Latin America is becoming a new battleground for foreign interests, with the United States facing growing competition from global powers like China and Russia. This shift is changing the region’s landscape, bringing in new investments, technologies, and diplomatic relationships, while also raising questions about the long-term impact of these foreign involvements.
China, in particular, has been making significant investments in Latin America, focusing on large-scale infrastructure projects and loans. These investments are part of China’s Belt and Road Initiative (BRI), which aims to expand its global influence through economic partnerships. Latin America, with its rich natural resources and strategic locations, plays a crucial role in this plan.
Trade between China and Latin America has skyrocketed, growing from $14 billion in 2000 to a staggering $495 billion in 2022. While China continues to import raw materials from the region, its exports have evolved to include high-tech goods and services, highlighting the deepening economic ties between the two.
From 2003 to 2022, China invested $187.5 billion in Latin America and the Caribbean, primarily in raw materials due to the region’s abundant natural resources. A prime example of China’s ongoing infrastructure investment is the new $3.5 billion deep-water port in Peru, the first Chinese-controlled port in South America. Another example is Venezuela, which has received $67.2 billion in Chinese investments since 2001, helping the country navigate its economic crisis.
In Brazil, Chinese state-owned company State Grid acquired CPFL Energia, one of Brazil’s largest electricity utility companies, for around $4.5 billion. State Grid’s total investments in Brazil’s electricity sector amount to approximately $12.4 billion. Similarly, China Three Gorges, another major Chinese energy company, acquired Companhia Energética de São Paulo, Brazil’s largest private energy generator.
Chile has also seen significant Chinese investments, particularly in its mining and electricity sectors. Chinese firm Tianqi acquired a 24% stake in Chilean company SQM, a key player in lithium extraction, for $4.1 billion. In the electricity sector, China’s State Grid International Development Limited bought the Chilean utility company Compania General de Electricidad S.A. for $3.04 billion, marking one of the largest Chinese investments in the country.
Mexico, a concern for the United States, has also attracted large Chinese investments. Lingong Machinery Group (LGMG) announced plans to build a manufacturing facility and industrial park in Nuevo Leon, Mexico, with an investment of $5 billion. This project is expected to boost foreign investments in manufacturing, warehousing, logistics, and business support services.
These examples are just a glimpse of China’s extensive investment in Latin America. The reasons behind these investments are primarily economic, political, and strategic. Economically, China seeks to secure vital raw materials like soybeans, copper, and petroleum. Politically, China aims to expand its influence through “South-South cooperation,” including efforts to isolate Taiwan internationally. Strategically, China’s growing presence in Latin America is part of its global ambitions, with 21 Latin American countries already joining the Belt and Road Initiative.
For the United States, China’s presence in Latin America poses a challenge to its traditional influence in the region. While the U.S. has focused on promoting human rights and democratization, China’s infrastructure projects, such as airports, sports stadiums, and 5G networks, are often seen as more tangible benefits. To counter China’s growing influence, the U.S. may need to rethink its approach, perhaps by offering more transparent and less debt-inducing investments, as well as assistance in areas like cybersecurity.