By Ariel C. Armony – Special to CNN
Shoes. Toys. Clothing. China has inundated Latin American markets with cheap goods. This flooding has jolted local producers and generated demands for government measures to protect domestic industries. But there is one Chinese export that has not received enough attention among policymakers, media analysts and public opinion: Corruption.
Though China and Latin America have different values and attitudes, both have traditionally lacked transparency in government. They operate according to informal business dealings which, in turn, undermine or further weaken the rule of law. Corrupt practices exacerbate distortions in public administration, impair sustainable development, erode a nation’s legal culture, and worsen inequality and poverty.
Given China’s increasing business operations and growing investment in Latin America, corruption at home is likely to have a significant impact on societies at the receiving end of China’s move to invest and trade with the outside world. The relationship between China and Latin America is an “encounter of informalities.” Traditional business practices that operate “above the law” and closed-door deal-making will find a welcome environment in Latin America. The consequences of this encounter can damage the interests of taxpayers, undermine safety and environmental standards, threaten human rights, and erode the capacity of the state to enforce legal rules.
In a recent interview with Fareed Zakaria, President Obama talked about China’s need to “play by the same rules as everybody else.” This is important, but the drama is not only played in the international stage. It is manifest in the varied dimensions of China’s engagement in the developing world, from large-scale projects related to public-sector contracts, to small-scale trade and outright criminal networks engaged in various illegal activities.
Media outlets have exposed many examples of corruption involving Chinese interests within mining ventures in Peru, petroleum refineries in Costa Rica, and hydroelectric projects in Ecuador. Transnational networks that can be traced back to China are involved in smuggling, human trafficking, and “protection” rackets in several countries of the region.
As China deepens its presence in Latin America, it is likely that Chinese investors (including state-owned enterprises) that peddle corrupt practices and undue influence will continue to find fertile ground and reinforce the weak institutional capacity of many Latin American countries.
There is some room for optimism though. A few Chinese firms themselves are starting to demand clearer rules of the game from Latin American governments. Several Chinese companies are gradually adjusting to international norms. China’s congress recently amended the country’s penal code, incorporating an extraterritorial amendment that introduces specific anti-corruption language that defines the act of bribing foreign government officials as a criminal offense.
Nevertheless, without active monitoring by the international community and local civil societies in these countries, the dark pull of corruption on China–Latin America economic and political relations will remain strong. Ultimately, the real risk from China may not be manufactured exports but the export of corruption.
The views expressed in this article are solely those of Ariel C. Armony.
