rship calls a vote just to that point so we can always predict when the votes are it's when was supposed to start our hearing so i do apologize and hopefully we won't be interrupted by any more votes i'm pleased to welcome you to today's hearing entitled a new challenge china in the western hemisphere this is a topic of growing interest and i look forward to exploring the issue here on the western hemisphere subcommittee which offers with keeping a close watch on developments throughout latin america and the caribbean several countries have for years quite a great deal of attention on colombia cuba and haiti have often led the list likewise regional issues like poverty and inequality energy production remittances and migration also top the list of issues we must monitor in recent years another challenge has also caught the attention of a subcommittee and it emanates from the other side of the globe the growth and increasing power of the people's republic of china is today forcing policy makers to take a new look at our priorities not only in asia but in latin america as well the expansion of the chinese economic jugg not only had a great impact on businesses and workers in the united states it is also powerful affecting the entire hemisphere here in one thousand nine hundred nine total trade between china and latin america and the caribbean region stood at eight point two billion by two thousand and seven it had risen to almost a hundred and two billion more than ten fold increase in less than ten years likewise chinese exports to the region have soared by a similar amount in november two thousand and four chinese president hu jintao is visit to several latin american countries underscore china's increased presence in the hemisphere cynthia watson recently wrote that quote in november two thousand and four rockstar visit of chinese president hu jintao to latin america was a wake up call for many in the united states that china had discovered in latin america during a speech of the brazilian congress who stated that china would invest one hundred billion dollars over the next decade and twenty billion in argentina alone while china has a tendency of over promising investment in latin america there is obviously no doubt that they presence in the region is growing i was particularly struck by china's visibility in the western hemisphere when i led a congressional delegation to the southern caribbean last year our visit just happened to coincide with the international cricket championships held in several caribbean countries and grenadian prime minister keith mitchell scheduled our meeting with him at their brand new chinese built cricket stadium during a cricket match i learned that everyone in grenada knew that that the chinese built the multi million dollar stadium and built it as i remember within a year unfortunately people were not nearly aware of what the united states had done for the island of the native it's him tambour of two thousand and four hurricane ivan slammed into going to ada and did terrible damage although people know about the chinese building of a sports arena they don't know that the united states provided forty two million dollars  grenada for recovery and reconstruction in the aftermath of the hurricane or that we repaired over a hundred thousand i'm sorry one hundred over a thousand private homes help two hundred sixty nine small businesses to reopen and  d thirteen hundred farmers to plant new crops but we should keep the chinese challenge in perspective the u s still remains the biggest player in the hemisphere by far all china has reported foreign direct investment in the region was eleven point five billion in two thousand and five u s investment was three hundred sixty six billion u s geographic perc proximity to latin america close cultural ties and  longstanding trade patterns give the united states overwhelming advantages nevertheless the challenge is clear and if we don't pay attention in my opinion and conduct effective public diplomacy as we didn't in grenada even after we invaded that country in the one nine hundred eighty s even the best intentions and the most worthy humanitarian efforts often go unrecognised likewise if we're not careful american businesses could find their investments undercut and their trade diminished the battle for diplomatic recognition between china and taiwan is also alive and well in the western hemisphere and is thought to be by many to be china's number one priority in the region i was just reading today where there are now going to be direct air flights between china and taiwan of the thirty three independent countries in the latin american caribbean region china currently has official diplomatic relations with twenty one states while the remaining twelve nations currently maintain relations with taiwan that's actually a very large percentage given the rest of the world and where the rest of the world has diplomatic relations during the china taiwan split for decades taiwan was a consistent provider of financial assistance and investment in latin america and the caribbean in order to nurture it remaining official relationships today it is hard pressed to compete against the growing economic and diplomatic clout of china which in recent years has stepped up its own version of what is sometimes called checkbook diplomacy the growth  aging is power and wealth is now visible in a number of countries recognizing china since two thousand and four dominate costa rica and greneda have switched their recognition to the people's republic of china from taiwan cricket stadium in grenada that i mentioned before the grenadian police band made a serious mistake it performed the national anthem of the republican of the republic of china not the people's republic of china and the republic of china is also kno taiwan instead of the people's republic of china which is beijing so i guess china can't win them all we have a distinguished group of experts with us today to discuss today's hearing topic a new challenge china in the western hemisphere first i'd like to introduce daniel p erickson senior associate for u s policy at the into american dialogue welcome second we have evan ellis adjunct professor at the university of miami welcome dr ellis and finally i'm pleased to welcome francisco a gonzales assistant professor of latin american studies at the pole nitze school of advanced international studies of johns hopkins university  you very very important hearing for some time now we've been aware of the challenge that china's growing influence around the world poses to u s interests on a number of fronts china's influence in the western hemisphere have been much of a focus  as it maneuvers in some parts of the world but it is surely time to take a close look at china's strategy in latin america if china's plan for africa is a blueprint for what it wants to do in latin america for one am very concerned i would note to my colleagues that i convened a hearing on the subcommittee on africa global human rights and international operations in july of two thousand and five that described disturbing trends regarding china's activities in africa activities it revealed just how insidious the chinese government influence is on that continent the damage again fluence of china on the situation in darfur and in zimbabwe is well known and these dangerous policies are part of a wider trend at our two thousand and five hearing carolyn bartholomew commissioner of the u s trying to economic and security review commission explain the darker side of china's economic expansion she describes his willingness to provide quote economic military and diplomatic assistance to on democratic african regimes in direct opposition to political forces that have spent years encouraging positive change she also noted that china is quick to block attempts by the united states to use multilateral institutions to censure the appalling human rights practices of some of the chinese government's allies as the chinese poor money into africa their partners are free to pursue any policies they wish even if they violate international treaties and basic human rights and how can we expect the chinese government to hold its business partners to any standard on human rights this is a government of its own people in any number of ways denying new technologies it is attempting to subjugate its own people restricting the internet and lucky of those who use it to speak freely with china routinely vialli violating the human rights of its citizens why would they care at all about the rights of latin americans i know that you want to build this investment in africa on economic cultural and geographic factors that are very different from those in latin america but when we see that ramping up its financial stake in the western mr burton to come back is when he comes we will let him give his opening statement at that point or to submit in the record anything that he may desire so why don't we start with start with our panel  or mr erickson why don't you thank you very much mr chairman thank you for all the members of the committee who are here today this is an extremely important topic for me to testify i'm going to make a summary of my views and ask for my full statement to be placed in the record without objection the interim merican dialogue has been closely following china's engagement with the western hemisphere over the past several years with an emphasis on the political economic and security dimension of the relationship today there is little doubt that the people's republic of china has moved from the periphery to become a central actor in the western hemisphere while many latin american and caribbean countries enjoy long established political and economic ties with beijing the stop of the scope of change since two thousand and one has been striking by almost every conceivable metric including high level visits presidential diplomacy the pace of trade investment the level of culture cultural exchange of military contacts china's relations with latin america have never been so robust moreover this deepening relationship has occurred against the backdrop of three interrelated trends first china's stunning rate of economic growth has driven its search for new markets as well as in doubt it with greater resources to cultivate political and economic allies throughout the world including latin america second latin american and caribbean economies are seeking to diversify away from their traditional trading partners such as the united states and europe and take advantage of the economic opportunities presented by china and third latin america remains an important battleground for diplomatic recognition between china and taiwan as beijing attempts to pry loose taiwan's remaining allies in the region i'll tackle these points one by one to begin with it's clear that china's a rising economic power plants global search for the commodities necessary to sustain it economic expansion forms the bedrock of its relationship with latin america let's consider a few numbers the pace of trade between china and the region has skyrocketed from about ten billion in the year two thousand so over one hundred billion in two thousand and seven this is an impressive figure although still well below the estimated five hundred sixty billion in us latin american trade and less than half of the trade the exist between europe and not latin america much of the straightest in the form of commodities including chile and copper argentina brazilian soya venezuelan oil and cuban nickel china sells a wide range of manufacture and consumer products to latin american countries brazil was china's largest trading partner last year with to a trade totally thirty billion dollars followed by mexico at roughly half that than argentina peru venezuela panama and colombia round out china's top eight trading partners in the region china has signed a free trade agreement with g l a in two thousand and five as entering into trade negotiations with kosta rica and peru chinese foreign direct investment in latin america lags far behind that of the european union and united states in fact the e u is estimated to be the region's largest investor with about six hundred billion investments followed by u s investment of around three hundred fifty billion by contrast the top chinese trade official recently estimated that about one quarter of china's total overseas investment goes to latin america which equals about twenty two billion however official estimates of chinese investment in latin america often vary in any case the vast majority of this investment goes to the virgin islands in the cayman islands and other offshore financial centers in fact not a financial direct investment in latin america is probably around one point nine billion dollars the chairman mentioned the speech made by president  jintao before the brazilian congress where he promised one hundred billion dollars in investment over the next ten years the chinese now say that they were actually misquoted they were talking about a hundred billion dollars in trade and not investment but they allow that assertion to hang out in the latin american press for over a year and generate a great level of excitement about what china may bring to the region in fact the chinese now say that it was trade they were aiming for in terms of one hundred billion dollars not investment and they claim to already have reached that goal while investment in the region has travelled much slower this initial in this initial confusion over what precisely china was promising to latin america indicates that the degree to which cultural differences and china's relative lack of experience of the region has at diplomacy let's discuss a few political and security concerns with china's renewed economic presence in latin america pose either a short term or long term risk to u s political and security interests it's difficult to answer this with either a strict yes or no answer clear that china places highest priority on its relations with washington and is highly sensitive to u s perceptions of its involvement in latin america nevertheless there are three cases where security concerns are traditionally raised they involve venezuela cuba and the panama canal the relationship between china and venezuela hugo chavez has been the subject of substantial debate and analysis much of this has been driven by chavez's obvious interest in diversifying its oil exports away from the united states and china's search for energy however in the short term it seems will be very difficult for venezuela to somehow cut off or dramatically reduce its oil exports to the united states and sell to china instead this is something that should be watched very  carefully but at the same time it is not necessarily concern for immediate alarm china is now the second largest trading partner of cuba and helping to sustain the cuban economy at a time when the u s is attempting to isolate cubans through sanctions however there's also evidence that the cubans are disappointed that china and that cuba is not of chinese are disappointed that cuba is not following the china model of development and instead is resisting economic reforms in terms of panama well there have been concerns about china's role around the panama canal particularly the operating of several ports at the same time the reality is that trade through the panama canal has flowed relatively smoothly over the past eight years since the u s held passed over the canal zone to panama in the short term it is not seen that china and china is involved in the panama canal so likely to disrupt trade there let me conclude with a few remarks on how the united states should respond china is poised to be a major player in the western hemisphere for the perceivable future irrespective of what actions the u s does or does not take in reaction to beijing's growing influence however there is a response that could help the united states consolidate its influence firstly should strengthen its ties with latin america and the caribbean through trade economic integration and cooperation in multilateral fora the next summer of the americas in two thousand and nine will present an ideal moment for the u s three new ties to the western hemisphere second the united states should maintain an open dialogue with china on issues of u s concern in the hemisphere especially as it relates to democracy human rights and environmental concerns third the united states should carefully monitor the evolution of china's ties with latin america and the  caribbean in consultation with other countries the primary goal of u s policy as it relates to china in the western hemisphere should focus on ensuring that china acts as a responsible stakeholder that contributes to the region's economic prosperity while respecting the democratic principles that serve as the guiding values for the interim american system thank you thank you very much d thank you i am also honored by the opportunity to testify today before this committee as with mr erickson i would like to summarize my remarks and ask that they be honored in full and in the congressional right without objection so move the p r c is growing relationships with latin america may be understood in terms of economic and strategic imperatives arising from its emergence as a global power including of course a worldwide search for new markets and reliable sources of supply as well as the p r c using its increasing international weight in its long isolate taiwan the principal challenge i believe for the united states is to continue to be a constructive partner as the latin america regions needs an interest continue to evolve including to help the region deal with what will be undesirable side effects of the new interactions between it and that would people's republic of china including economic displacement and potential sources of misunderstanding with respect to some of the questions that the committee has indicated are of interest what is the p r c buying from the region first of all a very great quantities of goods however not always what the businessmen of latin america hope to sell it first of all the growing middle class is using its affluence to sample western brand name goods latin american beneficiaries of specifically include chilean wines mexican beer well known brands such as stems and modelo although even media outlets such as televisa reportedly have plans to translate mexican tell novellas into mandarin for broadcast into china at the same time as well known as interest extends to latin america's primary products one global source among many to fuel its manufacturing base examples and indicated include copper and potassium nitrate from chile include iron and other mining products from brazil and bolivia and of course petroleum from venezuela ecuador and brazil and we must not forget from canada the a in addition the agricultural needs increasingly acute causa to buy bulk foodstuffs from the regions such as soy from brazil and argentina indeed one of the little know impacts of the argentine crisis right now in the agricultural sector is its principal purchaser soy products the chinese have been scrambling for alternative sources it's important i believe to emphasize that the region despite its hopes has been much less successful in placing its traditional crops but more labor intensive crops such as banana and coffee c despite great efforts to do so as mr erickson indicated while few of the hope for p r c investments in social and infrastructure projects in the region have materialized chinese companies have invested significantly in primary product  acquisitions and joint ventures in order to achieve security sources of supply of interest to them notable examples include the five hundred million dollar copper agreement between china and metals and coal delco as well is current and potential three billion dollars to purchase and as well as the recent one point two billion dollar acquisition of petroleum assets in the country of ecuador as well as four billion dollars in loans just recently in venezuela latin america is also increasing interest to the p r c as a market for its goods especially given that slow economic growth in its traditional markets the united states the european union and japan have increased that importance i should point out that in addition to the well known chinese inexpensive textiles toys and other products the chinese products as they move up the value added chain have a real very real social impact the possibility of buying a new leaf on motorcycle for five hundred dollars or a new cheery automobile purse six thousand dollars puts motorized transportation in the reach of an entirely new class in latin america and that has a social impact with respect to the taiwan issue of course it's widely known that the p r c offer a significant aid aretha's decision in june two thousand and seven to change its recognition that has implications for nicaragua and honduras because those countries have a less short term hope to export to the p r c and thus increased higher interest to continue with their strong has plans to visit better way in august to presumably help to shore up taiwan's relationship with that country turning to energy security i fundamentally believe that one of the reasons of the chinese increasing presence with respect to loans and oil companies in venezuela as confidence given that behind canada that mexico is the major supplier in this hemisphere of oil the question of where venezuelan oil goes as mexican oil continues to decline begins to become relevant to us energy security questions from this hemisphere beyond that i believe it's important to point out that with respect to chinese relationships with what are often termed the populous countries of the andes it's important to point out that china also has very real concerns over those nations for example after china invested one point four two billion dollars in the nation of ecuador to acquire oil assets there it is probably not at all pleased by the recent issue by president correa in that country to force it to renegotiate those into service supply agreement to provide that fuel oil to china also in places such as ecuador it's useful to point out that the chinese companies equal as western companies have had some very real problems with mobilize social forces in november two thousand and six for example the asse violence directed at that dorrian thousand other chinese interest finally to turn to security interests i would like to point out that perhaps although the military relationships are much talked about i believe that a key point is to look at the emerging relationship between chinese and latin american criminal organizations as as the ties between those countries increase for example the chinese group red dragon which is implicated in a major scandal involving bolivian congressman and former congressman and other indications of these activities are increasing to echo what mr erickson said i believe that given the possibilities for misunderstanding in the region that the process initiated during the august two thousand and six trip by secretary secretary of shannon to beijing process of coordination to help resolve the sources of mis understanding takes us in the right direction and certainly you know should be encouraged and deepened where possible thank  included in the congressional record in my view the shortened medium term challenge that the u s government faces visit to the expansion of china sea influence in the western hemisphere is and will remain economic rather than diplomatic or geopolitical even if china have the capacity to project power to the americas which it does not have its top priority in the hemisphere is and will remain having a good relationship with the us china has much more to lose from mali in one thousand the us than it has to win from strengthening its standing in the americans instead china has chosen to exercise soft power in the region they've used two channels for this purpose the most important by far is economic in terms of trade and investment promises the other one is diplomatic and cultural and it has mainly been propelled by expanding chinese embassies consulates and confusing cultural centers in the region in the diplomatic cultural arena however much educated latin americans admire china's talking about that's an americans remain distrustful and in fear of over centralized rule like like china we have to remember latin americans own distant and recent historical experience with own accountable politics and it corollary human rights abuses corruption economic irrationality and official impunity latin americans don't want to revisit their political past and therefore china is not a political model that latin america would like to embrace no matter how strong and high their economic growth is on the contrary what latin americans want desperately want is to strengthen their young and still fragile democracies in my view the u s should promote decidedly the strengthening of liberal  democracy not in america as a matter of tactics as well as principle and this objective should be promoted not only through the traditional channels of the into the american system or bilateral relations but all throw someone through an explicit program that gives visibility to the u s government's commitment in helping to advance this goal for all their old on attained aims and serious shortcomings latin americans for example the remember ever d r s good neighbor policy and j f k s alliance for progress has high types of  constructive engagement regarding the growing economic presence of china not in america i think an argument can also be made that this is in fact in the interest of the us because what this country us faces south of its border is the most unequal region in the world governments that promise short term redress and redistribution by own doing the free market policies of the u s and the international multilateral institutions recommended in the eighty's and ninety's of so called washington consensus the fact remains that majority these or big minorities of voters throughout latin america think of the outworn oriental oriented model did not deliver on its promises and therefore must be changed china's economic engagement thing that's in america proves that's a commitment to open economies can actually yield benefits to the region which for example has enjoyed its fastest five year growth period between two thousand and three and two thousand and seven since the late sixty's thanks to commodity exports a growing proportions of which have been going to the booming economies of asia first and foremost china the so called super cycle commodity boom of these role materials exporters have enjoyed since zero three have translated into several benefits which again in my view are in the interest of the us first high when full gains from commodities exports have allowed countries to strengthen their fiscal positions by redeeming outstanding external debts bringing down borrowing costs and creating bond markets in domestic the nominated currencies these trends are behind the recent investment grade attained by beta one but us and these developments are in the interest of u s banks and businesses which will find it easier to engage in productive activity in latin america thanks to a stronger more liquid financial markets in the region also the sound fiscal position and deepening financial markets and that's in america are in the interest of the us government because the developments of the mastic borne markets reduces the likelihood of speculative attacks against currencies macro devaluations and the c for the growing middle classes this trend has been facilitated by another china related factor namely the cheap of a liability of consumer products many of which used to be the preserve of upper middle and upper classes in latin america  attack against free markets that have come to dominate politics in many of the regions contraries lastly on the use of energy the conventional wisdom has it that china venezuela partnership would be to the detriment of american energy security from my perspective this proposition is false on two counts economically and politically economically it makes no sense nor will it make any time as long as oil remains a fungible commodity for venezuela high amounts of  crude to china the bulk of heavy refining capacity remains in the gulf of mexico coast of the u s even if china started investing in heavy refining infrastructure the likelihood that this line of investment could become dominant is very low because most of china saw oil import bally's made up of light crude shipped from the middle east and africa while you invest in a venture that requires massive installation calls plus higher transport costs when the current alternative is the most cost effective politically china will continue to but if they do this if they continue engaging they will do so in the same fashion as japanese south korean spanish or canadian firms do with that as commercial ventures only given china's awareness about the potential to  s if it pushes into that cinematic as aggressively as it has in say africa and given that this is exactly what they don't want my perspective is that chinese bids and real commercial commitments in latin america will actually remain thank you very much i would like to give our ranking member mr byrd an opportunity to make a statement or even ask some questions if you'd like thank you mr chairman i apologize for for meeting for being late i was with the ambassador from argentina and i had to show a little courtesy to him because he's a fine fellow and they're a good friend of the united states my big concern along with my colleague mr smith is the human rights violations that we see and china and the slave labor camps that they have last i heard it was ten million people producing products and slave labor camps that are sold all over the producing products that are sold all over the world and that's that's been a big concern of mine but we're not here today to talk about that we're here to talk about china's influence in latin america and how that will affect united states of america  i'm concerned about that some of the things you said right now like doctor gives all those kind of allays some of those fears because you don't think it's going to be a major problem for the long term at least that's why i took your comments and i guess that's that's positive but i still concerned about things like venezuela you don't seem to think that venezuela's going to export a lot of their heavy oil to china because of production problems i'm not so sure about that we get about sixteen or seventeen percent according to my staff from venezuela and their close ties growing ties with countries like iran and china i think is a very troubling thing and and china has the resources to build the kind of  refining plants necessary to take that heavier oil and make it into and is one of the things that concerns me about about china and possibly buying more and more oil  from latin america is that that makes it more difficult for the united states to to keep the energy resources that we need we have a lot of resources in this country and one of the big debates is taking place on the floor of the u s house now and has been taking place over the last few weeks is our ability to produce our own energy we have energy supplies that would help us reduce our dependency on foreign oil like venezuela and the middle east but unfortunately because of environmental concerns by some environmental groups we have been able to get the congress of the united states to allow us to drill in the anwar the continental shelf and we are able to go into some of our natural force national forest to get maybe a three or four hundred year supply of natural gas which is clean burning i'm going off on a tangent here but this is important and where we're  not able to to become energy independent by using things such things coal shale which could be converted into oil and gasoline and as a result americans are matter in the dickens that us right now because gasoline is at four dollars plus a gallon and here we are worrying about china coming into the western hemisphere and taking away a lot of the resources that we have depended upon in the past and i don't know what we're going to do if we are unable to go after our own resources and we do see some of these things being siphoned off by countries like china who have the money to do it we're going to be in a big a lot of hurt and i hope that i can convince my colleagues along with others that it's time for us to re evaluate our situation and realize that while we're concerned about the environment we also have to be concerned about our economy and that means we have to have the energy necessary to make this economy work so i've gone off on a tangent mr chairman apologized for that let me just say i'm still concerned about china's influence in latin america they have been able to with their china owned companies actually take control of both ends of the panama canal i know that doesn't seem like a great threat but in time of conflict it could be a real problem even though most of our battleships couldn't get through the panama canal anyhow but as far as commerce is concerned the panama canal is still very important and with china having both ends of it that we could have a problem down the road and also i'm concerned also as a as a about the influence that they have through their money and their ability to invest in central and south america that maybe some of the democracies that we're able to see come to fruition during the reagan years may be heading in the opposite direction venezuela is a perfect case in point but as a way that was a democracy we have a lot of countries down there that are democracies nicaragua bolivia and others that are moving to the left i'm concerned about that and i think in part it's due to the fact that countries like china are going in there and investing and they have more influence than we've had in the past so with that i'm anxious to hear what questions are asked i have some questions of my own mr chairman but i'll reserve those for later on in the in the hearing thank you well thank you mr burton congressional research service  always puts out member randoms on different subjects and when they sent us one china involving china's involvement in latin america they opened up it was extensive but they opened up and i would like to just read you half of a paragraph and ask you to comment on are you all have commented on that but i like you to comment on it more this is what they said china's growing interest in latin america and the caribbean is a fairly new phenomenon that has developed over the past several years beginning in april two thousand and one with president jiang zemin thirteen day tour of latin america accession of senior chinese officials have visited latin american countries to court regional governments while latin american leaders have also been frequent visitors in beijing there are two main drivers in china's expansion of its relations with latin american and caribbean countries one competition with taiwan for diplomatic recognition particularly in the caribbean and central america and to strengthen relations with resource rich countries in the region that can help feed china's resource needs and expanding economy now someone touched on before the fact that china has been under tremendous criticism with its moves in africa to try to tap some would say steal the resource needs of africa for its expanding economy is that something that we should worry about in terms of latin america and should we also  worry about how that might affect us if china is expanding our resource needs for her expanding economy so if anyone would like to comment on that i'll offer  few quick comments first on the i think what you see in china's overall strategy towards america is a two tier strategy where you look at central america in the caribbean this is principally about taiwan that's the largest group of countries that still recognize taiwan  china want a major victory last year when close to rico became the first central american country to defect from taiwan and recognize china and then of course there's paraguayan that's the only one left in south america and it could be likely to when you look at towards south america that's when you're really seeing this drive for resources and really trying to feed china's growing economy you have a different situation in latin america than you do in africa in the sense that latin america has basically middle income democracies there are a few of africa probably isn't going to replicate itself in quite the same way in the majority of the latin american countries nevertheless there's obviously a shortage of commodities worldwide i mean you're seeing prices rise across the board in almost every energy sector in terms of food products and also basic commodities and metals and a lot of that is driven by the growth of china and of india and so what you're seeing is a global impact and to some degree china's growing role in latin america doesn't fly some loss for u s business interests there but this is something that's playing out not just in latin america but across the world and because of the united states longstanding ties with latin america and a very deep economic relationship that exists including the number of free trade agreements that the united states has with latin american countries the u s actually may be better positioned in latin america than is in say africa thank you i'd like to focus my comments on the resources dimension  of that the first of course the governments of the region at least many of them are reaping the benefits of the global commodity boom to the extent that they have the commodities to sell why for example the president or government in argentina  focusing on taxing approximately half of the twenty four billion dollars waycross it's largely because that the value of that crop comes from the chinese demand a massive demand for those toys products we find similar issues with respect to the booms that the peruvians been ripping with respect to exports where do those benefits go to to the extent that they benefit governments and oftentimes can fuel increases in corruption of those who allocate who gets the concessions or who does not as well as oftentimes the benefits go to those who hold the land whether it's the crop land or or the mining or oil or other concessions and to that extent may actually help to contribute to inequality in the region traditionally a problem in addition as we look at where china is going with respect to industrial policy versus latin america as china moves ever higher up the value added chain with lenovo computers with introducing new car brands in the latin america with introducing washing machines and other high technology items latin america seems to be moving down the value added chain into ever more basic industries with ever more low value added and that is not good for the diversity of latin america and the diversity that is needed to sustain democracy i would also like to comment quickly with respect to venezuela i respectfully disagree with with my  gonzalez i believe that fundamentally all the oil is a point of all commodity is fungible if you have enough time to wait for the change and enough money to pay for the additional and what is happening right now is a pad of a supporting to twenty twelve strategic plan says that they're going to give an additional eight hundred thousand barrels a day to the chinese while at the same time maintaining their contractual commitments to the u s and its refineries however generally off the record oil executives indicate that that is almost not going to happen my own time in  to believe that the things that you have to put in place in terms of infrastructure and pipelines and mixing stations and additional refinery capacity given the capital crunch that is experiencing right now two things are happening first of all it's becoming ever more dependent on the four billion dollars which may go up to eighteen billion dollars in short term funds from china development bank called the heavy investment fund is well as other players we've seen such as iran and russia at the same time it's becoming ever more dependent on the presence of  chinese have already gotten the head of asia to agree to pay for the additional three dollars a barrel transportation cost from the venezuelan side i believe that that will have a lot to do with the politics of who is in charge in venezuela at the time is well as the very heavy presence and investment commitments from the chinese to the venezuelans thank you dr gonzales like to give you a chance to respond thank you on the issue of african that's in america i would highlight three point five the fact that latin america has stronger governance structures than africa i mean after all this is a region which has had to fight in its fair a bit with human rights abuses the latin america pre nine hundred eighty s post one thousand nine hundred is a very different region most of the countries in latin america have men most of the countries in the region for the last three decades that america has enjoyed on interrupted democratic rule as my colleague don erickson was was mentioning and this is not just any an token oh you've got you've got to elections the mechanism of democratic representation does work in latin america today better than it has at any point in time politicians are more responsive to public sound they used to be governance structures the mechanism of representation works and that's in america much more than in sub saharan africa second latin america has strong trade unions and strong mass based political parties w put pressure on who can come to invest what kinds of resources can come into a country and this ties directly with the usual resource nationalism which as you know has been the backbone of nationalist politics in  are first and foremost parts of the nation and should be either part of the state monopoly or you know maybe you can end up engaging in partnerships but nonetheless partnerships that are meticulously i think that is by and large politics as usual in latin america i doubt that there's going to be any change in that and that kind of jealousy that latin american governments have showed in terms of the management of their resources will apply no matter who it is that comes knocking on the door china the u s spain and just very quickly to comments on representative buttons  but you know sustain fashion two hundred dollars in order that there remains a mini profit margin for the venezuelan to make a buck out of exporting oil  as businesses exporting oil to the u s and that's that been it's really dependent on the u s much more than the u s has on venezuela i think that will continue to be the case in the future you know there was a movie called cabaret jalen there's a movie called cabaret did you see that movie in the movie the proprietor of the master ceremonies saying his song money makes the world go around the world go around and i'm going to tell you money does make the world go round unfortunately china has an awful lot of it which is our money buying their products which are produced by very cheap labor and they use that money to get the things they want in other parts of the world whether it's influence commodities or whatever you talked about a number of commodities in central americans are south america copper  from sixteen and a half percent to fifty two point seven three are by sixteen have percent to fifty fifty two point seven three million tons in the first three months of the year and crude oil rose by eight percent to ninety one point eight million to and tremendous growth they have a huge appetite for energy because they're expanding their economy on the backs of the rest of the world by using their labor as my colleague down here probably has talked about before i got here and they use that labor to produce products that we're buying in huge amounts i think where their biggest trading partner by far we have a huge trade deficit with them and they use that money then to go into other parts of the world to  extract the commodities and to expand their influence they continued to further their ties with iran the brutal military rulers in burma the horrible government of sudan selling them weapons all because they want energy and at the rate they're expanding their economy i believe that they're going to try to get energy from any source they can and mr chavez down there who is kind of interested in what you said about him having to import oil from russia that's because he says a terrible leader he has the resources down there to make that country flourish instead he's been exploiting his money and his influence into nicaragua and into bolivia and elsewhere so he can make those countries move to the left as well as his relationship with raul castro and develop without castro in cuba and so i'm still concerned about their influence they have expanded their influence in south america they've expanded their influence indirectly in central america and i think that there is a concern there but and finally let me just say this finally you have to look at the way the world is not the way you wanted china is a superpower not as not a superpower in the same context the united states but they're growing power and because of their system and because they have the ability to use the money they're getting from us and other countries because they're cheap labor and produce production of products they they have been able to expand kaname in my view on the backs of the rest of the world and we need to be concerned about that now the central and south america are our front yard and i'm very concerned about the influence of iran i'm very concerned about the influence of china and other what i would consider radical countries around the world and i'd like to see us and i wish our state department was here today i'd like to see our state department pay more attention to central south the influence is being exerted by other countries down there so that we don't have to look back ten or fifteen years from now and say what happened we already are too dependent on foreign energy and we have the resources here we're not doing anything about it and that's going to become more and more difficult situation in the years to come if we don't do something pretty quickly about central south america and our own resources thank you mr chairman thank you if anyone would like to do a quick answer mr burton or comment we've just been notified that there are a series of votes i'm going to try to to wrap this up in the next fifteen minutes i'm going to call him mr mr smith but if you would like to anyone like to comment on mr erickson just quickly on this point about china and venezuela i think it's clear that venezuela mr chavez is a major variable in u s latin american relations in a major one in terms of china's economic outreach in the region there's no doubt when you look at who china's largest trading partners are in latin peru and so the question is given the fact that venice well as such a major energy exporter and china needs so much energy why are the figures still so low i mean one would think that in fact it should be much much larger and i think that with some of my fellow panelists alluded to that you still venezuela may be addressing that then there's the political dimension the chinese know that very very careful attention to what's happening in venezuela and china values its relationship with the u s more that values its relationship with venezuela and so i think there's been a certain level of caution there i think last year chinese venezuelan trade group about thirty percent that's a nice growth figure was less than what's what the growth was with china's trade and other latin american countries but the question is when you look at the  current trends and you have this oil prices are going sky high and may remain there for some period of time clearly a relationship between china and venezuela that is deepening even if it's not deepening at the pace that mr chavez would like it to i think this is perhaps in a minute thank you my main point mr button is that a high growing latin america is in the interest of the u s and before this current commodity boom which has largely been driven by the economies of asia first and foremost brought forward you know the the winning the victorious populist politicians in america my sense is that the latin america which is growing fast enough to stay away actually what you end up doing is at least partly taking away the banner of those who are crying radical redistribution around now and if the u s or europe are not of the moment consuming enormous amounts of commodities as terms of organized crime i think that one of the one of the challenges of china's presence in latin america particularly mexico and central america is human trafficking that is something that i would really look into more seriously than the current economic engagement of china in the region thank you mr smith for requests has made me want to get back on the record with some answers who will run out of time but you mentioned lack of women they're gone they're missing and now they'll be looking elsewhere to find those women secondly on the human rights council eight members of the of the of the latin countries make up  that chinese telecommunications firm specifically but also to a lesser extent shanghai bell are making tremendous inroads in latin america largely on cost to the point where traditional suppliers such as telecom and telephone that are actually getting getting without proper of these authorisation which raises the issue of what are the larger possibilities raised from a security perspective by this tremendous growth of chinese infrastructure telecom infrastructure in the region and indeed when we look at  a we see that in this moment when there is an interesting triple combination of essentially the redrawing of the venezuelan telecom infrastructure buys in combination with supplying the new telecom satellite which will be launched in i believe august byte by the chinese hemisphere mexican officials have at least monitored the possibility that have caught several chinese operators already in partnerships with what the milan mexican gangs and what they basically engage in is the trafficking of economic laborers of trying to bring people to the u s second the very worrisome  child abductions for the adoption market in these both mexico and central americans and chinese gang members have been caught adopting children and third of course voting record all of that to a commission i'm saddened by it and i share your concern thank you i would like to to ask a question about taiwan  said that there are number of countries particularly in central america who have switched recognition from taiwan to the p r c can you just talk a little bit about i guess i have to be quick how the decision to recognize p r c or china relates issues of trade investment diplomacy in the region and i am i've been very supportive of the taiwan u s relationship because i think it's an important relationship and i think the united states has a special obligation to the people of taiwan we in the united states obviously don't have formal diplomatic relations with taiwan but we do have lots of other  relations with them and agreements with them would you foresee that kind of arrangement with some of the countries in latin america who perhaps don't have diplomatic relations with taiwan but could have other types of relations maybe with some encouragement by the united  states thank you for the question it's a very important issue as you mentioned in the beginning about twelve of the countries and the western hemisphere recognize taiwan and there's only twenty three worldwide that do so so more than half of taiwan's allies are in fact in latin america principally central america and the caribbean and this issue is really an extremely important and highly charged foreign policy decision for a group of countries that are in general the poorest  the weakest countries sort of countries in the hemisphere if you look at the countries that currently recognize taiwan they include guatemala bally's all salvador honduras nicaragua panama plus several caribbean countries including the dominican republic an haiti as well as paraguayan i really see the trend now that costa rica has switched over to china that probably within the next decade you're going to see a string of countries defect from taiwan and recognize china and it's important to note that every single major economy in the western hemisphere has already done so including of course the united states the u s today has preserved what i would describe as a strategic ambiguity in terms of advising what precisely central america and caribbean countries should government and i think that many times there are officials in beijing taipei and the capitals of latin america wondering what precisely the u s position is it may make sense and the long term to encourage taiwan investment and certainly knowledge sharing in latin america and the caribbean but at the same time obviously china is a far and away the most recognized country in the world out of the two and i think the expectation will be that taiwan will continue to see its numbers over the coming years thank you i know that the others might want to comment a few but i have to run for a vote unless you want to thirty seconds say something i'm going to go into the hearing but let me let me just say that i would hope that and i want to thank the three of you for for testifying guy it was very enlightening for me and i'm sure for my colleagues and we will be pursuing these matters in the future hearings now