Updated November 5, 2020
China’s Engagement with Latin America and the Caribbean
As the People’s Republic of China (PRC) has increased its
including exchanges and dialogues, trade and investment,
engagement with Latin America and the Caribbean over
agriculture, energy, infrastructure, manufacturing, and
nearly 20 years, U.S. policymakers have raised questions
technological innovation. The paper states that China will
regarding potential implications for U.S. interests in the
“actively carry out military exchanges and cooperation”
region. China’s engagement with the region has grown
with countries in the region but also emphasizes that China
significantly since 2001, particularly in terms of diplomatic
“does not target or exclude any third party.”
and economic ties. This growth reflects China’s global “soft
power” efforts and “influence operations” worldwide. A
Another apparent goal of Beijing in the region is to isolate
succession of Chinese leaders and other officials have
Taiwan by attempting to lure away Latin American and
visited the region to court governments. In turn, regional
Caribbean countries that still maintain diplomatic relations
leaders and officials have been frequent visitors to China.
with Taiwan, also known as the “Republic of China.”
The PRC has signed a variety of bilateral partnership
Currently, 9 countries in the region (out of 14 countries
agreements with several countries in the region, including
worldwide) recognize Taiwan, and the remaining 24
“strategic partnerships” with Argentina, Brazil, Chile, Costa
countries in the region recognize the PRC. In 2017 and
Rica, Ecuador, Mexico, Peru, Uruguay and Venezuela.
2018, Panama, the Dominican Republic, and El Salvador
switched recognition to the PRC.
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 a participant in the Asia Pacific Economic Cooperation
forum. Amid the Coronavirus Disease 2019 (COVID-19)
Just as Latin America’s economic linkages with China
pandemic, China has provided medical aid to countries
helped the region withstand the 2008 global financial crisis,
throughout the region and has offered loans to help pay for
China’s post-COVID-19 economic rebound could play an
the purchase and distribution of vaccines once developed.
important role in Latin America’s post-pandemic recovery.
PRC President Xi Jinping participated in a January 2015
Total China-Latin America trade increased from $17 billion
summit in Beijing with leaders and foreign ministers of the
in 2002 to almost $315 billion in 2019. In 2015, PRC
Community of Latin American and Caribbean States
President Xi set a goal of increasing total China-Latin
(CELAC), a region-wide organization that excludes the
America trade to $500 billion in 10 years. China’s imports
United States and Canada. At the meeting, China and
from Latin America and the Caribbean amounted to almost
CELAC countries agreed to a five-year cooperation plan
$165 billion in 2019, accounting for almost 7.9% of
covering politics, security, trade, investment, finance,
China’s overall imports; China’s exports to the region in
infrastructure, energy, resources, industry, agriculture,
2018 amounted to $151 billion, accounting for 6% of
science, and people-to-people exchanges. At a second
China’s total exports. China has become the top trading
China-CELAC ministerial held in January 2018, both sides
partner of Brazil, Chile, Peru, and Uruguay and the second-
agreed to an updated cooperation plan extending through
largest trading partner for many other countries. Chinese
2021. China also invited Latin American countries to
imports from the region in 2019 were primarily natural
participate in its Belt and Road Initiative (BRI), which is
resources, including ores (32%), mineral fuels (19%),
focused on PRC-backed infrastructure development around
soybeans (16.7%), and copper (5.6%). Major PRC exports
the world. Currently at least19 Latin American and
to the region in 2019 included electrical machinery and
Caribbean countries are participating in the BRI.
equipment (21%); machinery and mechanical appliances
(15%); motor vehicles and parts (6.5%); and a wide array of
In 2016, the PRC government released its second policy
industrial and consumer products. China currently has free
paper on Latin America and the Caribbean. The document
trade agreements with Chile, Costa Rica, and Peru.
states that China seeks to strengthen cooperation on the
basis of “equality and mutual benefit” in several key areas,
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link to page 2 China’s Engagement w ith Latin America and the Caribbean
According to the China Global Investment Tracker database
dictatorship in Venezuela.” In an April 2019 visit to Latin
maintained by the American Enterprise Institute (at
America, Secretary of State Mike Pompeo s aid, “when
https://www.aei.org/china-global-investment-tracker/),
China does business in places like Latin America, it often
China’s investments in Latin America and the Caribbean
injects corrosive capital into the economic bloodstream,
from 2005 to 2019 amounted to $130 billion, with Brazil
giving life to corruption, and eroding good governance.”
accounting for $60 billion and Peru almost $27 billion.
Energy projects accounted for 56% of all investments and
The U.S. Southern Command has expressed strong
metals/mining 28%. In addition, the database shows that
concerns about China’s activities in the region. Its 2020
China’s construction projects in the region were valued at
posture statement maintained that certain Chinese
almost $61 billion, with energy projects accounting for
investments in the region have strategic value for future
almost 53% and transportation projects nearly 27%.
military uses and expressed special concern about China’s
investments in deep ports and infrastructure on both sides
Chinese banks (China Development Bank and China
of the Panama Canal. It also warned about Chinese
Export-Import Bank) have become the largest lenders in
telecommunications projects that, it argued, could allow
Latin America. Accumulated loans amounted to $137
China to monitor or intercept U.S. official information.
billion from 2005 to 2019, with Venezuela, Brazil, Ecuador,
and Argentina the top recipients, according to the China-
In August 2020, the White House set forth a strategic
Latin America Finance Database hosted by the Inter-
framework for the Western Hemisphere, which includes
American Dialogue (see Table 1). A majority of the
among its priorities countering economic aggression and
lending (67%) has been for energy projects, and almost
malign political influence from external actors such as
20% has been for infrastructure projects. Such loans
China. The actions identified to combat such influence
typically lack policy conditions and have less stringent
include building closer ties between the U.S. and regional
terms and less rigorous environmental guidelines compared
private sectors, supporting development and investment
with the loans of major international financial institutions.
opportunities in the hemisphere, and continuing to lead in
Notably, China’s bank lending to Latin America has been
international organizations and multilateral fora.
waning since reaching a high of $21.4 billion in 2016,
likely due in part Venezuela’s economic deterioration. By
U.S. warnings about China have been met with some
2019, China’s annual lending had declined to $1.1 billion.
skepticism in the region and among some regional experts.
Some analysts contend that China’s primary interests and
Table 1. China: Financing in Latin America, 2005-2019
influence in the region remain largely economic and
diplomatic and that the possibility of the PRC creating a
Amount
Country
military sphere of influence in Latin America remains
(U.S. bil ions)
small. Some argue that China’s appeal is limited due to
Venezuela
$62.2
deep political, social, and cultural differences and language
Brazil
$28.9
barriers. Some observers argue the Trump Administration’s
Ecuador
$18.4
more confrontational or zero-sum approach in relations
Argentina
$17.1
with Latin America may have encouraged greater PRC-
Trinidad and Tobago
$2.7
Latin American cooperation.
Bolivia
$2.4
Jamaica
$2.1
Some analysts have concerns about the potential harmful
effects of China’s economic engagement on the region’s
Mexico
$1.0
Other Countries
$2.3
development, including that many Chinese companies do
Total
$137.1
not adhere to international environmental, labor, and safety
standards. They maintain that some countries have amassed
Source: Gal agher, Kevin P. and Margaret Myers, “China-Latin
unsustainable levels of debt owed to the PRC and have
America Finance Database,” Inter-American Dialogue, 2020, at
become dependent upon commodities exports to China.
https://www.thedialogue.org/map_list/.
Some argue that PRC support extends a lifeline to leaders
with poor governance records and exacerbates corruption.
U.S. Policy Concerns and Considerations
Under the George W. Bush and Obama Administrations,
In the 116th Congress, several legislative initiatives have
U.S. officials, while recognizing concerns about China’s
been introduced to counter China’s influence in the Western
influence, generally viewed China’s engagement positively.
Hemisphere. S. 4528/H.R. 8716, introduced in August and
The overarching goal of U.S. policy was for China to
October 2020, respectively, would take measures to
contribute economically to the region in a transparent
increase U.S. competitiveness in Latin America and the
fashion, following international rules and complying with
Caribbean, promote regional security and digital security,
local or international labor and environmental standards.
expand U.S. educational and cultural exchange programs,
From 2006 to 2015, the United States and China held seven
and advance initiatives to strengthen the role of civil society
bilateral consultations on Latin America.
and the media. S. 4629, a broader initiative introduced in
September 2020 to counter China’s influence worldwide,
The Trump Administration has viewed China’s engagement
includes a section to deepen U.S. engagement with Western
in Latin America with more suspicion. Its 2017 National
Hemisphere nations.
Security Strategy states that “China seeks to pull the region
into its orbit through state-led investments and loans” and
Mark P. Sullivan, Specialist in Latin American Affairs
expresses concern about China’s support for “the
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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 5 · UPDATED

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