The China Signal - May 1
New report on Chinese influence, EV deals, Argentina's Amb. to China
G’day, and welcome to The China Signal. This week, a new report on Chinese influence; more electric vehicle deals; Argentina’s Ambassador to China is accused of pushing Beijing’s interests, exposing the Fernandez Administration’s factional foreign policy; Latin America’s economic outlook is dragged down by China’s own economic slow down; plus more. Read on.
Chinese Influence 📡
China 🇨🇳 + Broader Latin America 🏝🏔
* Note: Doublethink Lab (DTL) is a Taiwan-based research outfit.
On Monday April 25, Doublethink Lab released the “China Index 2021”, which attempts to gauge the level of Chinese influence across 36 countries in 8 regions. This included 10 Latin American countries, however it didn’t assess Caribbean nations. Notably Peru ranked fourth, showing a particularly large Chinese presence in the society, media, and military domains.
Overall, the other Latin American countries assessed were ranked at mid to low levels of exposure, with Colombia and Paraguay closing the list at the bottom two places respectively.
Nine domains were assessed (see Peru’s graphic above) across a total of 99 indicators. Each indicator was chosen by an eight-person committee, and assessed on a four-point scale by at least two anonymous local experts - either academics, journalists, researchers or community leaders - who were required to provide corresponding evidence. The committee largely comprised US and Western analysts.
Local experts had to have not received funding, donations, payments, or any other benefits from the Chinese government, or the apparatus of the Chinese Communist Party (“CCP”). However in Latin America, experts whose academic institutions receive funding from PRC-affiliated entities were included due to the absence of local China experts who do not in some way benefit from a relationship with the PRC/CCP. (RP)
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If anything, this underscores one of my primary observations of the China-LatAm dynamic - that the political and economic relationship is so new that there is not a broad base of shared experience and understanding from interacting with China. Beijing is leveraging this shallow history by attempting to directly shape the perceptions of local China experts in academia, the media, and business.
This is a very useful study, however it should be taken in the context of its methodology. The indicators essentially measure the presence of Chinese tools that are intended to influence local populations, but they don’t assess their effectiveness. Secondly, the local experts chosen to complete the project’s survey were academics, journalists, researchers or community leaders, who may not be best placed to assess the presence of tools of Chinese influence in each domain - for example in the military, technology, and law enforcement domains. (MH)
Electric Vehicles 🚗
Brazil 🇧🇷
Brazil's JBS unveils electric truck rental unit for refrigerated cargo | Reuters | April 26, 2022
JBS SA announced on Tuesday the creation of a business unit for renting electric trucks to distribute refrigerated cargo to retailers, helping the Brazilian meat packer advance on its carbon emissions reduction plan and reducing logistics costs in the medium- and long-term.
“No Carbon”, the new company, is already operating, with a fleet of 31 electric urban cargo vehicles… The vehicles, produced by China's JAC Motors… will replace part of the diesel-powered trucks currently used by the group's logistics service providers.
The electric fleet is operating in some parts of the Brazilian states of Sao Paulo, Parana, Santa Catarina, and the country's federal capital region… The company calculates that each electric urban cargo vehicle will prevent 30 tonnes of equivalent carbon dioxide gas from entering the atmosphere per year.
Background: Anhui Jianghuai Automobile Co., Ltd (“JAC Motors”) 🔍
Headquartered in Hefei (Anhui region), JAC Motors is a state-owned automobile enterprise. Established in 1964 as Hefei Jianghuai Automobile Factory, the company has been listed on the Shanghai Stock Exchange since August 2001.
JAC Motors integrates R&D, production, and sales of a full range of commercial vehicles, passenger vehicles and powertrains.
Actively involved in the Belt and Road Initiative (BRI), JAC Motors has established cooperative relations with more than 130 countries, including 13 in the Latin America & the Caribbean region, where it opened an industrial base in Mexico. Its subsidiaries include Anhui Ankai Automobile Co., Ltd. (see TCS March 11 background). (RP)
Mexico 🇲🇽
Vemo, the largest electric car provider in Mexico, has ordered 1,000 D1 electric compact MPV units from BYD. Currently, 200 units are already in operation in Mexico. These 1,000 units of D1s will form the largest electric taxi fleet outside China. Vemo also operates other China-made vehicles, like Yutong EV buses and BYD Yuan EV SUV.
BYD’s D1 model is designed specifically for ridesharing, and was originally manufactured for DiDi’s mainland China operations:
The D1 has an extra-large rear row which gives passengers more leg space, cup holders, and display screens. The drivers in the ridesharing market can take orders on the central control screen.
Infrastructure 🏗
Argentina 🇦🇷
~Above for the full Spanish article~
Argentina’s Ambassador to China, Sabino Vaca Narvaja has been accused of influence peddling and engaging in negotiations incompatible with his public function, according to a pending investigation. In a letter to Vaca Narvaja from the state-owned China Communications Construction Company (“CCCC”), the Ambassador was allegedly asked to intercede in awarding the Vía Navegable Troncal (“Hidrovía”) contract construction to CCCC.
The concession, which forms part of the 1,635 km Argentine “river highway” that runs along the Paraná River is considered vital for the country's foreign trade. In total, the 3,442 km cargo route would pass through Bolivia, Brazil, Paraguay and Uruguay. However a failed bidding process and accusations between the participating consortiums in the past three years has caused controversy.
The incriminating letter - later delivered to Coalición Civica’s deputy Mariana Zuvic - was sent to Vaca Narvaja on January 27:
~Paraphrased translation~
Not only does the letter list the CCCC's background, but it also warns the Casa Rosada about the benefits that such contracting would generate for the country. It says: "I would like to remind your Excellency that the maximum effort of the CCCC in its offers will have great significance for the project and for the cooperation between Argentina and China … [including] political influence, multilateral cooperation for shared benefit and foreign exchange savings for the Argentine government".
…It follows “The Hidrovía has always been a project of total priority for the Argentine government and for the President himself… It is highly aligned with the principles of cooperation of the Belt and Road Initiative (BRI), to which Argentina will adhere to during the [upcoming] President's visit *...the participation of CCCC in the implementation of the project would save the Argentine Government significant foreign exchange expenditure when, in recent years, it was challenged by scarce foreign exchange reserves.”
* On February 6, Argentina officially joined the BRI during Alberto Fernández’s visit to Beijing (see TCS February 10).
Background: China Communications Construction Company, Ltd. (“CCCC”) 🔍
Established in 2005 by the merger of China Road and Bridge Corporation (“CRBC”) and China Harbour Engineering Company Ltd. (“CHEC”, see TCS April 8 background), China Communications Construction Company, Ltd. (“CCCC”) is a majority state-owned global service provider of ultra-large infrastructure. Headquartered in Beijing, China, it is listed on the Hong Kong Stock Exchange (since 2006) and on the Shanghai Stock Exchange (2012).
One of the world's largest infrastructure engineering and construction companies, CCCC currently has more than 60 wholly-owned or controlled subsidiaries. CCCC has a presence in over 157 countries, including 21 Latin America and the Caribbean countries. The company was ranked 61st on Fortune’s Global 500 List, with revenue over US$106 billion. (RP)
Factional politics divides the Fernandez Administration’s foreign policy 🤜🏼
Argentina’s China foreign policy is caught in a factional battle between the politically weak yet more moderate President Alberto Fernandez and his inner circle, and Vice President Cristina Fernandez de Kirchner and her adherents on the left. Vice President Kirchner is known for her proximity to Russia and China – with which she pursued closer relations during her tenure as President (2007-2015). President Fernandez and his inner circle (including his Foreign Minister and the Ambassador to the US) are more critical, preferring closer ties with the US as the country continues its negotiations with the IMF.
While President Fernandez’s controversial statements in Beijing and Moscow on the eve of Russia’s invasion of Ukraine appear to muddle these preferences, the President’s statements were more a reflection of his need to reproach his commanding VP than of his own beliefs. Ambassador Vaca Narvaja is firmly within Vice President Kirchner’s camp, and plays a central role in Argentina’s ties with China and in Argentina’s admission into Beijing’s Belt and Road Initiative.
Argentina’s foreign relations with the West and China will continue to be squeezed by the government’s factional infighting as the economy deteriorates and 2023 elections approach. (IA)
Global Economic Growth 🛳
China 🇨🇳 + Broader Latin America 🏝🏔
This week, the UN’s Economic Commission for Latin America and the Caribbean (“ECLAC”) released a bleak report of the region’s growth, estimated to grow at an average of 1.8% for 2022. According to ECLAC, slowing growth in China, the US, and Europe are the main drivers dragging on LAC economies, alongside the Russia-Ukraine conflict. The IMF agrees:
Any greater growth deceleration in China, because of the pandemic or other reasons, could also have an impact on key export prices and trade in the region. All these risks cloud growth prospects for Latin America and require policy action.
As cases continue to surge across China, the central government remains fully committed to its by-now entrenched Zero Covid policy, sending damaging economic ripples across the world. Latin American natural resource exporters are feeling the effects: in Peru, exports to China fell by over 25% in March, accounting for a 48% dip in copper exports to that country. While in Brazil, dwindling iron ore exports and possible declines in oil prices threaten the economy.