US seeks to check China's influence in Latin America

Treasury Department questions Beijing's overtures to region's multilateral lender

WASHINGTON • The Trump administration is pushing back against China's efforts to boost its economic ties with Latin America, as the rivalry intensifies between the world's two largest economies.

The United States Treasury Department took steps to check the Asian nation's growing influence in the region last month, when it raised questions about Beijing's overtures to Latin America's multilateral lender.

The US is the largest shareholder of the Inter-American Development Bank (IDB) at 30 per cent, whereas China's stake in the lender is a minuscule 0.004 per cent.

In a Dec 19 letter obtained by Bloomberg, US Undersecretary for International Affairs David Malpass asked IDB president Luis Alberto Moreno why he had selected China to host the bank's 60th anniversary meeting next year.

"I have serious reservations about the bank's process that led to that initial decision, and I do not think the 2019 meeting could be nearly as successful in Beijing as it would be if held in the region," Mr Malpass wrote.

The IDB is preparing a written reply to Mr Malpass' letter, said Mr Paul Constance, a press officer with the bank. The IDB's shareholding countries, including the US, all agreed last year to hold the 2019 meeting in China, he said.

Mr Malpass' letter comes amid a push by China to increase its influence in Latin America, where during previous US administrations it became the top trade partner for commodity exporters like Brazil and a lender for cash-strapped nations such as Venezuela.

China's ruling Communist Party, in its national congress late last year, agreed to further strengthen commercial and strategic ties with the region as part of its drive to become a global economic leader.

Mr Malpass, in his letter to Mr Moreno, cautioned that China's economic policies in Latin America could prove harmful to the very countries the IDB tries to help.

He cited the Asian nation's investments in telecommunications in the region, where, for example, Chinese funds in 2016 were behind a winning bid to build a new wireless network in Mexico.

"Huge export credits are flowing in non-economic ways that distort markets and leave borrowers burdened with ineffective projects and heavy debt burdens," Mr Malpass wrote. "China's aggressive telecommunications investments in the region also raise security concerns about placing the region's communications backbone on Chinese networks."

The US' economic ties with China have grown increasingly tense since Mr Donald Trump took office. The White House last month lumped China with Russia as powers seeking to undermine US security and prosperity, and the President has repeatedly threatened to impose tariffs on Chinese goods.

Mr Malpass, in a speech late last year, accused China of backsliding on market-oriented reforms, calling on other major economies to form a united front with the US to put pressure on the Asian power.

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A version of this article appeared in the print edition of The Straits Times on January 05, 2018, with the headline 'US seeks to check China's influence in Latin America'. Print Edition | Subscribe