Dr. Sodfa Mohamed Mahmoud‏‏

Chinese President Xi Jinping is set to travel to Latin America in November for the launch of a huge port that Beijing funded near Lima, Peru. The Chinese leader will then travel to the G20 Summit which will be hosted in Rio de Janeiro on 18-19 November 2024. He will also make a state visit to Brazil to meet with his counterpart Lula da Silva. In addition, Beijing is planning to host a China-CELAC (Community of Latin American and Caribbean States) Forum in April 2025. Some countries in the region are also planning to join the Chinese Belt and Road Initiative.These developments reflect the scope and pace of the current expansion of China’s ties with Latin America and the Caribbean. They also shed light on the sustained activity between the two parties to strengthen joint cooperation. This has raised questions about the main drivers for expanding these ties, China’s future in Latin America and the Caribbean, and the limitations of China’s abilities to develop and scale up cooperation with the region.Ongoing DevelopmentsVarious developments indicate an accelerating pace for China-Latin America cooperation, including the following:1- The Chinese president’s upcoming trip to Latin America: The president of China is planning to travel to Latin America, during which he will make a state trip to Brazil in November 2024 and participate in the G20 summit. He will meet with Brazilian President Lula da Silva and also inaugurate the Chancay Port in Peru, which is part of the Chinese Belt and Road Initiative. The huge Chancay Port is owned and run by Hong Kong-based COSCO Shipping and is located only 80 kilometers north of Lima. This port constitutes a decisive element of Chinese commercial ambitions. Once the port is operating, it will reduce shipping times between Peru and China by 15 days, which will make it a key hub for direct trade with Asia.The project is expected to be finished by late 2024 and will cost 3.6 billion USD. It is one of the largest such projects on the Pacific coast and will greatly bolster Peru’s logistical capabilities and economic growth. China has also donated equipment and security scanning machines worth 7 million USD to Peru for the APEC (Asia-Pacific Economic Cooperation) Economic Leaders’ Meeting, which was held in Lima from 10-16 November 2024.2- Colombia plans to join the Belt and Road Initiative: On 3 October 2024, Colombia announced its plans to join the Chinese Belt and Road Initiative. Brazil, Colombia, and Paraguay are the only countries in South America that have not yet become members. On 10 October 2024, Colombian Minister of Foreign Affairs Luis Gilberto Murillo, Chinese Minister of Foreign Affairs Wang Yi, and Chinese Vice President Han Zheng met in Beijing and launched a joint working group for negotiations.While negotiations are still ongoing, Colombia’s interest in the initiative indicates that the country is interested in attracting Chinese funding to key sectors including clean energy, telecommunications, and transportation. Chinese investment in Colombia has risen markedly in recent years, as major companies participated in high-level projects such as the 4.5-billion-dollar Bogotá Metro, which was led by Chinese companies. This is one of many projects that highlight Colombia’s growing role in China’s strategic expansion through the region.3- Argentinian president changes stance towards China: Earlier in October 2024, Argentinian president Javier Milei, who has described himself as an anarcho-capitalist, significantly shifted his stance towards Beijing. He stated that the Asian superpower was a "very interesting trade partner" and announced plans to hold a bilateral meeting with Chinese President Xi Jinping. This marks a drastic departure from Milei’s earlier comments; the Argentinian president had previously pledged that he would not engage in trade with China because of its communist government. The Argentinian Ministry of Foreign Affairs has indicated dates for a potential face-to-face meeting between President Milei and his Chinese counterpart: at the G20 Summit in mid-November 2024, at the China-CELAC Forum in April 2025, or in a bilateral meeting to be held before June 2025.China is Argentina’s second largest trade partner after Brazil. In July 2024, China renewed a 5 billion USD portion of its currency swap line with Argentina, which means payments were postponed for a further 12 months. The upcoming trip signals regional leaders’ interest in expanding cooperation with Beijing. According to the Americas Society/Council of the Americas, 9 of 19 sitting heads of state in Latin America have visited China while in office.4- Strengthening clean energy partnerships: A delegation of top advisors to the Brazilian president traveled to China and met with Foreign Minister Wang Yi and representatives of various companies, including BYD, which manufactures electric vehicles. The Chinese company BYD is building an electric car factory in the Brazilian state of Bahia, with plans to begin operations before the end of the year, with full production launching during the first half of 2025. It is worth noting that this factory is being built on the site of an earlier factory owned by the US company Ford Motor before it was closed in 2021. Other Chinese companies like Great Wall Motor have also moved to Brazil; Great Wall Motor has acquired a Mercedes-Benz factory that was abandoned after the German company stopped production of cars in Brazil in 2020, citing difficult economic conditions in the country.Latin America and the Caribbean are home to 650 million people, and these are markets in which Beijing is trying to expand its activities. The region also holds a great deal of lithium, which electric car manufacturers need for batteries. BYD has stated that it is considering building a factory in Mexico, where about 10 percent of new cars sales are Chinese cars. Meanwhile, China is rapidly expanding its fleet of electric vehicles from Colombia to Chile.Future VariablesThe continued progress of Latin American-Chinese cooperation in the future is likely to hinge upon various factors, including:1- Impact of US stance on Latin American-Chinese rapprochement: The growing Chinese economic presence in Latin America has raised concerns in the US. The US has expressed worry about Beijing’s growing control of strategic assets in the region, including energy networks, ports, and transportation networks, which it could potentially use for military and security purposes. The West has accused China of "debt-trap diplomacy" and offering developing countries unsustainable loans with the goal of later seizing assets when these countries are unable to pay the loans back.US officials see Chinese investment as part of Beijing’s broader strategy of ensuring its influence in the Western hemisphere and shifting the foreign policy stances of countries in the region. Given that more than half of Taiwan’s remaining diplomatic allies are in Latin America, Chinese investment in the region could encourage countries to abandon Taiwan and to adopt policies that align more closely with Chinese priorities.US Trade Representative Katherine Tai recently stated in São Paulo that Brazil should exercise caution with regard to joining the New Silk Road. Tai said that she recommended that Brazil "weigh the risks" to its economy, approach the issue "through an objectivity lens, through a risk management lens," and "really think about what the best pathway is forward for more resilience in the Brazilian economy." In response, the Chinese embassy in Brasília issued a memo indicating that Tai’s recommendation was "disrespectful" to Brazil as a sovereign nation and emphasized that Brazilian-Chinese cooperation was grounded in equal relations and beneficial for both parties.Trump’s victory in the US presidential elections is likely to have a noticeable impact on the future of Latin American-Chinese ties. This is because Trump will probably exert pressure on countries in the region to limit their growing economic involvement with China, using stringent mechanisms such as imposing sanctions or tariffs. The projected escalation of tensions between the US and China following Trump’s victory will make it difficult for countries in the region to maximize their national interests by balancing relations with these two great powers, especially since the US is becoming a less reliable partner.2- Importance of Chinese partnership for Latin American economies: China is South America’s top trade partner and is the second largest trade partner for Latin America as a whole. Trade between China and Latin America and the Caribbean has grown 26-fold between 2000 and 2020 from 12 to 315 billion USD. Trade is expected to more than double by 2035 to more than 700 billion USD. In other words, China will almost match—or could even surpass—the US as the largest trade partner for Latin America and the Caribbean. In 2000, China made up less than 2 percent of total trade in Latin America and the Caribbean, but by 2035, this could reach 25 percent.With regard to direct foreign investment, Chinese companies have invested about 160 billion USD in around 480 deals with Latin America and the Caribbean between 2000 and 2020. These deals primarily center on the energy, mining, infrastructure, and agricultural sectors. Since 2005, the China Development Bank and the Export-Import Bank of China have provided more than 141 billion USD in loan obligations to countries in Latin America and the Caribbean as well as to state-owned companies. This is more than the World Bank, Inter-American Development Bank or Development Bank of Latin America provide.These data reflect the importance of Chinese involvement to the economic growth of countries in Latin America and the Caribbean. Because of this, some leaders in the region have adopted pragmatic policies in relations with Beijing, even if they previously held other stances, as was the case with the Argentinian president.3- Scope of Latin America political consensus on relations with China: There are clear divergences among the stances of some Latin American officials with regard to their preferred level of relations with China, although not over the importance of such ties. For example, there has been fierce debate about whether Brazil should join the Belt and Road Initiative. On the one hand, Minister of Agriculture Carlos Fávaro called on Brazil to join the initiative to counter US and EU protectionist measures. Fávaro has played a key role in Lula da Silva’s efforts to deepen ties with China and attract new investment to the largest economy in Latin America. Last year, he took a delegation of top executives from the agricultural sector to China with the goal of expanding agricultural relations between the two countries. Brazil has since signed agreements to export more of its beef and other products to the Asian superpower.However, other Brazilian officials have viewed this issue differently, including Celso Amorim, the chief advisor to the president with a focus on international relations, who announced on 28 October 2024 that Brazil would not officially join the Belt and Road Initiative. However, Amorim emphasized that he would be open to further agreements with China as long as the partnership was beneficial from a geopolitical and economic perspective. He noted that the two countries had worked together on a peace plan to end the war between Russia and Ukraine and that projects under discussion between Brazil and China could be expanded to include other countries in South America across various sectors, including solar energy and hybrid and electric cars.Amorim’s stance reflects Brazilian concerns about aligning with China in a world that is increasingly polarized between rival global powers. In light of this reality, the capacity of Latin American political forces to take a position on China has to be carefully balanced with economic opportunities and restrictions that could be imposed as a result of increasing cooperation with Beijing. This is a decisive factor for the future of relations between China and Latin America.4- Social concerns about growing Chinese involvement: The expanding Chinese economic presence in Latin America is also linked to various economic, social, and environmental risks, as regional analysts and experts have observed. For example, Brazilian economists have complained that since the US was surpassed as Brazil’s top trade partner in 2009, local markets have been flooded with cheap Chinese imports, which has significantly undermined local industrial capacity. Manufacturing shrunk from 36 percent of the Brazilian GDP in 1985 to only 11 percent in 2023. This perhaps explains why Brazil, Chile, Mexico, and Colombia all raised tariffs on steel imports from China in 2024: Local manufacturers were unhappy about shrinking production and the threat to local jobs posed by cheap imports from Beijing.In addition, flows of Chinese investment to various critical sectors such as lithium has raised fears about environmental degradation and the rights of local communities and indigenous populations. Critics contend that although these kinds of investments could bolster regional economies, they must be carefully managed to ensure that resource extraction does not occur at the expense of the region’s rich biodiversity, the wellbeing of indigenous communities, or the sustainability of natural resources.In conclusion, relations between China and Latin America are likely to continue in the future, and to expand further due to the huge potential for emerging sectors such as renewable energy and the digital economy. Chinese companies are offering advanced technologies and financial support to a region in need of development, especially with regard to infrastructure.However, the growing reliance on Chinese trade and investment carries certain risks for Latin American countries, which could find themselves subject to economic or political pressure from Beijing. This will require governments in the region to ensure that the growing Chinese economic presence continues to be beneficial for their people and that China’s involvement does not undercut the sovereignty and strategic autonomy of these countries.

Examining the Future of China’s Role in Latin America