Updated May 18, 2021
China’s Engagement with Latin America and the Caribbean
As the People’s Republic of China (PRC) has increased its
dialogues, trade and investment, agriculture, energy,
engagement with Latin America and the Caribbean (LAC)
infrastructure, manufacturing, and technological innovation.
over the past 20 years, U.S. policymakers have raised
The paper states that China will “actively carry out military
questions regarding potential implications for U.S. interests
exchanges and cooperation” with countries in the region but
in the region. China’s engagement with the region has
also emphasizes that China “does not target or exclude any
grown significantly since 2001, particularly in terms of
third party.”
diplomatic and economic ties. This growth reflects China’s
global “soft power” efforts and “influence operations”
Another apparent goal of Beijing in the region is to isolate
worldwide. A succession of Chinese leaders and other
Taiwan by attempting to lure away Latin American and
officials have visited the region to court governments. In
Caribbean countries that still maintain diplomatic relations
turn, regional leaders and officials have frequently visited
with Taiwan, also known as the “Republic of China.”
China. The PRC has signed a variety of bilateral partnership
Currently, 9 countries in the region (out of 15 countries
agreements with countries throughout the region, including
worldwide, including the Vatican) recognize Taiwan, and
“comprehensive strategic partnerships” with Argentina,
the remaining 24 countries in the region recognize the PRC.
Brazil, Chile, Ecuador, Mexico, Peru, and Venezuela.
In 2017 and 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 LAC include securing access to
engagement in the region and garner support in
raw materials (such as oil, ores, and minerals) and
international fora. Some analysts argue that China’s
agricultural goods (especially soybeans); establishing new
activities in the region reflect a global strategy to reduce
markets for Chinese goods, including high value-added
U.S. dominance, although they do not aim to challenge the
products; and partnering with Latin American firms to
United States directly or militarily. China’s diplomatic
access and develop technology. China also has sought to
efforts include being an observer at the Organization of
secure investment opportunities in Latin America for its
American States, a member of the Inter-American
infrastructure firms.
Development Bank and the Caribbean Development Bank,
and a participant in the Asia Pacific Economic Cooperation
Just as Latin America’s economic linkages with China
forum. Amid the Coronavirus Disease 2019 (COVID-19)
helped the region withstand the 2008 global financial crisis,
pandemic, China has sold vaccines and provided medical
China’s post-COVID-19 economic rebound could play an
assistance and loans to about a dozen countries throughout
important role in Latin America’s post-pandemic recovery.
the region.
Total China-LAC trade increased from almost $18 billion in
PRC President Xi Jinping participated in a January 2015
2002 to almost $316 billion in 2019. In 2020, despite the
summit in Beijing with leaders and foreign ministers of the
decline in world trade due to the pandemic, China’s total
Community of Latin American and Caribbean States
trade with the region dipped only slightly, to $315 billion.
(CELAC), a region-wide organization that excludes the
In 2020, China’s imports from LAC amounted to $165
United States and Canada. At the meeting, China and
billion, consisting primarily of natural resources, including
CELAC countries agreed to a five-year cooperation plan
ores (35%), soybeans (17%), mineral fuels (12%), meat
covering politics, security, trade, investment, finance,
(7%), and copper (6%). China’s exports to the region in
infrastructure, energy, resources, industry, agriculture,
2020 amounted to $150 billion, with major exports
science, and people-to-people exchanges. At a second
including electrical machinery and equipment (23%),
China-CELAC ministerial held in January 2018, both sides
machinery and mechanical appliances (16%), motor
agreed to an updated cooperation plan extending through
vehicles and parts (6%), and a wide array of industrial and
2021. China also invited Latin American and Caribbean
consumer products. China has become the top trading
countries to participate in its Belt and Road Initiative (BRI),
partner of Brazil, Chile, Peru, and Uruguay and the second-
which is focused on PRC-backed infrastructure
largest trading partner for many other countries. China has
development around the world. Currently at least 19
free trade agreements with Chile, Costa Rica, and Peru.
countries in the region are participating in the BRI.
According to the China Global Investment Tracker database
In 2016, the PRC government released its second policy
maintained by the American Enterprise Institute (at
paper on LAC. The document states that China seeks to
https://www.aei.org/china-global-investment-tracker/),
strengthen cooperation on the basis of “equality and mutual
which tracks large transactions of $100 million or more,
benefit” in several key areas, including exchanges and
China’s investments in LAC from 2005 to 2020 amounted
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China’s Engagement w ith Latin America and the Caribbean
to $136 billion, with Brazil accounting for $61 billion and
investment opportunities in the hemisphere, and continuing
Peru $27 billion. Energy projects accounted for 57% of all
to lead in international organizations and multilateral fora.
investments, and metals/mining accounted for almost 27%.
In addition, the database shows China’s construction
The Biden Administration’s Interim National Security
projects in LAC from 2005 to 2020 were valued at $62
Strategic Guidance, issued in March 2021, broadly
billion, with energy projects accounting for 51% and
describes China as a strategic competitor and asserts that
transportation 28%.
the Administration will work to reinvigorate and modernize
U.S. alliances and partnerships around the world to hold
Chinese banks (China Development Bank and China
countries such as China to account. The guidance notes that
Export-Import Bank) became large lenders in LAC more
the United States will confront China when its behavior
than a decade ago, although amounts have been declining in
threatens U.S interests and values.
recent years and there were no such development loans in
2020. Accumulated loans amounted to over $137 billion
The U.S. Southern Command (SOUTHCOM) has
from 2005 to 2020, with Venezuela, Brazil, Ecuador, and
expressed strong concerns about China’s activities in LAC.
Argentina the top recipients, according to the China-Latin
Its 2021 posture statement states that China continues to
America Finance Database hosted by the Inter-American
increase its activities across all domains in the region:
Dialogue (see Figure 1). A majority of the lending (68%)
cyber, space, extractive and energy industries,
has been for energy projects, and 18% has been for
transportation hubs, roads, infrastructure,
infrastructure projects. Such loans typically lack policy
telecommunications, legal and illegal fishing, agriculture,
conditions and have less stringent terms and less rigorous
and military training. SOUTHCOM contends that China
environmental guidelines compared with the loans of major
donates security supplies and equipment to gain access and
international financial institutions.
win favor with regional security forces and uses medical
diplomacy to its advantage as leverage. It also warns the
Figure 1. China: Financing in LAC, 2005-2020
PRC is “seeking to establish global logistics and basing
infrastructure in our hemisphere in order to project and
sustain military power at greater distances.”
In recent years, U.S. warnings about China have been met
with some skepticism in LAC and among some regional
experts. Some analysts contend that China’s primary
interests and influence in the region remain largely
economic and diplomatic and that the possibility of the
PRC creating a military sphere of influence in Latin
America remains small. Some argue that China’s appeal is
limited due to deep political, social, and cultural differences
and language barriers.
Source: Created by CRS with data from Kevin P. Gal agher and
Margaret Myers, “China-Latin America Finance Databases,” Inter-
American Dialogue, 2021, at https://www.thedialogue.org/map_list/.
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, including that many Chinese companies do
Under the George W. Bush and Obama Administrations,
not adhere to international environmental, labor, and safety
U.S. officials, while recognizing concerns about China’s
standards. They maintain that some countries have amassed
influence, generally viewed China’s engagement in LAC
unsustainable levels of debt owed to the PRC and have
positively. The overarching goal of U.S. policy was for
become dependent upon commodities exports to China.
China to contribute economically to the region in a
Some argue that PRC support extends a lifeline to leaders
transparent fashion, following international rules and
with poor governance records and exacerbates corruption.
complying with local or international labor and
environmental standards. From 2006 to 2015, the United
In the 117th Congress, two bills would address China’s
States and China held seven bilateral consultations on Latin
increasing influence in LAC. S. 1169, which addresses
America.
issues involving China worldwide, has provisions that
would require a multiyear strategy for increasing U.S.
The Trump Administration viewed China’s engagement in
economic competitiveness and promoting good governance,
LAC with more suspicion. Its 2017 National Security
human rights, and the rule of law in LAC. The bill also
Strategy stated, “China seeks to pull the region into its orbit
would require a report assessing the nature, intent, and
through state-led investments and loans” and expressed
impact to U.S. strategic interests of Chinese diplomatic
concern about China’s support for “the dictatorship in
activity influencing the decisions, procedures, and programs
Venezuela.” In 2020, the Administration issued a strategic
of multilateral organizations in LAC. H.R. 2479 would
framework for the Western Hemisphere, which included
require a report on China’s efforts to expand its presence
among its priorities countering economic aggression and
and influence in the region.
malign political influence from external actors such as
China. The actions identified to counter such influence
Mark P. Sullivan, Specialist in Latin American Affairs
included building closer ties between the United States and
Thomas Lum, Specialist in Asian Affairs
regional private sectors, supporting development and
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China’s Engagement w ith Latin America and the Caribbean

IF10982


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https://crsreports.congress.gov | IF10982 · VERSION 10 · UPDATED