China’s Latin America Move

Leadership Strategy China’s Latin America Move Milton Ezrati Senior Contributor Opinions expressed by Forbes Contributors are their own. I write on finance and economics. Following New! Follow this author to stay notified about their latest stories.

Got it! Nov 7, 2022, 08:55am EST | New! Click on the conversation bubble to join the conversation Got it! Share to Facebook Share to Twitter Share to Linkedin Venezuela’s President Nicolas Maduro (R) walks with Chinese President Xi Jinping (L) as they arrive . . .

[+] to a welcoming ceremony at the Great Hall of the People. (Photo by Andy Wong-Pool/Getty Imgaes) Getty Images Washington may hate the word, but there is no denying that it has exercised all but untrammeled hegemony in Latin America for as long as anyone can remember. It now faces a challenger: the same one it faces in the western Pacific, China.

Though Beijing has not achieved universal success, its list of Latin American inroads is long and striking. Meanwhile, Washington has yet to manage much of a response. China began its push more than 20 years ago shortly after it joined the World Trade Organization (WTO) in 2001.

Since, Chinese trade with Latin America has increased at a striking 31% annual rate on average to the equivalent of about $450 billion a year. China is now South America’s largest trading partner and is second only to the United States for trade with all Latin America. Beijing has signed free trade agreements with three countries, Chile, Costa Rica, and Peru and began negotiations with Ecuador last February.

Its investment portfolio has also expanded greatly. Chinese enterprises have directly invested the equivalent of some $17 billion in projects, mostly in South America. With the equivalent of $137 billion in loans to Latin American governments, the Export-Import Bank of China has vaulted itself into the ranks of the region’s leading lenders.

Beijing’s presence has enabled it to become a voting member of the Inter-American Development Bank and of the Caribbean Development Bank. Twenty Latin American countries have signed onto the BRI. Apart from direct loans to governments, most of Chinese investment has concentrated on energy development, petroleum refining, and power generation.

Presently, Power China has 50 ongoing projects across 15 Latin American countries. As is so evident in the BRI wherever it appears, China’s Latin American investments have built dams, ports, and railroads. Chinese investment monies have also flowed to solar and wind projects, notably Latin America’s largest solar effort in Jujuy, Argentina.

Six Latin American countries – Argentina, Brazil, Chile, Ecuador, Peru, and Uruguay – have joined the Asian Infrastructure Investment Bank. It would seem that China’s primary interest, at least as far as economics is concerned, is in raw materials. Most of what it imports from the region consists of soybeans, copper, petroleum, other oils, and uranium.

Purchases of lithium for batteries has expanded strikingly, from Mexico and the so-called Lithium Triangle countries. Argentina, Bolivia, and Chile contain more than half the world’s known lithium reserves. MORE FOR YOU The Inside Story Of Papa John’s Toxic Culture Stock And Bond Investors: Prepare For A Favorable U.

S. Inflation Report Cha Cha Matcha: Expanding On Both Coasts But raw materials and economics are not all that is on Beijing’s mind. China has found a ready market for Chinese military equipment and training in the region.

Troops and bases are not yet in evidence, but between 2009 and 2019, the most recent year for which data are available, China sold the equivalent of $165 million in military equipment to Venezuela, Bolivia, and Ecuador, including aircraft, air defense radar, and small arms. China has also sold equipment to police forces throughout the region. If troops are not present, several port visits have called attention to China’s growing military prominence.

As is the case in Africa, the Middle East and elsewhere in Asia, Beijing is using its economic and financial prowess to raise its diplomatic profile and influence. President Xi Jinping has visited Latin America eleven times since taking office in 2013 and has signed strategic partnerships – the highest classification Beijing offers diplomatic allies – with seven countries, Argentina, Brazil, Chile, Ecuador, Mexico, Peru, and Venezuela. Beijing also wants to isolate Taiwan, refusing trade and investments to any country that recognizes the island as anything but a part of China.

And the pressure has worked. Whereas 20 years ago all Latin America recognized Taiwan’s sovereignty, only eight nations in the region still do. China has recently used the promise of loans and infrastructure investments to flip the Dominican Republic and Nicaragua on the question of Taiwan sovereignty.

It will take a lot more for Beijing to undermine the hegemonic position the United States has in the region. But the process has clearly begun, and with little pushback from Washington so far. Trump showed little interest in the region, even a kind or hostility, which is strange given his clear concerns about growing Chinese strength at America’s expense.

Joe Biden, who was the lead on Latin America when he served as Barack Obama’s vice president, has acknowledged the Chinese challenge but otherwise has done little to counter Beijing’s efforts. The White House has seldom even mentioned Latin American trade, development, and investment within U. S.

foreign policy. Follow me on Twitter . Milton Ezrati Editorial Standards Print Reprints & Permissions.