Updated June 1, 2020
China’s Engagement with Latin America and the Caribbean
As the People’s Republic of China (PRC) has increased its
several key areas, including exchanges and dialogues, trade
engagement with Latin America and the Caribbean over
and investment, agriculture, energy, infrastructure,
nearly 20 years, U.S. policymakers have raised questions
manufacturing, and technological innovation. The paper
regarding potential implications for U.S. interests in the
states that China will “actively carry out military exchanges
region. China’s engagement with the region has grown
and cooperation with Latin American and Caribbean
significantly since 2001, particularly in terms of diplomatic
countries” but also emphasizes that China “does not target
and economic ties. This growth reflects China’s increasing
or exclude any third party.”
global “soft power” efforts worldwide. A succession of
Chinese leaders and other officials have visited the region
Another apparent goal of Beijing in the region is to isolate
to court governments. In turn, regional leaders and officials
Taiwan by attempting to lure away Latin American and
have been frequent visitors to China. The PRC has signed a
Caribbean countries that still maintain diplomatic relations
variety of bilateral partnership agreements with several
with Taiwan, also known as the “Republic of China.”
countries in the region, including “strategic partnerships”
Currently, 9 countries in the region (out of 14 countries
with Argentina, Brazil, Chile, Costa Rica, Ecuador,
worldwide) recognize Taiwan, and the remaining 24
Mexico, Peru, Uruguay and Venezuela.
countries in the region recognize the PRC. In 2017 and
2018, Panama, the Dominican Republic, and El Salvador
Diplomacy
switched recognition to China.
Beijing’s diplomatic overtures in Latin America underpin
China’s economic activities and help it to institutionalize its
Economic Relations
engagement in the region and garner support in
China’s economic goals in the region include securing
international fora. Some analysts argue that China’s
access to raw materials (such as oil and various ores and
activities in the region reflect a global strategy to reduce
minerals) and agricultural goods (especially soybeans);
U.S. dominance, although they do not aim to challenge the
establishing new markets for Chinese goods, including high
United States directly or militarily. China’s diplomatic
value-added products; and partnering with Latin American
efforts include being an observer at the Organization of
firms to access and develop technology. China also has
American States, a member of the Inter-American
sought to secure investment opportunities in Latin America
Development Bank and the Caribbean Development Bank,
for its infrastructure firms and to reduce excess capacity in
and an active participant in the Asia Pacific Economic
steel, cement, and other related commodities.
Cooperation forum. In recent months, China has offered
medical assistance to Latin American countries battling
Total China-Latin America trade increased from $17 billion
Coronavirus Disease 2019 (COVID-19), although the
in 2002 to almost $315 billion in 2019. In 2015, PRC
effects of such “mask diplomacy” on regional public
President Xi set a goal of increasing total China-Latin
opinion about China reportedly have been mixed.
America trade to $500 billion in 10 years. China’s imports
from Latin America and the Caribbean amounted to almost
PRC President Xi Jinping participated in a January 2015
$165 billion in 2019, accounting for almost 7.9% of
forum in Beijing with leaders and foreign ministers of the
China’s overall imports; China’s exports to the region in
Community of Latin American and Caribbean States
2018 amounted to $151 billion, accounting for 6% of
(CELAC), a region-wide organization that excludes the
China’s total exports. China has become the top trading
United States and Canada. At the forum, China and CELAC
partner of Brazil, Chile, Peru, and Uruguay and the second-
countries agreed to a five-year cooperation plan covering
largest trading partner for many other countries. Major
politics, security, trade, investment, finance, infrastructure,
Chinese imports from the region in 2019 were primarily
energy, resources, industry, agriculture, science, and
natural resources, including ores (32%), mineral fuels
people-to-people exchanges. At a second China-CELAC
(19%), soybeans (16.7%), and copper (5.6%). Major PRC
ministerial held in January 2018, both sides agreed to an
exports to the region in 2019 included electrical machinery
updated cooperation plan extending through 2021. China
and equipment (21%); machinery and mechanical
also invited Latin American countries to participate in its
appliances (15%); motor vehicles and parts (6.5%); and a
Belt and Road Initiative (BRI), which is focused on
wide array of industrial and consumer products.
infrastructure development in various regions around the
world. Currently at least19 Latin American and Caribbean
In the aftermath of U.S. withdrawal from the proposed
countries are participating in the BRI.
Trans-Pacific Partnership (TPP) free-trade agreement
(FTA) in January 2017, the remaining 11 TPP signatories
A 2016 PRC government policy paper on Latin America
(including Chile, Mexico, and Peru) concluded their own
and the Caribbean stated that China seeks to strengthen
trade agreement without the United States. China currently
cooperation on the basis of “equality and mutual benefit” in
has FTAs with Chile (which was upgraded in 2019), Costa
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link to page 2 China’s Engagement w ith Latin America and the Caribbean
Rica, and Peru (currently being upgraded), and it began
Security Strategy states that “China seeks to pull the region
FTA negotiations with Panama in 2017.
into its orbit through state-led investments and loans” and
expresses concern about China’s support for “the
According to the China Global Investment Tracker database
dictatorship in Venezuela.” In an April 12, 2019, speech
maintained by the American Enterprise Institute, China’s
during a visit to Latin America, Secretary of State Mike
investments in Latin America and the Caribbean during
Pompeo said, “when China does business in places like
2005-2019 amounted to $130 billion, with Brazil
Latin America, it often injects corrosive capital into the
accounting for $60 billion and Peru almost $27 billion.
economic bloodstream, giving life to corruption, and
Energy projects accounted for 56% of all investments and
eroding good governance.”
metals/mining 28%. The same database shows that China’s
construction projects in the region were valued at almost
The U.S. Southern Command (SOUTHCOM) has
$61 billion, with energy projects accounting for almost 53%
expressed strong concerns about China’s activities in the
and transportation projects nearly 27%.
region. Its 2020 posture statement maintained that certain
Chinese investments in the region have strategic value for
Chinese banks (China Development Bank and China
future military uses and expressed special concern about
Export-Import Bank) have become the largest lenders in
China’s investments in numerous deep ports and
Latin America. Accumulated loans amounted to $137
infrastructure on both sides of the Panama Canal.
billion from 2005 to 2019, with Venezuela, Brazil, Ecuador,
SOUTHCOM also warned about Chinese
and Argentina the top recipients, according to the China-
telecommunications projects in 16 countries in the region
Latin America Finance Database hosted by the Inter-
that, it argued, could allow China to monitor or intercept
American Dialogue (see Table 1). A majority of the
official information that the United States shares with its
lending (67%) has been for energy projects, and almost
partners.
20% has been for infrastructure projects. Such loans
typically have less stringent terms without policy conditions
From 2009 to 2019, PRC arms sales to Latin America
and less rigorous environmental guidelines compared with
amounted to almost 5% of total arms exports to the region,
the loans of major international financial institutions.
according to the Arms Transfers Database maintained by
the Stockholm International Peace Research Institute.
Table 1. China: Financing in Latin America, 2005-2019
Venezuela accounted for 86% of the sales, but other clients
included Bolivia, Trinidad and Tobago, Peru, and Ecuador.
Amount
Country
Chinese arm sales have included armored personnel carriers
(U.S. bil ions)
and patrol vehicles, trainer/combat aircraft, transport
Venezuela
$62.2
aircraft, helicopters, radars, offshore patrol vessels, portable
Brazil
$28.9
surface-to-air missiles, light tanks, infantry fighting
Ecuador
$18.4
vehicles, and anti-tank missiles.
Argentina
$17.1
Trinidad and Tobago
$2.7
U.S. warnings about China have been met with skepticism
Bolivia
$2.4
in the region and among some regional experts. Some
Jamaica
$2.1
analysts contend that China’s primary interests and
Mexico
$1.0
influence in the region remain largely economic and that
Other Countries
$2.3
the possibility of the PRC creating a sphere of influence in
Total
$137.1
Latin America remains small. Some argue that China’s
appeal is limited due to deep political, social, and cultural
Source: Gal agher, Kevin P. and Margaret Myers, “China-Latin
differences and language barriers. Some observers argue
America Finance Database,” Inter-American Dialogue, 2020.
that recent U.S. disengagement in the region, marked by
such actions as withdrawal from the TPP and efforts to
Notably, China’s bank lending to Latin America has been
reduce U.S. foreign aid, may encourage greater PRC-Latin
waning since reaching a high of $21.4 billion in 2016,
American cooperation.
likely due in part Venezuela’s economic deterioration. By
2019, China’s lending had declined to $1.1 billion.
Some analysts have concerns about the potential harmful
effects of China’s economic engagement on the region’s
U.S. Policy Concerns and Considerations development. They maintain that some countries have
Under the George W. Bush and Obama Administrations,
amassed unsustainable levels of debt owed to the PRC and
U.S. officials, while recognizing concerns about China’s
that their economies risk becoming less competitive in
influence, generally viewed China’s engagement positively
manufacturing and agricultural technologies and more
as a contributor to the region’s economic growth. The
dependent upon commodities exports to China and
overarching goal of U.S. policy was for China to contribute
elsewhere. Some argue that PRC support extends a lifeline
economically to the region in a transparent fashion,
to leaders with poor records of governance and can
following international rules and complying with local or
exacerbate corruption. Furthermore, although some Chinese
international labor and environmental standards. From 2006
companies have improved their conduct in the region, many
to 2015, the United States and China held seven bilateral
still do not adhere to international environmental, labor, and
consultations on Latin America.
safety standards.
The Trump Administration has viewed China’s engagement
Mark P. Sullivan, Specialist in Latin American Affairs
in Latin America with more suspicion. Its 2017 National
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China’s Engagement w ith Latin America and the Caribbean

IF10982
Thomas Lum, Specialist in Asian Affairs


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https://crsreports.congress.gov | IF10982 · VERSION 4 · UPDATED

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