In global geopolitics, Latin America has emerged as a region of profound historical depth and contemporary relevance. From the bustling markets of Brazil to the expansive landscapes of Patagonia, this continent has long been a stage for the ambitions of nations and empires. Over the past two decades, China has increasingly shaped this narrative, transforming its sporadic historical ties into robust economic partnerships and strategic engagements. As South America’s foremost trading partner, surpassing even the United States, China’s influence extends deeply into sectors like energy, infrastructure, and space. Its significant investments have enhanced economic growth in countries such as Brazil and Venezuela. Despite these economic benefits, China’s expanding footprint has sparked debates on environmental impact, local sovereignty, and broader geopolitical implications. The United States and its allies closely monitor Beijing’s actions, wary of potential uses of economic ties for geopolitical leverage, such as influencing Taiwan’s isolation or supporting authoritarian regimes in Cuba and Venezuela. President Joe Biden has highlighted China’s role as a strategic competitor in Latin America.
Let’s explore this topic in detail.
Economic Ties Between China and Latin America
China has become one of the most significant export destinations for Latin American countries. As of now, China is South America’s largest trading partner and ranks second in Latin America and the Caribbean after the United States. In 2000, less than 2% of Latin America’s exports were directed to China. However, the region’s commodities boom, driven by China’s rapid growth and increasing domestic demand, saw trade with China surge at an average annual rate of 31% over the next decade, reaching $180 billion by 2010. By 2021, trade hit a record $450 billion and remained stable in 2022, with projections suggesting it could surpass $700 billion by 2035. Currently, China is the primary trading partner for South America and holds a significant position across Latin America, second only to the United States. Major exports from Latin America to China include soybeans, copper, petroleum, oil, and other essential raw materials for China’s industrial development.
This dynamic has resulted in Latin America importing a significant amount of higher value-added manufactured goods from China, which some analysts argue has undercut local industries with cheaper Chinese products. By 2023, China had established free trade agreements with Ecuador, Peru, Chile, and Costa Rica, with discussions for a similar deal with Uruguay ongoing. Furthermore, 21 Latin American countries have ratified China’s Belt and Road Initiative (BRI). Chinese loans and foreign direct investment (FDI) play crucial roles in strengthening these relationships. In 2022, China’s FDI in Latin America and the Caribbean was about $12 billion, representing nearly 9% of all FDI in the region. From 2005 to 2020, the China Development Bank and the Export-Import Bank of China extended $137 billion in loans to Latin American governments, primarily financing infrastructure and energy projects in exchange for oil. In 2022 alone, these loans amounted to $813 million. Venezuela is the largest borrower, with $60 billion in state loans from China, predominantly for infrastructure and energy projects, which is almost twice as much as the second-largest borrower, Brazil. China also holds voting memberships in the Caribbean Development Bank and the Inter-American Development Bank.
Currently, 22 out of 33 Latin American and Caribbean countries are actively involved in Chinese ambitious project, Belt and Road Initiative. New transportation connections, such as the container ship route linking the Chinese port of Dalian with Mexico, Ecuador, and Colombia, are anticipated. 2024 is expected to bring new areas of economic cooperation, additional Free Trade Agreements (FTAs), and the consolidation of the digital Silk Road, alongside plans by the Chinese government to enhance the BRI. The market for Chinese imports is likely to continue expanding for products like soybeans, copper, iron, oil, and lithium, the latter being crucial for China’s leading electric vehicle manufacturing industry. Trade is currently concentrated in five countries—Brazil, Mexico, Chile, Peru, and Colombia—which account for over 89% of all regional exports to China.
Investments and Infrastructure
Since the introduction of the Belt and Road Initiative (BRI) in 2013, cumulative participation has surpassed $1 trillion, reaching $1.053 trillion. This includes $419 billion in non-financial investments and approximately $634 billion in building contracts. In 2023, BRI construction investments in Latin America amounted to $180 million, slightly more than the $170 million invested in Pacific BRI countries. However, BRI countries in Latin America saw a 92% increase in overall investments, totaling over $5.5 billion and accounting for 20.5% of all Chinese BRI overseas investments. China’s mining and metals industry, valued at $19.4 billion, is experiencing significant growth, particularly in minerals and metals like lithium, which are crucial for the green transition and electric vehicle batteries. Notable engagement has occurred in Bolivia, Chile, several African nations, and Indonesia. China already dominates a substantial portion of the world’s mining resources, such as over 80% of the world’s graphite reserves, and holds significant sway over raw material processing, owning more than 50% of the world’s capacity to process graphite, lithium, nickel, and cobalt.
In 2023, $4.2 billion was invested in rail projects across Africa, Latin America, and East Asia, including the Kinshasa urban railway in the Democratic Republic of the Congo. Most of these projects were funded by construction contracts.
Despite these trends, Chinese investments and financing in BRI countries increased in 2023, with expectations for a potential recovery in BRI funding and construction contracts by 2024. Investments in green growth boosters are deemed necessary for promoting the green transformation in China and BRI nations. This includes prospects in mining and mineral processing, technology (such as EV and battery manufacturing), and green energy (such as electricity production and transmission). China’s focus on renewable energy, batteries, and electric vehicles, termed the “New Three,” highlights these sectors’ importance.
Chinese participation in the BRI is expected to remain robust in 2024. An increase in deal counts is anticipated, and deal sizes are expected to remain higher than in 2021 and 2022, especially in sectors requiring substantial investment, such as mining and manufacturing. Meanwhile, resource-backed transactions and transportation infrastructure projects, like strategic rail and road connections to mines and oil and gas pipelines, are likely to continue but may not yield immediate financial returns.
Political Diplomacy
China’s strategy to broaden its sphere of influence through “South-South cooperation,” which emphasizes trade, investment, and aid, is at the forefront of its diplomatic efforts in Latin America. By fostering cultural and educational exchanges, Beijing has cultivated political goodwill with local governments and positioned itself as a competitive partner to the US and Europe. Numerous high-level political discussions have taken place since former Chinese President Jiang Zemin’s historic thirteen-day tour of Latin America in 2001. Since taking office in 2013, President Xi Jinping has made at least eleven trips to the region. Beyond bilateral accords, China has entered into comprehensive strategic alliances—the highest designation it bestows upon its diplomatic allies—with Argentina, Brazil, Chile, Ecuador, Mexico, Peru, and Venezuela.
A significant aspect of China’s diplomacy is its effort to isolate Taiwan. Latin America’s support for Taiwan has decreased due to Beijing’s refusal to establish diplomatic ties with countries that recognize the island’s sovereignty. In 2023, Honduras became an ally with Beijing after Taipei denied its request for billions of dollars in aid. Nicaragua and the Dominican Republic are other recent switches. Experts suggest that pressure is mounting on the remaining holdouts, like Haiti. Some analysts argue that closer ties between China and Latin America support authoritarian regimes in countries such as Venezuela, Cuba, and Nicaragua. Evan Ellis, a research professor at the U.S. Army War College Strategic Studies Institute, claims that China acts as “an incubator of populism” in these nations. He asserts, “Anti-democratic regimes find a willing partner in the Chinese, not that China is trying to produce antidemocratic regimes.”
China has also focused on specific areas like space cooperation. In 2024, the China-Latin American and Caribbean States Space Cooperation Forum was established to promote cooperation in space applications, research, and technology. This forum aims to use satellite communications and earth observation technology for capacity building, environmental protection, and sustainable development.
Military and Space Cooperation
China is actively strengthening its military ties with Latin American countries through training programs, arms sales, and military exchanges. Venezuela is the region’s largest buyer of Chinese military hardware, a relationship that has flourished despite the U.S. government’s 2006 ban on all commercial arms shipments to Venezuela. Between 2006 and 2022, Beijing reportedly sent $629 million worth of weapons to Venezuela. Additionally, China has supplied Argentina, Bolivia, Ecuador, and Peru with air defense radars, assault rifles, ground vehicles, and military planes, amounting to millions of dollars in sales. Cuba has also sought to deepen its military ties with China by hosting multiple port visits from the People’s Liberation Army.
U.S. intelligence authorities have expressed concerns about evidence suggesting that China is increasing its intelligence sharing with Cuba. China also sent over a hundred riot police to Haiti as part of its participation in the UN peacekeeping operation that began in 2004. Although China withdrew from Haiti less than a decade later, it continues to direct military drills in the region and supplies local law enforcement agencies. During Evo Morales Ayma’s government, China sent military trucks and anti-riot gear to Bolivian police departments. It also provided transportation equipment and motorcycles to police forces in Guyana and Trinidad and Tobago, and donated tens of thousands of automatic firearms to Ecuador.
In the realm of space cooperation, China has been proactive in establishing collaborative efforts with Latin American countries. The China-Latin American and Caribbean States Space Cooperation Forum, established in 2024, aims to enhance cooperation in space applications, research, and technology. This forum promotes the use of satellite communications and earth observation technology for capacity building, environmental protection, and sustainable development. Through these initiatives, China seeks to bolster its strategic influence in the region and foster technological advancement and innovation.
COVID-19 Response and Vaccine Diplomacy
China’s “COVID-19 diplomacy” in Latin America aimed to boost its standing and win over regional governments through a comprehensive approach. This strategy included lending billions of dollars to nations for purchasing Chinese vaccines, investing in local vaccine production facilities, and sending essential medical supplies such as masks, ventilators, and diagnostic test kits. By June 2022, China had supplied Latin America with over 400 million vaccine doses. Additionally, Beijing signed vaccination agreements with at least a dozen countries in the region, some of which included technology transfers and joint research with Sinovac, a Chinese vaccine manufacturer.
Chile was one of the top recipients of Chinese vaccines, with almost 70% of its COVID-19 vaccination coverage coming from Chinese sources. Other major purchasers included Argentina, Brazil, Mexico, and Peru, which also bought tens of millions of doses. However, China’s vaccine diplomacy raised concerns in some countries. For instance, Honduras and Paraguay reported feeling pressured to abandon their recognition of Taiwan in exchange for vaccine doses. Observers suspected that China might also be using its vaccine influence to promote the growth of Huawei, the controversial Chinese telecom giant. A notable example is when Brazilian regulators reversed their previous decision to ban Huawei from participating in the country’s 5G network development, just weeks after China donated millions of vaccine doses to Brasília.
Challenges and Concerns
China made $73 billion in raw material investments in Latin America between 2000 and 2018, including the construction of refineries and processing facilities in nations with substantial reserves of coal, copper, natural gas, oil, and uranium. Recently, China has directed its investments toward lithium production in the Lithium Triangle—Argentina, Bolivia, and Chile—which collectively hold around 50% of the world’s known lithium reserves, a crucial metal for battery manufacturing. Chinese state-owned companies, such as Power China, play a significant role in energy development, with over fifty active projects across fifteen Latin American nations as of late 2022. However, the scale of these projects has exacerbated health and environmental concerns. China is also interested in the renewable energy industry in the area. Major solar and wind projects, including the largest solar plant in Latin America in Jujuy, Argentina, and the Punta Sierra wind farm in Coquimbo, Chile, have been supported by the China Development Bank.
As members of the Asian Infrastructure Investment Bank, Argentina, Brazil, Chile, Ecuador, Peru, and Uruguay have voting power in the region. Beijing has provided funding for building projects focusing on railroads, ports, and airports. Over a dozen large-scale infrastructure projects driven by China have negatively impacted the environment and local Indigenous communities, according to a 2023 report by the UN Committee on Economic, Social, and Cultural Rights. China is still focused on creating and developing “new infrastructure,” which includes 5G technology from telecom companies like Huawei, smart cities, cloud computing, and artificial intelligence (AI). Despite American advisories against doing so, countries in the region are increasingly utilizing Huawei technology, exposing them to potential Chinese cyberthreats. In 2022, Huawei initiated a two-year experimental project called “5G city” in Curitiba, Brazil.
Beijing has aimed to enhance its space collaboration with Latin America, starting with cooperative China-Brazil satellite development and manufacturing in 1988. China now has satellite ground stations in Bolivia, Brazil, Chile, Venezuela, and the Patagonian Desert in Argentina, where its largest non-domestic space complex is located. The proximity of these stations to the US has raised concerns about potential espionage on US assets.
While Washington has been preoccupied with other issues, including the aftermath of Russia’s war in Ukraine, American politicians and military leaders have expressed concerns about China’s expanding influence in Latin America. Former chief of US Southern Command Admiral Craig S. Faller stated in 2021 that “immediate action is needed to reverse this trend” because “we are losing our positional advantage in this Hemisphere.” President Donald Trump took a tougher stance than his predecessors by imposing penalties on multiple nations and cutting funding to regional organizations, which some observers claim pushed certain governments closer to Beijing. Additionally, Trump distanced the US from the region’s trade relations by renegotiating the North American Free Trade Agreement and withdrawing from the Trans-Pacific Partnership.
President Joe Biden, who oversaw the region’s strategy on Latin America as Barack Obama’s vice president, has maintained that the US needs to reclaim its leadership position in the region to confront an assertive China. Biden and his Group of Seven (G7) counterparts introduced Build Back Better World (B3W) to challenge China’s Belt and Road Initiative by building infrastructure in low- and middle-income nations, including those in Latin America. However, the Biden administration initially allocated only $6 million to B3W, which was later renamed the Partnership for Global Infrastructure and Investment. At the Americas Summit in 2022, Biden made several new economic commitments and increased the US’s vaccine donations to the region—about 65 million doses by early 2022—while continuing to express concerns about Huawei.
The independent US government organization, the US-China Economic and Security Review Commission, has highlighted the challenges posed by Beijing’s increasing influence over Latin America. Senators Bob Menendez (D-NJ) and Marco Rubio (R-FL) have sponsored bipartisan legislation to counter China’s “malign influence” in the region by strengthening multilateral security cooperation and counternarcotics initiatives. Other legislative measures advocate for establishing long-term trade agreements between the United States and Western Hemisphere nations to facilitate the “reshoring” of supply chains from China to more proximate countries.
End Note
China’s increasing influence in Latin America over the past two decades has generated economic opportunities and geopolitical concerns. As China becomes South America’s largest trading partner, surpassing the United States, its state-owned enterprises continue to invest significantly in energy, infrastructure, and space sectors. China’s strategic initiatives, including the Belt and Road Initiative, have strengthened its political, military, and cultural ties with the region, leading to concerns about health, environmental impacts, and potential espionage activities. Despite Washington’s efforts to counter China’s influence, such as through the Build Back Better World initiative and increased economic commitments under President Biden, analysts argue that more proactive measures are necessary. Bipartisan legislation in the US seeks to bolster security cooperation and reshoring of supply chains, emphasizing the urgent need to address Beijing’s growing geopolitical presence in Latin America.
