-Analysis-
PARIS – Do you know which country is Latin America’s most important trading partner? You’d expect the answer to be the United States, of course, but it’s China that holds the top spot on the continent. And it’s not about to be dislodged.
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This weekend, Chinese President Xi Jinping is in Peru for the Asia-Pacific Economic Cooperation summit. More significantly, on Thursday, he inaugurated Beijing’s most important project in Latin America: the Chancay megaport, a $1.3 billion investment. A second phase will see China’s Cosco invest a further $1 billion.
The massive project, which will transform the regional economy, is part of the Belt and Road Initiative, China’s multi-billion-dollar strategy of influence that has enabled it to weave its web across every continent. China’s economic slowdown has forced it to cut back on investment; but, as evident in Peru, the strategy has not been abandoned, and, above all, it is already producing results.
Trade between China and Latin America has increased 35-fold in two decades, reaching almost $500 billion a year. And that’s just one indicator of China’s presence.
Massive presence
There are two key explanations for China’s massive presence in Latin America.
First, in the early 2000s, China sought to secure access to raw materials. In Latin America, it found the lithium needed for electric batteries, of which it has become the world’s leading producer; but also copper, iron and other minerals. Agricultural products, such as soybeans from Brazil, have also driven trade between the two countries. Only in Mexico and Colombia is China not No. 1.
China took advantage of the United States’ absence.
The second explanation is more political: China has focused on bypassing Western dominance by forging relationships with countries in the Global South. This has been seen on a large scale in Africa, but has gone unnoticed in Latin America, under Washington’s nose.
The United States has long had a heavy and dominant hand in Latin America, and it’s surprising that it has allowed this to happen. China took advantage of the United States’ absence, too busy with its “war on terror” in Afghanistan and Iraq.
Ahead of the game
The Biden administration tried to regain influence, but too little, too late. It remains to be seen how Donald Trump will handle this situation. Even before joining the Trump team, Senator Marco Rubio had said that the United States could not allow Latin America and the Caribbean to fall into the Chinese sphere of influence.
Yet the president-elect’s agenda will not make him very popular in the region, if he starts by deporting millions of illegal immigrants, mostly from Latin America. And if he targets Chinese products made in Mexico to bypass U.S. restrictions. Only Argentina’s eccentric President Javier Milei is openly pro-Trump.
In Lima, Xi will meet Biden for the last time on Saturday, after four years of increased U.S. efforts to contain China. The Trump era promises even stronger measures, but the new Chancay port signals to the incoming president that China is ahead of the game in the U.S.’s backyard.
