top of page
  • Lev Cohen

China’s Growing Influence on Latin America


Courtesy of Council on Foreign Relations


Beijing, since the turn of the century, has surpassed the United States as South America’s largest trading partner. Flying under the radar to many, China has grown to influence South America beyond economic ties since the 1970s. Many Latin American countries including Brazil, Cuba, Peru, Paraguay, and Venezuela house some of the largest Chinese diaspora communities. This fluctuation of both people and investment has been ongoing since Mao Zedong’s communist government. 


Beyond migration and economic trade, some of the smaller Central American countries have blatantly aligned themselves with China politically. In 2017 Panama switched diplomatic recognition from Taiwan to China. El Salvador followed suit a year later, embracing a One-China Policy. In the last 3 years, Honduras and Nicaragua have also severed ties with Taiwan. Nicaragua presents a specific case where counter-American investment has impacted political ties with Taiwan. 


Nicaragua has received massive amounts of interest from Beijing regarding the construction of the Grand Canal, an alternative to the United States-influenced Panama Canal. Now, there is only one country in South America that recognizes Taiwan: Paraguay. The rest have embraced the ongoing 50-plus projects, tapping into South American natural resources. 



These ongoing projects have not happened overnight, nor have they all happened in the spotlight of the international eye. The PRC has slowly taken control of Peru’s 7 largest mines, including 100% of the iron production, and 25% copper output. This impact is enormous to both the international commodities exchange, but also to the Peruvian economy, iron, gold, copper, and other natural minerals account for 60% of Peruvian exports. 


The PRC embraces this fluid and consistent market, maintaining this relationship with South American countries through other forms of foreign aid like providing a significant majority of the Covid-19 vaccines, and medicine. 


Lithium, one of the world's lightest, most important metals, used to make our cell phones, laptops, and electric cars, is found at the intersection of Chile, Argentina, and Bolivia. This natural phenomenon of 4,000 miles of dry salt flats accounts for over 75% of the world's lithium production, and with the growing demand for battery-powered vehicles and energy; annual consumption for lithium has grown at a rate of 8.9%. The region in which all this lithium is found is called the lithium triangle.


As of 2022, Chinese-based Tianqui Lithium Corp. is the second largest shareholder in Chilean lithium miner SQM, the leading bring-based lithium producer, with a total of 25.9% shares. The implications of lithium are growing. Battery-powered cars use lithium-ion batteries, China, both in its private and public sectors is gambling on the reality that electric vehicles are the future of global sustainability, out-investing the United States, and all other global investment leaders in the future to sustainability. 


Lithium is a specific yet clear example of a commodity that has grown in both value and importance to Chinese investors. Chinese investment comes with little to no international repercussions right now. Chinese President Xi Jinping has only met with Venezuelan President Nicolas Maduro 5 times in the last ten years, despite large amounts of intentional and identifiable growth in trade between the two countries. Export value in Iron Ore, Venezuela’s largest export to China grew at a 336% rate between 2020 and 2021, and over the last 5 years, at a steady 28%. 


Latin America traded 449 billion dollars worth of goods with China last year, compared to a mere 12 billion dollars in the year 2000. This nearly 40-fold growth China is applying to Latin America has caught the attention of few, and the United States is doing shockingly little to stop it. 


The implications of this ongoing investment span far beyond the borders of their respective countries. One might call it a power play by China, others might say they are embracing the growth they are capable of. The bottom line being that China will continue with projects targeted investment globally, even if it is at the detriment of US economic ties. Their growth into 


Latin America is only the tip of the iceberg in their attempt at expanding their financial reliance beyond a single main consumer base. Developing countries see China as an investor that comes with fewer strings attached, especially when their interests don’t involve numerous diplomatic and political side effects. This spreading attractiveness is dangerous to both the US economy and consumers. However, globally, it alleviates the burden on many countries' shoulders, allowing them not to rely solely on one superpower or the other. 

 



Comments


bottom of page