The Belt, The Road, into Latin America : China's New Growth Axis

Abstract

Within the story of China's growing overcapacity problem is a solution that seems almost too ideal, too "win-win": The Belt and Road Initiative (hereinafter referred to as "BRI"). In theory, to combat China's growing excess capacity within said industries, China should "move out" its overcapacity abroad to harness an adequate demand overseas. First mentions of the project were delivered by president Xi Jinping himself in 2013. He alluded to the Silk Roads, the ancient trading routes that dominated commerce and China's exposure to other lands, and spoke upon the importance of connectivity, that should be bound not only through trade, but through culture, political alliances, and most importantly, logistically. At the time, the project was initially coined as the "One Belt One Road Initiative," originally promoted to concentrate on the following: forging infrastructure projects; coordinating development policies; strengthening investment and trade relations; enhancing financial cooperation; and deepening social and cultural exchanges, most specifically along Eurasia, Africa (the on land, "Belt" portion), and Oceania (in reference to the sea routes, the "Road). From then on, the project has grown considerably in size and money, and virtually spanned the entire globe. With greater project magnitude comes considerably more ambition, and consequently, more risks and challenges. In May 2017, President Xi officially announced BRI's commitment and expansion into Latin America, adding to the project's initial geographic conception of Asia, Europe, and Africa. On paper, the presence of BRI into Latin America would foster newer, more integrated markets with neighboring economies. Moreover, BRI would also serve as a strategic driver of developn1ent into the interior of each country, generating more trade internally, which ultimately would reduce transportation costs. For China specifically, not only would China's BRI working relationship with Latin America reallocate the aforementioned domestic overcapacity, but also, steer a form of globalization dominated through the wills and whims of Beijing. To date, Chinese infrastructure investment projects into Latin America have been the most recent and most ambitious addition to the growing relationship between the two regions. Additionally, for the world's largest country, one crucial long-term goal is to secure supplies of energy, food, and natural resources, even if that requires leaving China's borders. Made in China 2025, an ambitious, state-led industrial policy under President Xi, aims to accelerate and advance China's high-tech and manufacturing sectors, with the intent of surpassing Western technological institutions. Some principal industrial targets, namely, the electronic vehicle sector, can function if and only if there exists a steady supply of lithium to power its cars. Latin America has the world's largest reserves of copper, zinc, and lithium, located within the "Lithium Triangle" of Bolivia, Chile, and Argentina. Therefore, to branch into the pockets of Latin America that carry abundant sources of strategic goods is a move that will only be extended and contemplated in conjunction to the ongoing infrastructure projects.