G'day, and welcome to the twelfth edition of Mundo.
In this edition I continue analysing the impact of the COVID Crisis and China across the world - this time in Colombia. I argue that:
The China-Colombia relationship, historically one of the weakest in Latin America, has entered a new phase with a surge of Chinese investment and greater political engagement.
Colombia's president Iván Duque leveraged China's investment zeal to boost his falling political popularity, filling long-promised infrastructure needs.
Yet with U.S.-China relations at their lowest point in decades and deep Chinese strategic objectives in the region, the Duque administration has stepped into a complex geopolitical triangle that it may not have anticipated.
The COVID Crisis will see a lower profile in China's economic activities, opportunism in new technologies such as 5G and AI, and a concerted public diplomacy campaign.
Approximate reading time: 5 minutes.
Photo credit: Wang Zhao/AFP
Pandas in the Andes - China's renewed relationship with Colombia
I had a bag of fresh arepas in my hands when I heard the voices. Walking the back streets of Colombia's capital, Bogotá, it's an oddity to hear anything other than the neat, neutral-toned Colombian Spanish that the capital is known for. Hearing English swivels my head to investigate further. And now, walking down this quiet street, it was Chinese I heard echoing from a group leaving a residential building. Were these DiDi executives, the popular ride-sharing app that entered Latin American through Bogotá last year? Were they Huawei employees, whose phones have rapidly expanded to a 25% market share in the country? Were they Chinese Embassy officials, or even executives from the successful Chinese bid to build Bogotá's metro system?
In the last 12 months, the Colombia-China economic relationship entered a new era, on the urging of both governments. But in doing so, Colombia has stepped into a tense and complex geopolitical arena between the United States and China. The appeal of a deeper and broader economic relationship with China is appealing to Colombia's business sector. And to Colombia's politically embattled president, China's eagerness to invest in long-planned infrastructure is enticing. However these overtures are grounded in China's deeper geo-strategic goal of "close coordination in international affairs" with Latin America, grounded in tighter political and economic ties. And now, the COVID Crisis has complicated this budding relationship through growing U.S.-China friction, a stressed Chinese economy, and Colombia's own domestic economic and social pressures.
Celebrating forty years of....?
In January, Colombian and Chinese officials mingled to celebrate 40 years of diplomatic relations. For most of this period, there's little to show. Between 2000 and 2018, China's foreign direct investment to Colombia totalled $243 million, 32nd on a list dominated by the United States. Five percent of Colombia's exports travelled to China in 2017, comparable to the Netherlands, while U.S.-bound exports dominated at 28%. Of its China exports, a whopping 79% is oil. People to people connections are minuscule. In 2018, 15,000 Chinese travellers visited Colombia for tourism and business, a rounding error of the 3.9 million total tourist visits.
Relationship relaunch
July 2019 saw Colombia's president Iván Duque "relaunch" the China relationship with a state visit to Beijing, signing twelve commercial agreements. He deftly avoided adding Colombia to China's Belt and Road Initiative, although a pending announcement of a "China-Colombia Initiative" was flagged in March this year. Plans were also underway for a reciprocal visit by China's President Xi Jinping later this year.
Shortly after, a flurry of commercial deals were announced. Cali received a fleet of Chinese electric buses in September. DiDi launched in October. Chinese bidders won the Bogotá metro contract. Medellín received electric buses in November. A consortium won the bid for a "fourth generation" ("4G") highway. A regional tramway connecting fringe cities to Bogotá was awarded in December.
Duque announced these projects as a deeply unpopular president, attempting to leverage China's investment zeal to restore his own political capital. Colombians, particularly the middle and lower classes were restless over perceived stagnation in the peace process, growing unemployment, and a series of corruption scandals through the country's political elite. Tension boiled over in November, as Colombians followed waves of protests through Latin America to air their grievances in a series of largely peaceful protests.
Duque attempted to calm tension by trumpeting the signing of the Bogotá metro contract that week - a sign of progress toward a decades-long promise whose successive flops had devolved into tragicomedy. The 4G highway was awarded to Chinese bidders following the original consortium's involvement in the continent's infamous Odebrecht corruption scandal. And when the powerful taxi union threatened further protests in January, Duque capitulated to their demands, banning Uber - but not other similar ride-sharing apps such as DiDi. Before legal semantics restored Uber's presence in the country, it attracted a strong rebuke from the U.S. Ambassador.
COVID complications
The coronavirus' arrival complicates China's Colombian advances. Strategically, China is likely to temper its economic strategy through Latin America, as Xi focuses on restoring domestic growth (more on this in Mundo #11). There will still be opportunistic advances in China's prioritised technologies, particularly 5G and artificial intelligence. In tone though, U.S.-China friction will push China's Latin American economic diplomacy to assume a lower profile.
Colombia's expected coronavirus recession will drag on infrastructure projects such as the metro, tramway and 4G highway, drawing public scrutiny. China's economic recovery won't drive demand for natural resources as it did after the 2008 financial crisis, either. Duque's ambition for a broader trading relationship with China will be slowed by the twin burdens of lower Chinese demand, and greater U.S. geopolitical pressure.
China's intensive public diplomacy campaign will continue, eager to shape a favourable narrative of their virus response, and their international leadership. China has donated medical equipment to several Colombian cities, promoting these acts through softer local news outlets. However the virus' Chinese origin has reinforced skeptical and even xenophobic China attitudes long existent in Colombia - a product of the two countries' limited interaction.
The Colombian government received a $1.5mm donation of medical supplies on May 7.
The coronavirus also complicates Colombia's U.S. relationship. The cultural attractiveness of the "American Dream" won't be threatened, nor will its narrow strategic commitment to security and narco-trafficking objectives. However the trajectory of heightened economic nationalism in U.S. politics (see Mundo #9) won't help a Colombian economy craving infrastructure investment and a broadened export base.
Through the economic eagerness of the Duque administration and a tactical push from China, Colombia is now a piece on the geopolitical chess board of US-China rivalry. The COVID Crisis will see a tactical pause in China's growing economic interest in the Andean nation, but its strategic calculus remains unchanged. Its impact won't be restricted to the pomp of high diplomacy, but will sink into Colombian society through the trains and buses ridden, the new highways constructed, they ways Colombian's communicate, and a growing cultural awareness.
Links
The New York Times' "1619" series won a Pulitzer Prize this week. If you haven't already, read or hear a fresh take on slavery's legacy in the United States.
Adam Tooze, economic historian and author of the terrific history of the 2008 financial crisis "Crashed" compares and contrasts the COVID Crisis with the Great Depression of the 1930s.
Please feel free to send through your own thoughts and articles to me. Forward this along to others who might find this an interesting read. Stay calm, think of others, stay healthy. Mitch