China's move on Latin America

Editor's note: The following story is adapted from Joseph Farah's G2 Bulletin, where it was first published in early February. Today, the basic facts are being reported by news organizations around the country. For readers who have a need to know the news before it's news, consider a subscription to the premium, online, intelligence newsletter published by the founder of WND.

Is it just about raw materials? Is it just about oil? Or is there much more to China's growing interest and alliances in Latin America?

Some U.S. intelligence sources are sure there is much more than meets the eye.

Last November, Chinese President Hu Jintao toured Latin America and completed a number of economic deals. Hu's first stop was Brazil to meet with Fidel Castro acolyte President Luiz Inacio Lula da Silva to renew the "strategic partnership," which had been declared during Lula's visit to China earlier last year.

Both leaders predicted openly that China would replace the United States as Brazil's top trading partner.

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Deals were struck to assure China's growing need for food was satisfied in part by Brazil's exports of chicken, beef, soy beans. There were also deals for minerals, including more oil.

Hu offered between $5 billion and $7 billion worth of investments to improve Brazil's roads, railways and ports. Brazil also got a contract for at least 10 Embraer aircraft. But China's plan is to produce more itself through a "joint venture." The Chinese prefer to keep any advanced industrial project in their own hands, relegating partners to a subordinate supplier status.

From Brazil, Hu went to Argentina where another "strategic partnership" was declared with President Nestor Kirchner. Beijing backed up its diplomacy with the promise of $20 billion in investments over the next decade, mainly to develop railways, telecommunications and hydrocarbon fuels. Argentina has been pursuing its own export-led growth strategy, but it is being turned in a neo-colonial direction by China.

Hu next went to Chile where a "free trade" agreement was discussed. Beijing wants more of Chile's copper. Hu finished his Latin American tour with a two-day visit with Fidel Castro in Cuba. In Havana, Hu made it clear China is looking to invest heavily in the island's nickel mines, and Castro predicted that Cuban exports of nickel would double from expanded shipments to China.

In December, Hugo Chavez, a Fidel Castro acolyte, visited China and said said his country would put many of its oil facilities at the disposal of Beijing. Chinese firms would be allowed to operate 15 mature oil fields in the east of Venezuela, which could produce more than 1 billion barrels. Chavez has also invited Chinese firms to bid for natural gas exploration contracts, which his government will offer next year in the western Gulf of Venezuela. Other agreements Chavez signed with Hu covered agriculture, railways, mining, and telecommunications.

Venezuela and China are also looking into ways to better move oil to Pacific transit points. A pipeline could be built across Venezuela and Colombia to a deep water port. An alternative would be a pipeline through Panama. Chinese military companies control both ends of the Panama Canal.

China has invested heavily in recent years in sea power and is now the world's third largest shipbuilder.

How does Latin American figure into China's strategic plans for the future? It doesn't take much imagination to figure it out, say intelligence sources.

Four of the six "outposts of tyranny" identified by Secretary of State Condoleezza Rice during her Senate confirmation hearing Jan. 18 -- Cuba, Iran, Burma, and North Korea -- have ties to China. Now it appears obvious to some U.S. intelligence sources that China is thinking of encircling the U.S. – strangling commerce in its own hemisphere and creating chokepoints that could be useful in what everyone perceives to be an inevitable showdown over Taiwan.

"The violent international politics of the 20th century were dominated by the rise of Germany and Japan in the first half of the century, and of the Soviet Union in the second half," explains William Hawkins, senior fellow for National Security Studies at the U.S. Business and Industry Council. "China's rise is potentially even more unsettling to the world order, especially if it continues to pursue its mercantile-imperialist course in league with rogue states. But U.S. policy on China, dominated as it is by outsourcing-happy multinationals, doesn't take notice. This is an intelligence and policy failure that makes our pre-9/11 mistakes seem insignificant.”

But China's unprecedented naval build-up has implications far beyond an attack on Taiwan or energy conflicts with Japan over the East China Sea. A new naval base on Hainan Island in the South China Sea will allow the navy's North Sea Fleet and South Sea Fleet to support new nuclear submarine operations, including deployments as far away as the Persian Gulf.

China's new nuclear attack submarines will have the ability to hit India or the United States with multiple-warhead (MIRV) missiles. By 2010, Beijing could have 50 to 60 of these vessels in active service. By utilizing stolen American military secrets, technology advice from U.S. companies, and Russian technology, Beijing could exceed the number of U.S. nuclear attack submarines and far exceed Japan's 18 non-nuclear submarines. Taiwan has no such vessels. Beijing is also exploiting advanced Russian technology to build a Type-093 nuclear attack submarine, which is expected to carry new land-attack cruise missiles.

China recently launched the first of its second-generation 094 nuclear submarines, armed with 16 new JL-2 nuclear-ballistic missiles that have a range of 5,000 miles, marking China's first nuclear "second strike" capability. By 2007, the PLA Navy will have 12 silent Russian Kilo Class conventional submarines armed with "Club" anti-ship missiles, with a range of 136 miles. In addition to "Song" class submarines – which resemble a French submarine model – the PLA started building a more advanced 'Yuan' model in June, equipped with increased submersion time capabilities. These developments have left Japanese leaders of all major political parties fearful of an attack on their homeland, which has provoked the country to pursue a more assertive naval deterrence capability.

China is constructing a gigantic harbor in Gwadar, Pakistan to boost Beijing's strategic position on the Arabic Sea, reports the German Der Speigel. The harbor, which is solely designed for oil tankers and container ships, is China's attempt at linking the country's westernmost provinces, which borders the Soviet Union, the Central Asian oil fields of Kazakhstan, to the Southwest Asian oceanfront through Pakistan. Construction teams are also building a 350-mile hard-surface highway connecting Karachi to Gwadar. Karachi is on the peninsula facing the Baluchistan province, which links Pakistan, Afghanistan, and Iran. Pakistan's military president General Pervez Musharaf recently presided over a ribbon-cutting ceremony, after which some 500 Chinese construction engineers will bring in over 200 bulldozers to begin construction of the port. When completed, the port will be capable of handling the world's largest container ships.

U.S. intelligence sources who specialize in China affairs say all this spells trouble for future U.S-Beijing relations.

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