S. President Joe Biden that the United States should devote more resources to the region and treat its neighbors as countries on equal footing, saying: “This is the moment for us to determine to do away with this abandonment, this disdain and this forgetfulness for Latin America and the Caribbean, which runs counter to President Franklin D. Roosevelt’s policy of Alliance for Progress.”

However, as the strategic rivalry between the United States and China intensifies, the Western Hemisphere, and North America in particular, is gaining importance for the U.S. In the National Security Strategy report, the Biden administration made it clear that renewed partnerships in the Americas is essential to building and maintaining economic resilience, democratic stability and civic security within the Western Hemisphere. One of the key initiatives is to “protect the region from external interference or coercion from China, Russia, Iran and others.”

Clearly, the perceived importance of North America — and by extension the entire hemisphere — will no longer be limited to the geopolitical domain and responses to non-traditional security challenges but will also include the wider system of strategic competition with major powers. This can also be seen in the agenda of the North American Leaders’ Summit, covering economics and trade, infrastructure development, supply chain resilience and other topics.

At the economic and trade level, the U.S. wants to further strengthen, and even expand, the United States-Mexico-Canada Agreement (USMCA) as a template for a new generation of regional FTAs. During the summit, American and Mexican leaders reaffirmed their commitment to the USMCA “as a cornerstone of North American competitiveness and a foundation for economic prosperity and social development.”

It is well known that the USMCA contains a so-called poison pill clause that bans any party from entering into a free trade agreement with a “non-market” economy and may be subject to other parties terminating the agreement upon six-months’ notice and replace it with an agreement between them (such as a bilateral agreement). It is clear that this clause excludes the possibility of concluding FTAs with so-called non-market economies, with obvious exclusionary and discriminatory overtones. Of those that fall into this rhetoric, China is clearly the most important target.

 At the level of infrastructure development, Biden emphasized that the U.S.-led Partnership for Global Infrastructure and Investment (PGII) has made the Western Hemisphere a priority investment area. Considering that infrastructure is a priority in China’s cooperation with Latin America, the U.S. clearly has competition against China in mind in laying out this plan.

At the level of supply chain resilience, the U.S. has been pressing for “friend-shoring” to reduce dependence in key supply chains on countries of “different values — including China — as a way to shore up supply chain security. According to the U.S. Interior Department, China was the largest producer of 16 of 32 key minerals listed by the U.S. in 2018. In terms of non-fuel mineral imports, in 2021, China is the top provider of more than 50 percent, involving 25 mineral types, followed by Canada, which has 16, and Brazil and Mexico with nine each. For example, cesium is imported wholly from China and Germany, fluorspar wholly from Mexico and Canada, graphite wholly from China, Mexico and Canada and niobium from Brazil and Canada.

The first item on the list of key outcomes of the North American Leaders’ Summit was the strengthening of supply chain cooperation between the three countries, including an agreement to organize a forum on semiconductors early this year to look at enhancing investment in the semiconductor supply chain in the region. It would aim to coordinate supply and demand in the semiconductor sector and identify complementary investment opportunities in the three countries. And it would expand the mapping of key mineral resources in North America to gather detailed information on resources and reserves.

The geological survey arms of the three countries will organize a trilateral workshop to share data and promote cooperation. A key item on the agenda is U.S.-Mexico cooperation in semiconductors. In fact, as early as 2021, during the U.S.-Mexico High Level Economic Dialogue, a supply chain working group was established to assess supply chain needs. The goal is to attract investment and reduce vulnerability to supply chain disruptions in key sectors such as semiconductors and ICT.

In his meeting with Lopez Obrador on the sidelines of the summit, Biden focused on incentives to promote investment in the semiconductor cluster along the U.S.-Mexico border under the U.S. CHIPS and Science Act. The Biden administration has said the next decade will be “decisive” in strategic competition between major powers — particularly China — and economic, trade and technology competition (including key supply chains) will be the “main battlegrounds.”

While the leaders’ summit was primarily focused on the region, the U.S. does not confine itself to the regional dimension. Rather, it contemplates and operates with a strategic perspective of fostering great power competition, especially with China. Clearly, the U.S. had China in mind when it joined the summit, whose focus was supposed to be on North America.

What the U.S. is truly driving at through closer cooperation with Mexico and other countries in the Western Hemisphere in trade, commerce and supply chains is to serve U.S. interests. It is not promoting the broad development of the Americas. To some extent, in fact, the interests of the U.S. and Latin American countries are at odds, owing to fundamental differences in their strategic interests. The U.S. is a developed country and hegemonic power and whose core strategic concern is to maintain that position, while Latin America is home to a large number of developing countries striving to develop and modernize.

From this perspective, China has certain comparative advantages in developing relations with Latin American countries, both in terms of the complementarity of economic interests and the similarity of political aspirations. China should further expand its level of openness — especially with developing countries. It should strengthen mutually beneficial cooperation in areas such as supply chains and infrastructure development. And it should increase its political support for Latin American countries’ efforts to gain independent development status and to have a greater say in international discourse. All this will make China-Latin America relations more resilient against external disturbances and bring about steady progress. 

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