China Trashing Latin America To Fuel Growth
In January 1997, Panama awarded concessions to a Chinese company to operate port facilities on the Atlantic and Pacific coasts at both ends of the Panama Canal, just after having obtained control of it from the US.
When did Latin America and the Caribbean wake up to its dramatically expanding new relationship with China? November 2004, when the then Chinese president Hu Jintao visited Argentina, Brazil, Chile and Cuba and apparently spoke of the possibility of investing US$100 billion in the region – although the Chinese government later claimed it had been mistranslated and the US$100 billion referred to bilateral trade.
That, at least, is what Evan Ellis, a researcher at the U.S. Army War College and considered by some to be a leading expert on China-Latin America relations, states in his new book China on the Ground in Latin America: Challenges for the Chinese and Impacts on the Region. Ellis’s main argument is that in the last few years the Chinese have started to establish a new, “significant” physical presence in Latin America and the Caribbean – following trade deals, acquisitions, loans and loan-backed construction projects, among other things. As a result, Ellis argues that China now finds itself, for the first time in its 5,000 year history, connected to however many million non-Chinese people in other countries and dependent on the “success and well-being of its commercial representatives in distant parts of the world.”
While the focus of his book is Chinese acquisitions, loans, other commercial dealings and the challenges these pose for the Chinese government, companies and Chinese people living in Latin America, Ellis has various things to say about the environment.
Chinese companies have focused on developing their physical presence in Latin America in the sectors that are most likely to generate environmental impacts and concerns: petroleum, mining and agriculture. The Chinese presence in petroleum is most significant in Venezuela, Ecuador and Argentina, and in mining in Ecuador and Peru.
Resistance from “environmentalists and local communities” is one of the major challenges facing Chinese companies trying to make acquisitions and win contracts in Latin America. To date, projects involving Chinese investors have “often” been “opposed on environmental grounds, or because of their impact on local communities and indigenous groups,” writes Ellis, citing the Chone dam project and Mirador mine in Ecuador, the Belo Monte dam in Brazil, the Rio Blanco mine in Peru, the Lupe mine in Mexico, a soy processing facility in Rio Negro in Argentina, the Agua Zarca dam project in Honduras, and the River Magdalena in Colombia as examples.
Opposition to Chinese projects on environmental grounds is “likely to expand in the future because of the number of potential projects. . . that involve environmentally sensitive areas.” These include plans to develop Goat Island, Jamaica, into an “international shipping hub” and the exploitation of the Ishpingo, Tambococha and Tiputini (ITT) oil fields in the far east of the Yasuní National Park in Ecuador where Ellis says the “Chinese corporations who have already done the exploratory drilling are the leading contenders” to win contracts.
Indeed, Ellis states that although “no official link” exists between ITT and the construction of a new refinery on Ecuador’s Pacific coast, “a senior Ecuadorian source speaking off-the-record suggested that the granting of the rights for ITT may be a condition pursued by the Chinese for the funding of the Refinery. . . which would be fed by the petroleum extracted there.”
Environmental concerns are a major challenge for Chinese companies not because they are “inherently less respectful of the environment” than others, but “because of a confluence of factors” including the high environmental impacts of the sectors they are focusing on, a “cultural distance” between Chinese and Latin American people, and Chinese companies’ lack of experience in the region. One example: “Chinese executives and managers often presume that local authorities will be able to force local residents to comply with decisions to relocate their homes. . . and may mistakenly presume that, as long as they have reached an agreement with the appropriate government authorities, the local communities and other actors will comply with the decisions.”
“Environmental complaints” have already been made about various ongoing Chinese projects. These include the Marcona mine in Peru run by the company Shougang, the Cerro Maimon mine in the Dominican Republic, and the Sierra Grande mine in Argentina.
Chinese companies “have made efforts to improve their environmental practices where they have felt it necessary to do so, in order to avoid problems with governments and communities.” Ellis cites new technology by company Bosai to address dust problems caused by bauxite mining in Guyana as one example, and ten “environmental protection projects oriented toward wastewater, dust and air pollution” at the Marcona mine in Peru as another.
Offshore drilling by Chinese companies in Latin America and the Caribbean is particularly risky in terms of environmental impacts because “they are relatively new to producing and using deepwater drilling technology.” Ellis argues that Chinese operations are “arguably even more vulnerable to such risks” than was BP before the Deepwater Horizon Gulf of Mexico blowout in 2010.
Although “many Chinese companies in Latin America do behave badly” – either “due to a combination of willful imposition of Chinese norms and practices that do not function well in the new context, or accidentally, due to a lack of knowledge regarding local norms” – they “do not inherently behave worse than their Western counterparts” (Ellis’s italics).
A “significant portion” of the new Chinese presence in Latin America is in the renewable energy sector where companies “have been a key force in the “green revolution” transforming the energy generation mix” and “slowly moving the electricity infrastructure of the region away from fossil fuels.” Ellis states that “of the many projects and acquisitions by Chinese firms in the electricity generation sector. . . only a very small number have involved traditional fossil fuel power generation facilities”, with a focus instead on hydroelectric and what Ellis calls a “wave of new solar and wind power projects” across Argentina, Bolivia, Brazil, Chile, Costa Rica, Ecuador and Mexico.
What better way to end than with one particularly emblematic example and startling claim? Despite a January 2014 announcement that work would begin on a canal through Nicaragua by the end of this year or early 2015, “as this book went to press, a public announcement regarding the route to be taken by the canal had not been made, nor had any information been made public regarding environmental impact” (my italics, this time). Indeed, a report published in September by the Alexander von Humboldt Studies Centre in Nicaragua states that “technical information of environmental character generated during the design, construction and operation of the Great Canal and associated projects will remain confidential,” under the terms of the concession agreement. Von Humboldt calls the canal – due to be built by the Hong Kong-based HK Nicaragua Canal Development Investment Company – and associated infrastructure the biggest environmental threat to the country in its history.