CHina’s Engagement Trade with Latin America tends to be pure transactional. It went from doing almost nothing with the region at the turn of the century to surpassing the United States as the number one trading partner in South America, and the number two almost anywhere else in Latin America. Annual merchandise trade between China and Latin America has risen from $12 billion in 2000 to $445 billion in 2021. But China’s relationship with the region appears to be changing. Geopolitically, Latin America is also increasingly useful to China.
June 8, wall street journal According to reports, Cuba’s communist government has secretly agreed to allow China to establish electronic espionage facilities in the country. At first U.S. and Cuban officials denied the story. Two days later, the White House acknowledged that the base had been in existence for some time. This is not the first time there have been reports that China has a military or security presence in the region. China has long been believed to have a small military presence in Cuba and access to listening posts. It has several satellite ground stations in Latin America, which are also believed to serve espionage purposes. A space observatory in Argentina is run by the Chinese military and its activities are opaque. Evan Ellis of the U.S. Army War College said the latest move was “one small step” and “a giant leap”.
Along with the close economic relationship, the geopolitical relationship is deepening. China is a big source of cash for the region. Between 2005 and 2021, Chinese state-owned banks have lent $139 billion to Latin American governments. It has invested billions of dollars in the region, mostly in energy and mining. Some 21 countries in Latin America and the Caribbean have signed up to China’s Belt and Road Initiative, a massive global infrastructure-building spree.
Latin American countries are also turning to the yuan for trade and for inclusion in central bank reserves. On June 2, Argentina doubled its currency swap line with China, meaning about a third of its central bank reserves, or $32 billion, will actually be denominated in yuan. Last year, the renminbi overtook the euro to become the second most important foreign currency in Brazil’s central bank coffers.
Many commercial projects have attracted attention. In some cases, they are in sensitive industries such as telecommunications or energy. In April, a Chinese state-owned power company struck a deal to buy two power suppliers in Peru, which would give China a near-monopoly on the country’s energy grid. Some worry that China is building ports in the region, such as the giant Chancay port near Lima, Peru, that could be repurposed for military purposes.
China’s most recent Latin America strategy document, released in 2016, said it would “actively carry out military exchanges and cooperation”. While the United States remains the main military partner in the region, China has stepped up engagement with law enforcement agencies. It has trained police officers in countries including Argentina and Brazil, donated cars and investigative equipment to Nicaragua and Costa Rica, and sold surveillance equipment to Ecuador.
So far, China appears to be winning the geopolitical popularity contest — and not just with the usual suspects like Venezuela’s authoritarian regime or Cuba’s socialists. Since 2017, five countries in the region have severed ties with Taiwan in favor of China. In March, Honduras was the latest country to do so. On June 14, Honduran President Theo Mara Castro concluded a six-day visit to China.Argentina, Honduras and Uruguay are all joining the Shanghai-based New Development Bank, run by BRICS countries nation.
Not all were impressed. Argentina’s center-right opposition is challenging a $1.2 billion deal between the governor of Tierra del Fuego, on the continent’s southernmost island, and a Sinopec group to build a port, power station and chemical plant there.
But most Latin American leaders dismissed concerns about Chinese meddling. The chance to avoid what they perceive as hypocritical speeches from the US appeals not only to leftists but also to populists who have little time to care about human rights, such as President Nayib Bukele of El Salvador, and moderates in Ecuador and Panama and Costa Rica. China has continued to trade and invest in Brazil even as Jair Bolsonaro, Brazil’s right-wing president from 2018 to 2022, has made critical comments about the country.
A Mexican official said it was up to the “eyes of the beholder” whether China’s deeper involvement was risky. China tends to avoid provoking the United States and engages primarily in South America rather than Central America and the Caribbean (with the exception of Cuba). But China’s growing ambitions and Latin America’s supply of many of the minerals needed for the green transition, such as lithium and copper, mean the relationship could deepen. ■
