Updated November 12, 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 Latin America and the
engagement in the region and garner support in
Caribbean (LAC) include securing access to raw materials
international fora. Some analysts argue that China’s
(such as oil and various ores and minerals) and agricultural
activities in the region reflect a global strategy to reduce
goods (especially soybeans); establishing new markets for
U.S. dominance, although they do not aim to challenge the
Chinese goods, including high value-added products; and
United States directly or militarily. China’s diplomatic
partnering with Latin American firms to access and develop
efforts include being an observer at the Organization of
technology. China also has sought to secure investment
American States, a member of the Inter-American
opportunities in Latin America for its infrastructure firms
Development Bank and the Caribbean Development Bank,
and to reduce excess capacity in steel, cement, and other
and a participant in the Asia Pacific Economic Cooperation
related commodities.
forum. Amid the Coronavirus Disease 2019 (COVID-19)
pandemic, China has provided medical aid to countries
Just as Latin America’s economic linkages with China
throughout the region and has offered loans to help pay for
helped the region withstand the 2008 global financial crisis,
the purchase and distribution of vaccines once developed.
China’s post-COVID-19 economic rebound could play an
important role in Latin America’s post-pandemic recovery.
PRC President Xi Jinping participated in a January 2015
summit in Beijing with leaders and foreign ministers of the
Total China-LAC trade increased from $17 billion in 2002
Community of Latin American and Caribbean States
to almost $315 billion in 2019. In 2015, PRC President Xi
(CELAC), a region-wide organization that excludes the
set a goal of increasing total China-LAC trade to $500
United States and Canada. At the meeting, China and
billion in 10 years. China’s imports from Latin America and
CELAC countries agreed to a five-year cooperation plan
the Caribbean amounted to almost $165 billion in 2019,
covering politics, security, trade, investment, finance,
accounting for almost 7.9% of China’s overall imports ;
infrastructure, energy, resources, industry, agriculture,
China’s exports to the region in 2018 amounted to $151
science, and people-to-people exchanges. At a second
billion, accounting for 6% of China’s total exports. China
China-CELAC ministerial held in January 2018, both sides
has become the top trading partner of Brazil, Chile, Peru,
agreed to an updated cooperation plan extending through
and Uruguay and the second-largest trading partner for
2021. China also invited Latin American and Caribbean
many other countries. Chinese imports from the region in
countries to participate in its Belt and Road Initiative (BRI),
2019 were primarily natural resources, including ores
which is focused on PRC-backed infrastructure
(32%), mineral fuels (19%), soybeans (16.7%), and copper
development around the world. Currently at least 19
(5.6%). Major PRC exports to the region in 2019 included
countries in the region are participating in the BRI.
electrical machinery and equipment (21%); machinery and
mechanical appliances (15%); motor vehicles and parts
In 2016, the PRC government released its second policy
(6.5%); and a wide array of industrial and consumer
paper on Latin America and the Caribbean. The document
products. China currently has free trade agreements with
states that China seeks to strengthen cooperation on the
Chile, Costa Rica, and Peru.
basis of “equality and mutual benefit” in several key areas,
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China’s Engagement w ith Latin America and the Caribbean
According to the China Global Investment Tracker database
injects corrosive capital into the economic bloodstream,
maintained by the American Enterprise Institute (at
giving life to corruption, and eroding good governance.”
https://www.aei.org/china-global-investment-tracker/),
China’s investments in Latin America and the Caribbean
The U.S. Southern Command has expressed strong
from 2005 to 2019 amounted to $130 billion, with Brazil
concerns about China’s activities in the region. Its 2020
accounting for $60 billion and Peru almost $27 billion.
posture statement maintained that certain Chinese
Energy projects accounted for 56% of all investments and
investments in the region have strategic value for future
metals/mining 28%. In addition, the database shows that
military uses and expressed special concern about China’s
China’s construction projects in the region were valued at
investments in deep ports and infrastructure on both sides
almost $61 billion, with energy projects accounting for
of the Panama Canal. It also warned about Chinese
almost 53% and transportation projects nearly 27%.
telecommunications projects that, it argued, could allow
China to monitor or intercept U.S. official information.
Chinese banks (China Development Bank and China
Export-Import Bank) have become the largest lenders in
In August 2020, the White House set forth a strategic
Latin America. Accumulated loans amounted to $137
framework for the Western Hemisphere, which includes
billion from 2005 to 2019, with Venezuela, Brazil, Ecuador,
among its priorities countering economic aggression and
and Argentina the top recipients, according to the China-
malign political influence from external actors such as
Latin America Finance Database hosted by the Inter-
China. The actions identified to combat such influence
American Dialogue (see Figure 1). A majority of the
include building closer ties between the U.S. and regional
lending (67%) has been for energy projects, and almost
private sectors, supporting development and investment
20% has been for infrastructure projects. Such loans
opportunities in the hemisphere, and continuing to lead in
typically lack policy conditions and have less stringent
international organizations and multilateral fora.
terms and less rigorous environmental guidelines compared
with the loans of major international financial institutions.
U.S. warnings about China have been met with some
Notably, China’s bank lending to Latin America has been
skepticism in the region and among some regional experts.
waning since reaching a high of $21.4 billion in 2016,
Some analysts contend that China’s primary interests and
likely due in part Venezuela’s economic deterioration. By
influence in the region remain largely economic and
2019, China’s annual lending had declined to $1.1 billion.
diplomatic and that the possibility of the PRC creating a
military sphere of influence in Latin America remains
Figure 1. China: Financing in LAC, 2005-2019
small. Some argue that China’s appeal is limited due to
deep political, social, and cultural differences and language
barriers. Some observers argue the Trump Administration’s
more confrontational or zero-sum approach in relations
with Latin America may have encouraged greater PRC-
Latin American cooperation.
Some analysts have concerns about the potential harmful
effects of China’s economic engagement on the region’s
development, including that many Chinese companies do
not adhere to international environmental, labor, and safety

standards. They maintain that some countries have amassed
Source: Created by CRS with data from Gal agher, Kevin P. and
unsustainable levels of debt owed to the PRC and have
Margaret Myers, “China-Latin America Finance Database,” Inter-
become dependent upon commodities exports to China.
American Dialogue, 2020, at 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. H.R. 7703, introduced in July 2020,
Security Strategy states that “China seeks to pull the region
would authorize funding for the Caribbean Basin Security
into its orbit through state-led investments and loans” and
Initiative, including for the purpose of countering malign
expresses concern about China’s support for “the
influence from authoritarian regimes, including China.
dictatorship in Venezuela.” In an April 2019 visit to Latin
America, Secretary of State Mike Pompeo s aid, “when
Mark P. Sullivan, Specialist in Latin American Affairs
China does business in places like Latin America, it often
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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 7 · UPDATED

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