The China Signal - May 21

My testimony to the U.S.-China Economic and Security Review Commission

G’day, and welcome to The China Signal! This week is different to the usual format. Yesterday I testified before the U.S.-China Economic and Security Review Commission for their hearing on China in Latin America and the Caribbean. The hearing was filled with terrific observations and analysis from an array of Latin America/China specialists, including a number of China Signal readers.

I’d recommend you take a look through their testimonies. You can also review a recording of the entire hearing on the same page.

I’ve included my shorter verbal testimony below, which focuses on the objectives and impact of China’s COVID-19 diplomacy. The Commission informs U.S. Congress on China matters, so the perspective I’m taking is from the United States’ national interests. You can read my more detailed testimony here.

As always, please feel free to share your own thoughts and comments with me.

Testimony before the U.S.-China Economic and Security Review Commission

Hearing on China in Latin America and the Caribbean

Good morning and thank you to the Commission for inviting me to testify today.  I write a weekly newsletter called The China Signal, which analyses China’s growing involvement in Latin America.

I see the defining characteristics of the China-Latin America relationship as one of economic necessity and political validation.  I discuss these aspects in more detail in my written testimony, but here I’ve chosen to focus on China’s COVID-19 diplomacy. 

China’s COVID-19 diplomacy

The COVID-19 pandemic hasn’t altered these defining characteristics of the China-Latin America relationship.  However, the pandemic’s deep shock to the region’s public health, its economies, and social stability has drastically increased the domestic political pressure on Latin America’s leaders for social and economic stability.

China’s COVID-19 diplomacy can be divided into three phases, “mask diplomacy”, “vaccine diplomacy”, and a consolidation phase.

Their regional objectives through these phases can be characterised as follows:

1.    Generate favourable views of China’s international pandemic leadership

2.    Build commercial relationships between Chinese pharma companies and local pharmaceutical firms that can evolve to broader commercial activities

3.    Increase scientific collaboration for ongoing research and development

4.    Note supply chain dependencies between China and their Latin American partners for vaccine inputs, using it as a punitive “sharp power” tool if necessary

5.    Opportunistically foster domestic political pressure on Taiwan’s regional allies to form a closer relationship with Beijing

Beijing’s methods to achieve this are largely opportunistic, and are equally driven by growing outreach from Latin American leaders as it is from China’s approaches.

Phase I - “Mask diplomacy”

China’s initial response to the pandemic in the region was to provide Personal Protective Equipment.  This was driven partly by Beijing, provincial governments, Chinese businesses, universities and foundations.  As my fellow panellist Francisco Urdinez notes in his research, the channels of China’s mask diplomacy in the region varied greatly, correlating with the depth of bilateral relationships across these actors.

These efforts can be characterised as an exercise of “soft power diplomacy”, however it was largely in defence of their damaged reputation through the region.

Phase II – “Vaccine diplomacy”

By mid 2020, China’s pandemic engagement evolved to vaccine provision. 

A number of factors saw China’s vaccines dominate Latin America’s inoculation drive in the first months of 2021.  This included a longer than anticipated delivery of vaccines through the Covax program, the U.S.’ decision not to export vaccines to the region (with the exception of Mexico), uncertainty over the side-effects of the AstraZeneca vaccine, growing political pressure for leaders to secure any vaccine, and increased connections and understanding of procuring Chinese vaccines.

I’ll briefly touch on a few examples - my written testimony provides more details.

In Colombia, we’ve seen steps taken by the Duque Administration to leverage U.S.-China strategic competition during the pandemic to pursue their own objectives – making favourable comments on Beijing’s human rights record after additional lots of Sinovac vaccines were secured, and providing President Xi Jinping with an unprecedented platform in a video address to the Colombian people.

In Brazil, we’ve seen how the allure of vaccines can provoke policy shifts to appease Beijing, in what appeared to be a reversal to allow Huawei to participate in the country’s upcoming 5G auction following an agreement for Chinese vaccines.

In Uruguay we have seen leaders lever their connections and procurement experience with Sinovac to facilitate a donation of 50,000 vaccines for the Copa América football tournament.

In other instances, Beijing’s soft power has shown sharp edges.  Brazil has felt this recently, when raw ingredients for Sinovac production at Sao Paulo’s Batuntan Institute appear to have been delayed following critical remarks from Brazil’s President and economic minister. 

In Paraguay, Honduras and Guyana we have seen coercion and opportunism over Taiwan.

Combined, China’s COVID-19 diplomacy, so far, has helped to normalise China’s presence beyond trade and investment, and improved public perceptions in some cases.  In this sense, it’s best to view Beijing’s soft power in the region as “iterative”, reverberating off the region’s material needs. 

Deeper engagement with Beijing may not have been the preference of many of Latin America’s leaders.  However, the circumstances of the pandemic left them with few alternatives.

Phase III – Efforts to consolidate their diplomatic gains in the region

Beijing’s efforts to consolidate their diplomatic gains depends on a number of factors: 

1.    Beijing’s ability to secure long-term vaccine production. Recently we have seen Sinopharm and Sinovac looking to consolidate and expand their productive capacity in the region via local partnerships in Argentina and Chile, respectively

2.    The perceived success of countries in region who rely heavily on Chinese vaccines

3.    Perceptions of the evolving efficacy of Chinese vaccines – against available alternatives

4.    The ongoing risk of scandals and misuse involving Chinese vaccines

I elaborate on each of these in my written testimony.

Recommendations

In order to counter China’s COVID-19 diplomacy, I make the following recommendations:

1.    Release some of the surplus vaccines held by the United States for distribution throughout Latin America. 

2.    Continue the White House’s push to temporarily waive intellectual property rights to COVID-19 vaccines, via the World Trade Organization.   

3.    Empower United States embassies in conjunction with the U.S. Commercial Service to broker and deepen relationships between U.S. pharmaceutical firms and manufacturers in the region.

4.    Make U.S aid more tangible, and heavily promote success stories. 

5.    Support U.S. financial and tech companies to enter Latin America, to facilitate private capital and American entrepreneurialism to the region. 

6.    Liberalise U.S. visa rules, so that more of Latin America’s middle class can visit the United States (including trips to the United States for “vaccine tourism”). 

7.    Sponsor and promote investigative journalism that highlights Beijing’s malign influence in the region.  However, this will only be effective if the United States Government is supplying vaccines, investment and economic development, as detailed in the above recommendations.