The “high-quality” development model that China promotes in Latin America conceals a more complex and problematic reality, marked by a profound crisis. Exploitative labor conditions, human rights violations, rampant pollution, aggressive resource extraction, displaced indigenous communities, and shoddy work are among the many issues that plague Chinese projects in the region.
Chinese President Xi Jinping reaffirmed, at the Third Plenum of the Communist Party on July 15 in Beijing, his commitment to making “high-quality” development the main driver of China’s economy, Bloomberg reported. China thus seeks to advance the technological value chain and the resilience of its economy.
The impetus for this model in the Latin American region comes from Chinese state capitalism, led by state-owned and nominally private companies. These entities facilitate investments, offer financing, and confidential loans. They also promote the construction of strategic infrastructure, favoring their influence in Latin America, Uruguayan platform Diálogo Político indicated in a report.
Most of these investments are concentrated in extractive and infrastructure projects. This combination, together with the approach of the Chinese development model, produces labor abuses, forced evictions, and destruction of the natural environment, with serious effects on local communities. China’s internationalization is marked by low standards and poor corporate practices.
A clear example is the lack of respect for environmental and social standards in Chinese investments. The absence of proper licenses, the negative impact on protected areas, and the rejection of local communities are common, according to French radio news network RFI. These practices not only endanger the environment, but also generate social conflicts and undermine the legitimacy of local governments.
“China, however, promotes the image of a development model, which advocates the rational use of natural resources and sustainable growth. Although Beijing presents this face to the world, its application in Latin America is far from ecological ideals,” Sergio Cesarin, coordinator of the Center for Asia-Pacific and India Studies at the National University of Tres de Febrero in Argentina, told Diálogo on September 4.
In addition, through its debt strategy, China has subdued several developing countries, Argentine news site Infobae reported. Aware of the difficulty of repaying debts, Beijing finances unprofitable infrastructure projects to control key assets, such as Venezuela’s natural resources, thus consolidating its geopolitical influence.
Problematic infrastructure
In the area of infrastructure, several Chinese projects are marred by corruption and poor quality. A notable case is the roads that Chinese companies built in Bolivia, which quickly deteriorate until they are wiped off the map by seasonal rains, German news agency DW reported.
Labor exploitation in these projects is alarming as well, with labor rights advocates asserting that overseas Chinese workers are victims of human trafficking and forced labors, the Washington Post reported. These workers, who do not speak the local language, are forced to work in inhumane conditions, living isolated in camps, and receiving wages, when those aren’t withheld, so low that they cannot even feed themselves, DW reported.
Speaking to DW, Renan Torrico, a Bolivian engineer who worked in the construction of the San José hydroelectric plant in Bolivia, said he was able to talk to a Chinese foreman. “He told me that he was a military prisoner, that he had committed some infraction within the Army, and that he had to come to serve his sentence in Bolivia,” Torrico told DW.
The situation is no different in Ecuador, where the Coca Codo Sinclair Hydroelectric Power Plant, built by Chinese company Sinohydro at a cost of more than $3.3 billion, has thousands of fissures in its turbines. Since 2018, the number of cracks increased dramatically, leading to a legal dispute between Ecuador and Sinohydro.
“This is a sensitive issue, due also to the severe cracks in the dam. The Chinese bids
lack clarity, quality, and transparency,” Cesarin said. “Partnering with an unreliable actor brings reputational risks. China is a problematic partner.”
Moreover, the impunity of Chinese companies abroad reinforces their irresponsible behavior. By not facing sanctions for their abusive actions, these companies lack incentives to adopt more sustainable and ethical practices, which often translates into a greater negative impact on the countries where they operate, Diálogo Político indicated.
Growing inequality
This impact is also reflected in the Latin American steel industry, which is facing a deep crisis due to the flood of cheap Chinese steel, backed by subsidies and unfair trade practices. These maneuvers have brought the local industry to the brink of collapse, with serious social and economic consequences, the BBC reported in March.
In 2023, the region imported 10 million tons of Chinese steel, more than 17 percent of its production of 58 million tons. Although the hemisphere is not the only destination for Chinese steel, it is the most affected due to its weak capacity to defend against dumping, the unfair trade practice of selling at prices below cost to take over the market and then manage prices at convenience. India, the United States, and the European Union imposed tariffs of 25 percent. Mexico, Chile, and Brazil have also raised tariffs on Chinese steel to protect domestic firms.
China is also stepping up its presence in the Latin American market by exporting electric vehicles (EVs) and investing in local production. Brazil and Mexico are the main destinations for the establishment of Chinese companies’ research, development, production, and sales centers, Australian news site East Asia Forum reported.
The Chinese government’s support for its EV industry with tax exemptions and subsidies, allows these cars to have lower prices, which represents a threat to manufacturers in Europe, the United States, and Japan, and could destroy the automotive industry in Mexico, Mexican newspaper El Economista reported in February.
The growing demand for EVs is driving China to aggressively pursue strategic minerals, such as lithium from South America. Control of these reserves is crucial to its energy security, generating intense international competition and concerns about the region’s dependence, Asia News reported.
“It is vital that countries carefully manage their strategic resources, as Chinese companies seek to extract minerals without much oversight,” Cesarin said. “Mexico and Colombia are placing limits on Chinese investment and competition. It’s not about accepting everything without reservation, but about regulating and protecting their resources.”
Strategic dominance
The Chinese model also extends to other key sectors such as energy. In Peru, the control of strategic assets by Chinese companies exposes the region to geopolitical pressures. Although the threat is not immediate, Infobae reported, control of these sectors gives China the tools to exert pressure and shape the regional environment in its favor.
“The key is for Latin American governments to establish solid regulatory frameworks and demand high standards of quality and sustainability, to avoid dependence on technologies or products that could compromise our sovereignty or the environment,” Cesarin concluded.
