From the imposing Andes mountains through the rushing Amazon to the thick Atlantic Forests, from its southernmost tip at Tierra del Fuego across to the Texas border, Latin America has a new guest at the table: The dragon has arrived from across the Pacific, hungry and ready to eat.
In this long-slumbering region, the rise of the Asian superpower promises both riches and ruin. As the United States' influence wanes, China offers a pragmatic path toward prosperity.
When Li Xi, Secretary of the Central Commission for Discipline Inspection of the Communist Party of China and member of the Politburo Standing Committee —its 7th most powerful member— made a several-days' visit to Brasilia after the G77+China meeting in Havana this past September, many questioned louder whether the dragon's gifts come laced with hidden curses.
What sacrifices will be asked for in return? And can sovereign dignity survive such indebtedness and dependence? These haunting doubts linger as Latin America walks the foggy road ahead under the dragon's shadow. The voyage began innocently, but now looms with ominous unknowns.
Over the past two decades, China has aggressively expanded its economic, political and even military influence across Latin America. A region once firmly in the Western sphere of influence is increasingly coming under Beijing's sway.
This tectonic geopolitical shift is driven by China's quest for resources, markets, and global power projection. Latin American nations, eager for investment and unburdened by historical grievances, have welcomed China's embrace. However, beneath the surface of smiles and handshakes, tensions and unease are simmering.
With Brazil at the helm of G20 in 2024, China has a strategic opportunity to advance its interests in Latin America. Beijing is leveraging economic ties with Brasilia to counterbalance Washington within the G20 where a deferential Brazil could boost its regional sway.
It is not lost that China's rapid inroads present complex challenges for Latin American development and sovereignty. As the US watches anxiously as its southern neighbors drift toward its main strategic rival, the future balance of power in the Western Hemisphere hangs in the balance.
The anatomy of Chinese ambition in the Americas — Passage through the Dragon's den
Two decades ago, China was a peripheral player in Latin America, barely registering in the region’s consciousness, mentioned mainly in minor economic dispatches or stories on Hong Kong immigrants and passing references in the financial pages of their newspapers.
Yet in the span of a generation, the dragon has emerged from obscurity to cast its imposing shadow over the region. From the cosmopolitan capitals of Mexico City and Buenos Aires to the winding Amazon, the lithium-rich salt flats of Bolivia, and endless Patagonian steppe, China's presence looms everywhere and concerns grow about expanding Chinese influence.
What began quietly as trade has now blossomed into an extensive web of economic, diplomatic, technological and even military ties. This increasingly multifaceted relationship holds profound implications for Latin America's development model and geopolitical alignment.
The dance begins
In the early 1990s, bilateral trade totaled a paltry $2 billion annually. The US dominated economic ties, along with Europe and Japan. Latin America served mainly as a source of raw materials and agricultural goods. However, China's exponential growth in the 1990s, followed by its 2001 entry into the World Trade Organization, upended the status quo.
Hungry for resources to fuel its industrial expansion, China turned to Latin America's bountiful mines and fields. It voraciously imported iron ore from Brazil, copper from Chile, and soybeans from Argentina. At the same time, Chinese manufacturers flooded Latin American markets with affordable consumer goods.
Two-way trade rocketed from $12 billion in 2000 to nearly $450 billion in 2021—a 37-fold increase. In the process, China overtook the European Union to become the region's second largest trading partner behind the US. It is Brazil’s largest trade partner.
This growing economic relationship is built on clear motivations. For Latin American countries, China represents a crucial export destination and source of investment. They supply the raw materials and agricultural products that have enabled China's economic miracle. In return, Chinese companies provide financing and construction for major infrastructure projects across the region.
For China, Latin America offers a steady supply of commodities to fuel domestic growth. It also serves as a promising market for Chinese goods and services as millions of Latin Americans enter the middle class. On a strategic level, China sees economic ties as way to garner diplomatic support and undermine US regional influence.
Some observers have compared this dynamic to the past relationship between Western powers and Latin American nations. However, there are key differences. China avoids forceful intervention and political conditionality. It presents itself as a fellow developing country and partner in overcoming colonial legacies. This narrative has strong appeal for many Latin American leaders and publics.
The rhythm quickens
In the 2000s, China's presence in Latin America was largely restricted to trade and some mining/oil investments. However, the 2008 global financial crisis marked a turning point. With the US economy paralyzed, China unleashed massive stimulus spending. It doubled down on Latin American commodities to sustain its breakneck growth.
Soon resource extraction projects were insufficient to meet China's needs. The government realized it required more control over the entire supply chain and Chinese state-owned companies went on a Latin American shopping spree — acquiring mines, oil fields, farmland, ports, and infrastructure.
Investment surged from a few billion dollars annually to nearly $30 billion by 2015. Majority state-owned enterprises like Sinopec, China Minmetals and State Grid spearheaded the charge. While Western multinationals focused on service sectors, the Chinese sought to physically lock up Latin America's natural wealth.
Here are significant Chinese acquisitions and investments that have shaped strategic partnerships in key Latin American nations:
Brazil
State Grid purchased CPFL Energia, Brazil's largest power utility controlling electricity distribution to 80 million people across the country.
China Minmetals acquired one of Brazil's largest iron ore mines in 2017 for $1.3 billion.
China National Petroleum Corporation (CNPC) bought a 10 per cent stake in Brazil's Libra offshore oil field for $1.6 billion in 2013.
China's Three Gorges (CTG) purchased two hydro-electric plants on the São Simão and Jupiá rivers for over $1.7 billion.
Bolivia
China's Xinjiang TBEA Group invested $2.3 billion in 2013 to develop the massive Mutún iron ore mine in Bolivia. This was one of Bolivia's largest mining investments.
Chinese oil company Shengli acquired shell company Vinto Petróleo from Bolivia for $460 million in 2015. This provided Shengli rights to oil and gas blocks with reserves estimated at 277 million barrels.
China's Sinosteel purchased the Agua Rica iron ore mine in southern Bolivia in 2007 for $120 million. Sinosteel had previously held rights to develop the mine but acquired it outright to secure the resource.
China Railway Construction Corporation constructed a $1.3 billion highway linking Santa Cruz to Puerto Suárez on the Brazilian border. The lucrative 190 mile project was financed by Chinese loans.
Huawei partnered with Bolivian state firm BOA to provide 4G telecommunications infrastructure. Huawei also opened an information technology academy in Bolivia to train engineers.
China's first satellite monitoring facility in the Western Hemisphere opened in Bolivia in 2018. China provides satellite data to Bolivia in exchange for its strategic location.
The pattern shows Chinese state-backed firms focused mainly on extracting Bolivia's minerals, oil/gas and agricultural potential rather than value-added investments. Securing rights to iron ore, lithium and hydrocarbons appears as priorities.
Argentina
State Grid acquired 89 per cent stake of electricity distributor CPD Argentina for $3 billion in 2018. This provided access to 10 provinces.
China Molybdenum bought the massive Bajo La Alumbrera copper mine for $2.5 billion in 2022.
CITIC Agri Fund (China) acquired farmland developer CRESUD for $300 million in 2021.
Chile
China's Tianqi bought 24 per cent stake in Chilean lithium producer SQM for $4.1 billion in 2018, securing access to the mineral critical for electric vehicles.
State-owned Sinomach (China National Machinery Industry Corporation) purchased 323,000 hectares of agricultural land in Chile in 2011 to produce crops for export back to China.
Peru
Chinalco owns the Toromocho copper mine, one of the largest in Peru, having spent $3.5 billion on its development.
Chinese consortium CNPC acquired Petrobras Peru's hydrocarbon assets for $2.6 billion in 2013.
China Fishery Group gained control of Peruvian fishmeal giant Copeinca in 2008 for $210 million.
Ecuador
China National Petroleum Corporation operates and owns part of the Sacha oil fields in the Amazon, purchased for over $1 billion.
China Great Wall Drilling Company invested $70 million in drilling wells in Ecuador starting in 2015.
These illustrate only part of China's voracious appetite for Latin America's natural resources and strategic infrastructure assets like ports and utilities. However, these high-profile acquisitions expanded Chinese control over entire supply chains.
On a parallel timeframe, Chinese policy banks unfurled billions in loans for Latin American infrastructure. Projects like highways, dams and railways conveniently facilitated the export of raw materials back to China. They also undermined the lingering influence of Western-dominated institutions like the World Bank and Inter-American Development Bank.
On the political front
China aggressively courted Latin American governments. In the past years, it drew countries like Argentina and Ecuador deeper into its orbit with credit lines and trade deals. These partnerships gave China leverage to peel away Taiwan's remaining Latin American allies, with Panama, El Salvador, Honduras, and the Dominican Republic all switching recognition to Beijing.
Military ties also expanded, though more quietly. China began sending advisers and limited weapons sales, while partnering on technology and defense industries.
China's security collaborations in Latin America encompass not only arms sales but also technology transfers that have played a pivotal role in shaping regional dynamics. Let’s take a country-by-country look:
Bolivia
China provided military helicopters, transport planes, and HJ-5 anti-tank missiles to Bolivia over the past decade. It has also donated trucks and buses for military use.
Chinese military advisers have trained Bolivian forces on maintenance and use of Chinese-origin equipment.
China launched Bolivia’s first satellite, the Tupac Katari (TKSat)-1 in 2013 aboard a Chinese Long March rocket. The satellite provides Internet and telecommunications connectivity to the millions of Bolivians in rural areas not connected to the telecommunications grid
China opened a joint aerospace technology center with Bolivia in 2017 and has provided space technology assistance.
A second satellite launched in 2022 also used Chinese technology.
Brazil
China sold tracking radars in 2009 to Brazil for use with surface-to-air missiles. It also contracted to co-produce short-range missiles.
Chinese aerospace firm CASIC is partnering with Brazil's Embraer on satellite technology development and aircraft manufacturing.
Huawei contracted to construct an information security lab with the Brazilian military in 2017 to research cybersecurity, encryption, and communications systems.
Venezuela
From 2005-2012, China exported over $500 million in arms to Venezuela, including jet fighters, radar systems and armored vehicles. It also jointly developed multiple rocket launchers and drones with Venezuela.
China launched three satellites for Venezuela to provide telecommunications and remote sensing capabilities. It also constructed satellite control facilities.
Huawei and ZTE built thousands of cellular network base stations across Venezuela over the past decade. They provide ongoing technical support.
Argentina
In 2015, China provided financing for Argentina to purchase military helicopters, armored vehicles, trainer aircraft, naval vessels, and surface-to-air missile batteries worth over $1 billion.
China constructed a space mission control center near Las Lajas to support its lunar exploration program. It is China's first intercontinental space communications hub.
The defense relationships entail more than just transactional weapons sales. However, they provide China sustained access and influence to shape security policy in key states. Advanced communications and space partnerships also extend China's global surveillance and navigation capabilities.
China also initiated Confucius Institutes to enhance people-to-people ties and extend soft power. The implications of these moves would soon become apparent.
The world notices
By the early 2010s, media reports trumpeted China's newfound sway in the Western Hemisphere. Pundits wondered if the US had blundered in its own neighborhood. Some even predicted Chinese domination of the region. The reality, however, is more nuanced.
There was no denying China's growing footprint. But trade remained dominated by low value-added commodities like soybeans and iron ore. Manufacturing links were minimal. And despite headlines about multi-billion-dollar investments, actual financial flows never matched the hype.
Much of the relationship's expansion stemmed from Latin America's primary commodity dependence dovetailing with China's development needs. Still, some countries did form genuinely close ties with Beijing. Argentina under leftist populists Néstor Kirchner and Christina Fernández grew addicted to Chinese currency swaps and infrastructure loans (theses continued through the Alberto Fernández regime that ended this past December 10). At the same time, Venezuela, shunned by the West over human rights abuses, fell deep into debt with China.
By historical standards, China was still a minor player in Latin America compared to the US and Europe. But the trendlines were clearly moving in Beijing's favor. Alarmed by this, the Obama administration announced a "pivot to Asia" to counter China's rise. Efforts like the Trans-Pacific Partnership trade deal were meant to strengthen economic bonds with Latin American and isolate China. However, US attention soon shifted elsewhere.
The music picked up again under China's ambitious new president, Xi Jinping. In 2013, he unveiled the Belt and Road Initiative (BRI), a trillion-dollar push to boost China's global connectivity through infrastructure. Though it focused mainly on Eurasia and Africa, Latin America was a natural extension given its commodities and transport links to the Pacific. Chile, Peru, Ecuador and Bolivia signed up to be early partners.
Brazil has been cautious about joining the initiative citing concerns over Chinese influence in the region and reluctant to take on additional debt, which is often a requirement to participate in the BRI.
Chinese military engagement progressed, nevertheless, highlighted by a 2015 visit from the PLA Navy to Chile. That same year, China pledged $250 billion in Latin American investments over a decade and ramped up cultural outreach. President Xi conducted extensive regional tours amidst great fanfare. Clearly, China was playing the long game in Latin America.
The Trump interlude
After the 2008 financial crisis, Latin America had leaned economically toward China but was still politically close to the US The Trump presidency would severely test those bonds.
Trump's protectionist rhetoric, immigration policies, and disinterest in Latin American relations were seen as offensive throughout the region, despite Bolsonaro cozying up to the American president. China cleverly portrayed itself as the responsible global citizen compared to the erratic Trump.
The US withdrawal from the Trans-Pacific Partnership in 2017 was a gift to China. Beijing quickly forged its own massive trade pact, the Regional Comprehensive Economic Partnership, which included Latin American states Chile, Peru and Mexico.
Trump's tariffs on Chinese goods also benefited China-Latin America ties. Since many tariffs excluded major commodities, Latin American resource exports to China soared while US manufacturers suffered.
Meanwhile, China made headlines by promising $250 billion in regional financing and securing a free trade deal with Uruguay. More quietly, almost every Latin American country signed onto China's Belt and Road Initiative during this period. The US backlash was coming.
Bumps in the Road
The COVID-19 pandemic in 2020 demonstrated both the promise and perils of China's Latin American inroads. Early shipments of Chinese medical supplies and vaccines were welcomed. However, public opinion later soured in some countries like Peru and Brazil where inferior Chinese vaccines underperformed. It reinforced lingering wariness of China's geopolitical intentions.
Diplomatically, the Trump administration warned Latin American countries away from partnering with Chinese telecom giant Huawei for 5G networks, with mixed success. It harshly criticized China's opaque infrastructure loans and overfishing in the region. The US also slammed Latin American partners who continued engaging with Venezuela's dictatorship.
This pressure revealed cracks in China's relations. Ecuador negotiated a restructuring of its oil-for-loans deals with Beijing. Mexico cooled ties after investments like a mega-railroad failed to materialize. The incoming Biden administration has vowed to compete vigorously with China in Latin America.
But China remains undeterred. Chinese firms continue aggressively acquiring assets like lithium mines to dominate electric vehicle supply chains. And Brazil, Latin America's largest economy, tightens cooperation with China.
Renewed US protectionism and domestic political uncertainty may further alienate Latin American states. For all the ups and downs, however, Beijing stays patiently on the dance floor.
The Chinese toolbox
Trade: For individual Latin American countries, China is now the number 1 or 2 trading partner and export destination. Failure to maintain access to Chinese markets could devastate their economies. This dependency gives China huge leverage.
Financing power: China has become the dominant creditor across Latin America. Policy banks like China Development Bank and China ExIm provide tens of billions in infrastructure loans. State-backed firms invest billions more in mining/oil. This financial muscle buys influence.
Infrastructure vision: China banks have funded ports, roads, dams, and railways across Latin America. Besides facilitating trade, these projects make recipient countries beholden to China. They also frustrate decades of Western calls for transparency.
Security ties: While still limited, China's police, military, and technology partnerships offer ideologically aligned states like Venezuela and Nicaragua an alternative to the US. These ties could expand power projection into Latin America over time.
Elite capture: China cultivates extensive high-level political connections in Latin America through state visits, party-to-party ties (Secretary of the Central Commission for Discipline Inspection of the Communist Party of China, Li Xi was in Brasilia partly to sign agreements between the Communist Party and Lula’s Workers’ Party) and advisors. It uses these links to shape decision-making in its favor. Corruption and lack of transparency aid this elite influence strategy.
Propaganda and media: China frames itself as a fellow developing country and partner through state media and cultural initiatives like Confucius Institutes. It downplays dangers of its authoritarian model. Criticism is dismissed as Western bias.
Technology trap: Chinese firms like Huawei and ZTE are major telecom providers in Latin America. Their 5G infrastructure could enable espionage or coercion, say critics. But avoiding Chinese tech may delay modernization.
United front outreach: China funds non-profit and grassroots groups to build societal goodwill. It taps into anti-US resentment and left-wing ideology common in Latin America. This soft power is harder to counter.
Multipolarity pitch: China encourages Latin American partners to embrace a multipolar world order and reduce dependence on the US. But greater autonomy may not benefit smaller economies long-term if China dominates.
Patience and persistence: Unlike the US, China takes a long view in Latin America. It sticks with investments despite crises and leadership changes. This constant engagement breeds familiarity and trust from elites.
A region divided — Ambivalence colours the dancefloor
Given its deep ties with the US, Latin America remains conflicted about growing Chinese intrusion into its sovereign affairs. Polls consistently show populations wary of China's hunger for resources and rising economic clout. They also recoil at China's leniency toward Venezuela's dictatorship. However, China's infrastructure blandishments find many takers across the ideologically diverse region.
The chance to balance US dominance also appeals to some leaders. So, China enjoys enough political access to keep expanding influence despite public skepticism. With the election of Milei, Argentina swings back to closer US ties and away from China.
The ambivalence across Latin America reflects uncertainty about ceding regional hegemony to an authoritarian superpower.
Commodity colony or equal partner?
Leftist politicians especially chafe at Latin America's neo-colonial relationship with China. While leaders welcome Chinese investment, they lament reproducing the region's traditional role as a mere exporter of natural resources. Dreams of diversifying into manufacturing or services under Chinese guidance have largely failed.
Latin America's value to China lies in its raw materials and vast agrarian potential. As China buys up mines and farmland for its own needs, tensions will grow over whether the relationship can ever evolve toward equality.
Who needs whom more?
For all its growth, China accounts for just 5 per cent of foreign direct investment in Latin America while the US accounts for 38 per cent. China’s $150 billion line of credit since 2005, while substantial, pales compared to lending from Western-led multilateral banks. And should China's economy slow significantly, demand for Latin America's commodity and agricultural exports could crater.
Despite the hype, China still needs Latin America more than vice versa. This inherent asymmetry ought to give the region leverage to demand more beneficial and sustainable ties. Whether Latin American countries have the bargaining power and collective will to assert their interests remains to be seen.
Buying loyalty through modernization
While citizens worry about dependency, many Latin American governments enthusiastically court China to finance national modernization dreams. Chinese banks provide the credit and expertise to finally build long-awaited highways, hydro-electric plants, and telecom networks.
This dependency on Chinese largesse to fund their political agendas makes leaders reluctant to criticize any dark side of the relationship, they fear jeopardizing ongoing or future projects. China exploits this vulnerability by tying loans and investments to political loyalty. The bargain, however, erodes national autonomy.
Who's zooming who?
For Latin Americans, China represents both opportunity and threat. China offers a path to prosperity, along with risks of economic domination. For China, Latin America provides resources and markets to sustain growth, but relatively minor political or strategic benefit currently. Despite interdependence, neither fully trusts the other's motives.
This uneasy pas de deux continues as long as it serves both parties' interests. However, if sovereign rights and development models clash, the dance could end abruptly with serious consequences for power dynamics in the 21st Century's most important bilateral relationship.
The future choreography — no return to the solo spotlight
The days of uncontested US hegemony in Latin America are over. Though America remains embedded culturally and economically, its political grip has loosened. Dependent on China trade, Latin American countries now loudly resist US dictates. They have options, and maneuver to extract benefits from both superpowers.
For the US, restoring credibility means proving its model better serves the region's interests. Bullying and coercion only drive Latin America toward China.
Is it time for collective bargaining?
Latin American nations struggle to negotiate sustainable ties with China individually. Collective institutions like Mercosur, the Pacific Alliance, and CELAC should jointly formulate demands for more transparency, technology transfer, and investment diversification from China.
Though hardly a bloc, Latin America possesses substantial economic clout to shape a more balanced relationship if wielded cooperatively. The region's future autonomy may depend on smart power-balancing between the major powers.
The democracy dilemma
China's rise poses awkward questions for Latin America's democratic aspirations. While communism failed to take root, leftist populism endures across the region.
Will growing economic dependence on an efficient authoritarian regime undermine Latin America's already fragile institutions? Or will the desire to preserve freedoms temper attraction to the Chinese development model?
China touts its respect for national choices, but will this hands-off policy survive if Latin American nations challenge its interests? This is where the struggle for democracy in Latin America enters complex new terrain.
Winning hearts and minds
To sustain influence, China cannot rely solely on elites and economic leverage. Its model needs intrinsic appeal to Latin American societies. Otherwise, partnerships will stay fragile and transactional, vulnerable to geopolitical shifts.
Investing in environmentally and socially sustainable industries, rather than just resource extraction, could improve perceptions. But China's authoritarian politics hinders its soft power in the region. Without underlying affinity, its role as partner remains limited.
The BRICS factor
Beyond bilateral ties, China's deepening involvement in the BRICS bloc has strengthened its hand in Latin America. BRICS serves as a coordination forum between major emerging economies.
For China, BRICS is a vehicle to amplify its political and economic sway globally, providing an alternative to Western-dominated institutions. BRICS highlights Global South solidarity and shared development goals. It also establishes a financial architecture less dependent on the US and EU, which is one of China’s major goals in Latin America.
The BRICS New Development Bank (NDB), headquartered in Shanghai and currently headed by former Brazilian president Dilma Rousseff, finances infrastructure in BRICS states and beyond. The Contingent Reserve Arrangement (CRA) allows members to tap pooled foreign currency reserves during crises. The China-led Asian Infrastructure Investment Bank (AIIB) parallels the NDB.
Brazil gains investment funding from these institutions. China uses BRICS forums to deepen ties with the regional giant. Collaboration on 5G, satellites and other technologies is increasing between China and Brazil, and that spreads throughout the region. Diplomatically, BRICS provides China cover to shield regimes like Venezuela, Nicaragua, and Cuba from international pressure.
BRICS also enables China to divide Latin America. Brazil and Argentina have significant trade with China, while Colombia, Chile, Peru, and Mexico remain more economically linked to the US.
Chinese infrastructure loans create dependencies. This increases the risks splitting Latin America between pro-China and pro-US camps.
For Latin America, skillfully navigating ties with both superpowers will be crucial to sustaining regional autonomy. The geopolitical tension surrounding BRICS underscores China's aim to redraw hemispheric power dynamics.
The perils of dependence
Latin America's commodity and infrastructure dependency on China is deepening just as the global economy faces grave uncertainties. This concentration of trade and investment could prove disastrous if China's economy falters. Diversification is critical, even if it angers Beijing.
Meanwhile, overly relying on Chinese 5G, surveillance and AI tech gives China dangerous leverage over national infrastructure. And Chinese criminal groups are flooding Latin American cities with fentanyl. The convenience of embracing China's largesse may be obscuring alarming vulnerabilities.
The Dragon is here to stay
Whatever tensions and anxieties remain, China's new prominence in Latin America will not recede anytime soon. The dance will continue given mutual needs. But it remains an open question whether China's regional footprint will keep expanding exponentially to displace the US or will Beijing's ambitions hit natural limits as Latin Americans determine some sovereign spheres are off-limits to China's influence?
Argentina under Milei may be one of those limits. The new president has talked of cutting ties with China though the likely outcome is that his country will find to soothe relations with China reset on more assertive and limiting terms.
Striking the right equilibrium will demand nuance and confidence from all countries involved. The geostrategic and economic implications are immense as Latin America negotiates its relationships with the two superpowers that will define the 21st century.
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