China is now Latin America's largest trading partner (excluding Mexico). China's relationships with the countries in the region, however, are about far more than trade. China's influence in the region has deepened to the point where it has translated into significant leverage. (Image source: iStock)
China has overtaken the United States in trade terms "in large swathes of Latin America," according to a recent Reuters analysis of UN trade data from 2015-2021. Reuters added that "outside of Mexico, the top U.S. trade partner, China has overtaken the United States in Latin America and widened the gap last year."
Although US President Joe Biden pledged to give Latin America higher priority, "current and former officials told Reuters that the United States had been slow to take concrete action and that China, a major buyer of grains and metals, simply offered more to the region in terms of trade and investment."
Biden, while campaigning for the presidency in March 2020, in response to the question of whether China's growing influence in Latin America is a threat to U.S. national security, pledged to restore American leadership to the region, and said:
"It is the current absence of American leadership in the Western Hemisphere that is the primary threat to U.S. national security. Russia and China can't match our extraordinary ties and common history with the people of Latin America and the Caribbean."
China is now Latin America's largest trading partner (excluding Mexico). While in 2000, China's trade with Latin America amounted to just $12 billion, by 2019 the number had grown to $330 billion.
Trade between China and Latin America is expected to grow even more in the coming decade. "LAC [Latin America and the Caribbean] China trade is expected to more than double by 2035, to more than $700 billion," wrote Pepe Zhang, Associate Director at the Atlantic Council's Latin America Center, and Tatiana Lacerda Prazeres, former Foreign Trade Secretary of Brazil, in June 2021.
China's relationships with Latin American countries however, are about far more than trade. Chinese companies have been investing greatly in Latin America as part of China's Belt and Road Initiative (BRI), launched by the Chinese Communist Party in 2013 as a global infrastructure and economic development project that seeks to advance China's geopolitical ambitions. The BRI has deepened China's influence in the region to the point where it has translated into significant leverage. For instance, in the past four years, the Dominican Republic, El Salvador and Panama each switched their diplomatic recognition from Taiwan to China. As with China's engagement in other places, especially through the BRI, China is looking to secure its boundless need for resources, markets and control.
Professor Evan Ellis of the US Army War College, in testimony before the US-China Economic and Security Review Commission in May 2021, said:
"It is not necessary to show malevolent PRC intentions with respect to its activities in Latin America and the Caribbean to conclude that the current and long-term implications of that engagement are grave for prosperity, democracy, and liberties in the region, as well as the security and strategic position of the United States...
"... China's pursuits in Latin America and the Caribbean are remarkably consistent with what it seeks globally: secure sources of commodities and foodstuffs, reliable access to markets for its goods and services (particularly in strategic, high value-added sectors), strategic technologies and related capabilities."
Biden's pledge to counter China's consolidation of influence in Latin America and restore American leadership has so far amounted to little in practice. While 21 Latin American and Caribbean countries have signed onto the Belt and Road Initiative, Biden's Build Back Better World, which was launched in June 2021 as a means to counter China, has not even taken off yet.
China is openly involved for the long haul, proposing long-term cooperation, while the US evidently is not. One of the reasons for this discrepancy is that 80% of China's investments in Latin America come from Chinese state-owned firms and other public ventures, including from those owned by Chinese municipalities, cities and provinces.
"China is proposing cooperation for 2035 and 2050," said Enrique Dussel Peters, a professor at the Universidad Nacional Autónoma de México.
"There is a very clear, long-term perspective. The U.S. used to be, a couple of decades ago, much more clear... China is very clearly working to integrate infrastructure, investments, trade, financing, et cetera. Their strategy is very clear, and not in the case of the United States."
China also has another advantage: No regard for human rights or democracy. It is more than happy to invest in and trade with authoritarian dictatorships like itself. The US, on the other hand, did not invite the undemocratic Cuba, Venezuela and Nicaragua to the Summit of the Americas that took place in Los Angeles in early June, which had apparently been intended to showcase Biden's ostensible prioritization of the region. Not inviting the three countries upset several other Latin American countries and caused the leaders of Mexico, Honduras, Guatemala and Bolivia to boycott the summit, making it a public relations failure for the Biden administration.
"It shows the deep divisions in the continent," said Martha Bárcena, the former Mexican ambassador to the United States. The leaders who decided against attending, she continued, are "challenging U.S. influence, because U.S. influence has been diminishing in the continent."
"We definitely would have wished for a different Summit of the Americas," said Argentinian President Alberto Fernández about the US decision not to invite the three countries. "The silence of those who are absent is calling to us."
"The United States is playing catch-up," said Diego Abente Brun, director of the Latin American and Hemispheric Studies Program at George Washington University. He suggested that the Biden administration will need to "have a little bit more of a flexible approach" and consider whether geopolitical considerations should come before ideological ones when dealing with undemocratic regimes in Latin America.
At that Summit of the Americas, Biden announced the "Americas Partnership for Economic Prosperity" a new U.S. economic partnership with Latin America to counter China's growing power in the region.
The plan aims to reinvigorate regional economic institutions and mobilize investment, "create resilient supply chains," and "broaden participation in the formal economy, including tax and anti-corruption measures, as well as cooperation and infrastructure investments in areas such as migration, education, health, unemployment and retirement, childcare, and women's economic empowerment."
The plan also aims to create "clean energy jobs" and work to "decarbonize" economies; enhance biodiversity and build resilience to climate impacts" and ensure "sustainable and inclusive trade."
The odds of Biden's new plan winning over Latin American countries -- where China has already massively invested in building roads, railways, harbors, bridges and a host of other infrastructure and communications projects, with no questions asked on the environment, climate or "inclusivity" -- are probably low. Even Biden administration officials do not seem to harbor any illusions about the new plan's ability to change facts on the ground. "As long as China is ready to put its cash on the table, we seem to be fighting a losing battle," one US official, speaking on condition of anonymity, told Reuters.
This belief appears to be backed by Welber Barral, Brazil-based partner at BMJ Consultores Associados, who said that the US is too much talk and no money. "Latin American governments complain that there's a lot of talk but ask 'where is the money'?" he said.
Ecuador's ambassador to the US, Ivonne Baki, probably put it most succinctly. "The U.S. is losing Latin America to China without putting up a fight, Ecuador's ambassador to Washington told Axios," according to a September 2021 article featuring selections of an interview with Baki, in which she said:
"And China is waiting, saying, 'We're here. We're giving you money.' They want control of course, but they don't say that."
Judith Bergman, a columnist, lawyer and political analyst, is a Distinguished Senior Fellow at Gatestone Institute.