China Pursues 'Manifest Destiny' Through Mercantilism and Imperialism

American Economic Alert ^ | February 03, 2005 | William R. Hawkins

[3AngelaD]

China’s economic development strategy has often been called a new version of mercantilism, the philosophy of political economy that built the great nation-states and empires of Europe in the 16th-19th centuries. Mercantilist features have been most prominent in Beijing’s drive for exports and a large reserve of hard currency. The focus has usually been on China’s trade with the United States and Europe, the source of its large trade surpluses. But China’s relations with other parts of the world show different aspects of the mercantilist model.

Latin America is an example of how Chinese mercantilism is assuming a neo-colonial pattern in which the dominant country secures markets for its manufactured goods in exchange for raw materials from its weaker partners. Last November, President Hu Jintao toured Latin America and completed a number of economic deals on this basis... Both leaders predicted that China would replace the United States as Brazil’s top trading partner.

Hu’s interest was importing more Brazilian chicken, beef, soy beans and minerals. In the long term, China sees Brazil's vast territory as a potential solution for its growing need for food and raw materials. To advance this agenda, Hu offered between $5 billion and $7 billion worth of investments to improve Brazil's roads, railways and ports. Though Brazil gained a commitment from China to order at least ten Embraer aircraft, Beijing prefers to focus on Chinese production of a joint venture regional airliner, which will transfer Embraer technology to China Aviation Industry Corporation II. Ambitious mercantile powers want to keep any advanced industrial project in their own hands, relegating partners to a subordinate supplier status.

From Brazil, Hu went to Argentina where another “strategic partnership” was declared with President Nestor Kirchner...Argentina has been pursuing its own export-led growth strategy, but it is being turned in a neo-colonial direction by China...Argentina’s lead export product is soybeans to China. Indeed, soybeans, corn and oil account for nearly all of the increase in Argentina’s exports. China’s imports primary goods from Argentina, which more than doubled in 2003 from the previous year, whereas China exports manufactured goods to Argentina.

Hu next went to Chile where a “free trade” agreement was discussed. Beijing wants more of Chile’s copper. Hu finished his Latin American tour with a two day visit with Fidel Castro in Cuba....China is looking to invest heavily in the island’s nickel mines, and Castro predicted that Cuban exports of nickel would double from expanded shipments to China.

Another radical leader in Latin America with ties to both Lula and Castro is Hugo Chavez in Venezuela. Visiting China on December 24, Chavez said his country would put many of its oil facilities at the disposal of Beijing...

[JACKRUSSELL]

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