Updated April 11, 2019
China’s Engagement with Latin America and the Caribbean
As the People’s Republic of China (PRC) has increased its
and cooperation with Latin American and Caribbean
engagement with Latin America and the Caribbean over
countries” but also emphasizes that China “does not target
nearly 20 years, U.S. policymakers have raised questions
or exclude any third party.”
regarding potential implications for U.S. interests in the
region. China’s engagement with the region has grown
Another apparent goal of Beijing in the region is to isolate
significantly since 2001, particularly in terms of diplomatic
Taiwan by attempting to lure away Latin American and
and economic ties. This growth reflects China’s increasing
Caribbean countries that still maintain diplomatic relations
global “soft power” efforts worldwide. A succession of
with Taiwan, also known as the “Republic of China.” At
Chinese leaders and other officials have visited the region
this juncture, 9 countries in the region (out of 16 countries
to court governments. In turn, regional leaders and officials
worldwide) recognize Taiwan, while the remaining 24
have been frequent visitors to China. The PRC has signed a
countries in the region recognize the PRC. Although
variety of bilateral partnership agreements with several
competition between China and Taiwan for friends in the
countries in the region, including “strategic partnerships”
region through offers of economic assistance, also known
with Argentina, Brazil, Chile, Costa Rica, Ecuador,
as “checkbook diplomacy,” had been waning for about a
Mexico, Peru, Uruguay and Venezuela.
decade, in 2017 and 2018, Panama, the Dominican
Republic, and El Salvador switched recognition to China.
Diplomacy
Beijing’s diplomatic overtures in Latin America underpin
Economic Relations
China’s economic activities and help it to institutionalize its
China’s economic goals in the region include securing
engagement in the region and garner support in
access to raw materials (such as oil and various ores and
international fora. Some analysts argue that China’s
minerals) and agricultural goods (especially soybeans);
activities in the region reflect a global strategy to reduce
establishing new markets for Chinese goods, including high
U.S. dominance, although they do not aim to challenge the
value-added products; and partnering with Latin American
United States directly or militarily. China’s diplomatic
firms to access and develop technology. China also has
efforts include being an observer at the Organization of
sought to secure investment opportunities in Latin America
American States, a member of the Inter-American
for its infrastructure firms and to reduce excess capacity in
Development Bank and the Caribbean Development Bank,
steel, cement, and other related commodities.
and an active participant in the Asia Pacific Economic
Cooperation forum.
Total China-Latin America trade increased from $17 billion
in 2002 to almost $306 billion in 2018. In 2015, PRC
PRC President Xi Jinping participated in a January 2015
President Xi set a goal of increasing total China-Latin
forum in Beijing with leaders and foreign ministers of the
America trade to $500 billion in 10 years. China’s imports
Community of Latin American and Caribbean States
from Latin America and the Caribbean amounted to almost
(CELAC), a region-wide organization that excludes the
$158 billion in 2018, accounting for almost 7.5% of
United States and Canada. At the forum, China and CELAC
China’s overall imports; China’s exports to the region in
countries agreed to a five-year cooperation plan covering
2018 amounted to $148 billion, accounting for 5.9% of
politics, security, trade, investment, finance, infrastructure,
China’s total exports. China has become the top trading
energy, resources, industry, agriculture, science, and
partner of Brazil, Chile, Peru, and Uruguay. Major Chinese
people-to-people exchanges. At a second China-CELAC
imports from the region in 2018 were primarily natural
ministerial held in January 2018, both sides agreed to an
resources, including ores (29%), soybeans (19%),
updated cooperation plan extending through 2021. China
petroleum (19%), and copper (8%). Major PRC exports to
also invited Latin American countries to participate in its
Latin America included electrical machinery and equipment
Belt and Road Initiative (BRI), which is focused on
(21%); machinery and mechanical appliances (15%); motor
infrastructure development in various regions around the
vehicles and parts (7%); and a wide array of industrial and
world. Currently 16 Latin American and Caribbean
consumer products.
countries are participating in the BRI.
In the aftermath of U.S. withdrawal from the proposed
A 2016 PRC government policy paper on Latin America
Trans-Pacific Partnership (TPP) free trade agreement in
and the Caribbean stated that China seeks to strengthen
January 2017, China participated in a meeting with the
cooperation on the basis of “equality and mutual benefit” in
remaining 11 TPP signatories (including Chile, Mexico,
several key areas, including exchanges and dialogues, trade
and Peru) regarding future trade integration in the Asia
and investment, agriculture, energy, infrastructure,
Pacific region. Although the remaining TPP signatories
manufacturing, and technological innovation. The paper
have concluded their own trade agreement without the
states that China will “actively carry out military exchanges
United States, all three Latin American signatories to the
https://crsreports.congress.gov

---

link to page 2 link to page 2 China’s Engagement with Latin America and the Caribbean
TPP also have expressed interest in moving forward with
to 2015, the United States and China held seven bilateral
further trade integration with China.
consultations on Latin America.
The cumulative stock of Chinese foreign direct investment
The Trump Administration has viewed China’s engagement
(FDI) in Latin America and the Caribbean reached over
in Latin America with more suspicion. Its 2017 National
$200 billion in 2017, according to PRC figures cited in a
Security Strategy states that “China seeks to pull the region
2018 Brookings report (note these figures include flows to
into its orbit through state-led investments and loans” and
territories with large offshore financial sectors and may not
expresses concern about China’s support for “the
reflect the final destinations of the FDI). According to a
dictatorship in Venezuela.” In an October 2018 trip to the
2017 Atlantic Council report, China’s FDI in Latin America
region, Secretary of State Mike Pompeo expressed concerns
traditionally was focused on the extractive sector, but now
about China’s “predatory economic activity” in Latin
more than half of its investment is in service sectors such as
America. The U.S. Southern Command’s 2019 posture
transport, finance, electricity, information and
statement expressed concern that China is expanding its
communications technology, and alternative energy.
influence in the hemisphere, often at the expense of U.S.
interests. It maintained that in the future, China’s
Chinese banks (China Development Bank and China
investments in port infrastructure in the hemisphere could
Export-Import Bank) have become the largest lenders in
potentially enhance its global operational posture, and
Latin America. Accumulated loans have surpassed $140
expressed special concern about China’s infrastructure
billion (2005-2018); Venezuela, Brazil, Ecuador, and
investments associated with the Panama Canal.
Argentina are the top recipients of that lending (see Table
1). For Venezuela and Ecuador, much of the financing has
Over the past decade, PRC arms sales to Latin America
been provided through loans-for-oil deals. In recent years,
have grown modestly; Chinese conventional weapons make
China’s banks provided more financing to the region than
up 3% of the combined North and South American arms
was provided by the World Bank and the Inter-American
import market. Nevertheless PRC defense sales and
Development Bank combined. A significant amount of the
assistance to the region have expanded from small arms to
lending has been for infrastructure projects, as well as for
more sophisticated equipment and weapons, including
oil and gas and mining projects. Such loans typically have
radars, armored personnel carriers, multiple rocket launch
less stringent terms, do not impose policy conditions, and
vehicles, combat aircraft, and military ships. Venezuela has
have less rigorous environmental guidelines compared to
been the largest buyer of PRC arms in the region, but other
the loans of major international financial institutions.
significant clients have included Bolivia, Ecuador, and
Peru.
Table 1. China: Financing in Latin America, 2005-2018
U.S. warnings about China have been met with skepticism
Amount
Country
in the region and among some regional experts.
(U.S. bil ions)
Panamanian President Juan Carlos Varela called on the
Venezuela
$67.2
United States to respect his country’s sovereign decisions.
Brazil
$28.9
Some analysts contend that China’s primary interest and
Ecuador
$18.4
influence in the region remain largely economic, and that
Argentina
$16.9
the possibility of the PRC creating a sphere of influence in
Trinidad and Tobago
$2.6
Latin America remains small. Some argue that China’s
Bolivia
$2.5
appeal is limited due to deep political, social, and cultural
Jamaica
$2.1
differences and language barriers. Some observers argue
Mexico
$1.0
that recent U.S. disengagement in the region, marked by
Other Countries
$1.3
such actions as withdrawal from the TPP and efforts to
Total
$141.3
reduce U.S. foreign aid, coupled with growing U.S. trade
frictions with China and some Latin American countries,
Source: Gal agher, Kevin P. and Margaret Myers, “China-Latin
may encourage greater PRC-Latin American cooperation.
America Finance Database,” Inter-American Dialogue, 2019.
Some analysts have concerns about the potential harmful
According to the Inter-American Dialogue, Chinese
effects of China’s economic engagement on the region’s
companies and banks have shown interest in some 150
development. They maintain that some countries have
transportation infrastructure projects in the region since
amassed unsustainable levels of debt owed to the PRC and
2002, with about half in some phase of construction.
that their economies risk becoming less competitive in
manufacturing and agricultural technologies and more
U.S. Policy Concerns and Considerations dependent upon commodities exports to China and
Under the George W. Bush and Obama Administrations,
elsewhere. Some argue that PRC support extends a lifeline
U.S. officials, while recognizing concerns about China’s
to leaders with poor records of governance and can
influence, generally viewed China’s engagement positively
exacerbate corruption. Furthermore, although some Chinese
as a contributor to the region’s economic growth. The
companies have improved their conduct in the region, many
overarching goal of U.S. policy was for China to contribute
still do not adhere to international environmental, labor, and
economically to the region in a transparent fashion,
safety standards.
following international rules and complying with local or
international labor and environmental standards. From 2006
Mark P. Sullivan, Specialist in Latin American Affairs
https://crsreports.congress.gov

---

China’s Engagement with Latin America and the Caribbean

IF10982
Thomas Lum, Specialist in Asian Affairs


Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.

https://crsreports.congress.gov | IF10982 · VERSION 3 · UPDATED

---