Bolivia And China: A Cultural Comparison

Bolivia and China have been enjoying a cooperative relationship since the establishment of diplomatic ties in 1985. China has become the principal funder and contractor for President Evo Morales's state-led development project. Bolivia is now using the yuan to pay for imports and exports, becoming the latest country in South America to regularly use the Chinese currency. China has also provided assistance for Bolivia to get through other crises in the recent past, including the COVID-19 pandemic, where Beijing gifted millions of vaccine doses to the country's population. In February 2024, Bolivia obtained a $350 billion loan from China to build a zinc refining factory.

Bolivia's adoption of the yuan for trade

Bolivia is not China, but the two countries do have established diplomatic relations. They have been conducting bilateral trade since at least 2002, and their relations have expanded to military, transport, infrastructure, raw materials, education, and other areas.

In 2023, Bolivia began to use China's currency, the yuan, for trade, joining other South American countries like Brazil and Argentina in challenging the hegemony of the US dollar for international financial transactions. Bolivia's state-run bank, Banco Union, has started to carry out transactions using the yuan, with the country's economy minister, Marcelo Montenegro, confirming that between May and July of 2023, Bolivia conducted financial operations amounting to 278 million yuan ($38.7 million), which accounted for 10% of its foreign trade during that period.

The adoption of the yuan for trade by Bolivia is part of a broader trend in Latin America to reduce dependence on the US dollar and establish stronger ties with China. This shift comes amid rising trade and investment from China in the region, as well as a global dollar shortage, making alternatives to the US currency more appealing.

Bolivia's decision to use the yuan for trade is also influenced by its own economic challenges, including severe dollar shortages driven by falling natural gas production, a key national export. The use of the yuan could help facilitate transactions with China, Bolivia's largest export market, and potentially reduce the country's reliance on the dollar.

While some analysts have questioned the move, suggesting it may not be a long-term solution to Bolivia's economic problems, others have defended it as a practical alternative in the current macroeconomic context. The adoption of the yuan for trade by Bolivia and other countries in the region aligns with China's efforts to internationalize its currency and challenge the global dominance of the US dollar.

China's involvement in Bolivia's infrastructure projects

Bolivia and China established diplomatic ties in 1985, and since then, relations have expanded from economic and cultural ties to military, transport, infrastructure, raw materials, education, and other areas. China has been involved in several infrastructure projects in Bolivia, including:

• The Bolivian Space Agency: China provided support for the establishment of the Bolivian Space Agency and the launch of its first satellite in 2014 for a total cost of US$300 million.
• Oruro Region Infrastructure Upgrade: China provided a loan of $67 million to upgrade infrastructure in the Oruro region.
• Lithium Mining Operation: A Chinese firm is a partner in a $2.3 billion lithium mining operation in Bolivia.
• Security System Overhaul: In 2019, China developed a new security system for Bolivia worth more than $105 million, including surveillance cameras, drones, and automated evidence processing systems.
• Bolivian Road Administration: The World Bank financed a $230 million infrastructure project in Bolivia, which was awarded to the Bolivian Road Administration (ABC). ABC then commissioned China State Construction Engineering Corporation to lead the work. However, the project was delayed, and there were issues with non-compliance with labour laws and environmental damage.
• El Mutún Mine: The Bolivian government awarded a US$450 million contract to the Chinese firm SinoSteel to build and administer facilities to extract and process iron from the El Mutún mine.
• Huanuni Mine: A US$50 million contract was awarded to the Chinese firm Vicstar for a tin ore processing facility at the Huanuni mine in Potosí.
• Oruro and Potosí Infrastructure: A contract was awarded to Henan Yuguang to build infrastructure in Oruro and Potosí to refine and cast zinc.
• Rositas Hydroelectric Power Project: China funded the $1.3 billion Rositas hydroelectric power project, which is currently halted.
• Rurrenabaque-Riberalta Road Project: The Chinese government provided nearly $500 million in loans for the Rurrenabaque-Riberalta road project.
• Telecommunications: Bolivian telecommunications company Entel signed a US$120 million contract with the Chinese firm Huawei to provide service to 12,000 localities across the country. Entel also made the Chinese company ZTE the exclusive supplier for building the new FTTx national broadband network.

China's support for Bolivia's space agency

China has played a significant role in supporting Bolivia's space agency and its space exploration endeavours. In 2010, the Bolivian Space Agency (ABE) was established with the goal of developing and implementing communications satellite programs. ABE's initial budget was modest, at just US$1 million, and the Bolivian government planned to seek additional funding through donations and loans from other countries, including China.

The satellite, named after an 18th-century Aymara native who led a rebellion against the Spanish Empire, played a crucial role in improving telecommunications in rural Bolivia. It provided telecommunication services, remote education, and telemedicine programs, helping to lower the cost of internet, television, and phone services in the country.

The successful launch of Túpac Katari 1 marked a significant milestone in the cooperation between China and Bolivia in the field of science and technology. Chinese President Xi Jinping congratulated Bolivian President Evo Morales, highlighting the satellite's role in improving broadcasting, education, and medical services in Bolivia.

The revenue generated by the satellite exceeded expectations, and by April 2016, Bolivia had collected US$33 million through its services. The income allowed Bolivia to make loan payments to the China Development Bank, with the Bolivian Space Agency director, Iván Zambrana, expressing confidence in repaying the loan within 15 years.

China's influence on Bolivia's surveillance systems

China has been a key player in the development of Bolivia's surveillance systems, with the two nations first establishing diplomatic ties in 1985. In 2019, China invested over $105 million in overhauling Bolivia's security system, introducing new surveillance cameras, drones, and automated evidence processing systems, collectively known as the BOL 110. This system, according to the Bolivian government, uses artificial intelligence to combat crime.

However, the nature and pervasiveness of these technologies have raised concerns among some individuals, who worry that they may be used to create a police state in Bolivia. These fears are not unfounded, given the recent use of questionable surveillance and manipulation tactics by the Bolivian government. Scholars have also warned that similar systems can encourage authoritarian practices, as seen in China's mass surveillance of its citizens.

China itself has become a global leader in surveillance technology, with companies like Dahua and Hikvision selling their products to over 180 countries. China's mass surveillance of its citizens is conducted primarily through the government, with the help of local companies, and includes internet surveillance, camera surveillance, and other digital technologies. This extensive surveillance network has been used to monitor Muslim ethnic minorities in Xinjiang, feminists, and LGBT rights groups, leading to numerous human rights abuses.

China's role in Bolivia's lithium industry

Bolivia has some of the world's largest reserves of lithium, a key component in batteries that power electric cars. However, it has struggled to fully capitalize on its potential, falling behind its South American neighbours Chile and Argentina, which together account for close to 40% of the world's lithium production.

In January 2023, Bolivia's state-owned lithium company YLB signed an agreement with a consortium led by Chinese battery giant Contemporary Amperex Technology Ltd. (CATL) to collaborate on the mining, refining, processing, and sale of the country's lithium reserves. The deal, worth $1 billion, also includes CATL's recycling subsidiary, Brunp, and China's largest cobalt miner CMOC.

The consortium will invest in building production plants that will use direct lithium extraction (DLE) in the Salar de Uyuni and Salar de Coipasa salt flats. The plants are expected to produce 25,000 tonnes of battery-grade lithium carbonate by 2024 and 100,000 tonnes by 2028.

China's involvement in Bolivia's lithium industry gives it access to the country's vast untapped reserves. China is the biggest global consumer of lithium and will need 800,000 tonnes of the metal per year by 2025 to support its booming electric car industry.

Bolivia's partnership with China is expected to help the country unlock the full potential of its lithium resources and boost its economy. However, there have been concerns about the lack of transparency in the selection process and the potential impact on the environment and local communities.

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