Álvaro Mendez and Chris Alden from LSE IDEAS at the London School of Economics and Political Science, analyse China’s growing presence in Latin America concerning trade, diplomacy, and strategic influence
The People’s Republic of China (PRC) commercial penetration of Latin America and the Caribbean (LAC) has expanded rapidly in recent years. Since its founding in 1949, just over seven decades ago, the PRC has become a significant economic and political force on the continent. This prominence has intensified since 2001, when China joined the World Trade Organization (WTO). Recent calculations indicate that total trade between China and LAC has increased to at least 20 times what it was in 2001.
While the United States (U.S.) remains the main trading partner for LAC as a whole, the PRC ranks second for LAC and first for South America. In fact, Beijing is the primary trading partner for numerous countries, including Brazil, which has the largest economy in the region.
In its formative years, the PRC focused on obtaining diplomatic recognition from LAC. The journey to universal acceptance began when Cuba became the first country in the region to recognise the PRC in 1960. Following Havana’s lead, other countries like Chile recognised it a decade later in 1970. China’s diplomatic relations with the region prioritised rallying support to expel Taiwan from the United Nations (UN) and to assume its seat in the General Assembly.
The goal was achieved on October 25, 1971, when 76 UN Member States voted for Beijing instead of only 35 supporting Taiwan. Seventeen countries abstained, and three were absent. This historic resolution recognised the PRC as the sole legitimate representative of China at the UN. While LAC countries alone did not tip the balance, only seven voted in favour; they amounted to a significant bloc after Beijing’s diplomatic outreach campaign in the previous two decades.
China’s expanding footprint in Latin America
China’s interest in LAC soon grew beyond political alliances to encompass its robust demand for natural resources to feed its expanding economy. In particular, Beijing sought LAC’s agricultural bounty, vital to China’s food supply chain and rich energy reserves. Countries like Brazil and Argentina have benefited significantly from exporting soybeans and beef, which aligns with LAC’s development goals of diversifying its export markets and attracting foreign direct investment, to boost economic growth.
Chinese investments in energy projects, from hydroelectric power in Ecuador to oil extraction in Venezuela, were welcomed to improve regional infrastructure. These partnerships have expanded trade and strengthened political alignments, demonstrating how strategic economic cooperation fosters more comprehensive, long-term relations. Such significant investments, however, also raise concerns about environmental harm to and economic dependency on the LAC region.
The global transition to renewable energy and electric vehicles has increased Latin America’s strategic importance to China. The region is rich in critical raw materials (CRMs) like lithium, copper, and niobium, essential to these industries. Brazil alone produces 90% of the world’s niobium, and Chile is a key player in rhenium processing.
This resource concentration has made LAC indispensable in global markets, yet it has also exposed it to risks. Political instability or policy shifts in key resource-rich nations may have far-reaching consequences for global supply chains. As China consolidates its relations with resource-laden nations like Chile and Brazil, the economic and geopolitical balance in the region will continue to evolve, not always predictably.
Among the CRMs, lithium stands out as especially critical for batteries and other energy storage technologies, The demand for lithium is projected to increase by up to 51 times by 2040. This has turned the “Lithium Triangle” of Chile, Bolivia, and Argentina into a global hot spot. China has proactively secured its own access to these reserves by leveraging its established ties in the region.
United States relations with Latin America
Meanwhile, the U.S, which produces less than 1% of the world’s lithium, faces growing pressure to overhaul its relations with Latin America. However, in Washington, LAC is by default an afterthought, a priority (if at all) mostly for presidents in their second term. By contrast, President Xi Jinping between 2013 and 2024 visited the region more often than Obama, Trump, and Biden combined, an incredible fact in a region traditionally seen as “America’s backyard”.
Suppose the past is any guide to the future. In that case, this historical neglect is likely to continue under President Trump, who, like his predecessors, will focus on illegal immigration and narcotics in connection with the region. However, Trump has also made statements suggesting the possibility of retaking the Panama Canal, citing concerns about increasing Chinese influence in the region since Panama switched its diplomatic ties from Taipei to Beijing in 2017. This rhetoric, reminiscent of earlier U.S. expansionism, risks being poorly received in a region increasingly wary of external interference.
China’s growing influence in Latin America directly supports its broader strategic objectives, particularly its rivalry with the U.S. and reunification with Taiwan. Economic statecraft such as the Belt and Road Initiative (BRI) has established China as a major trading partner in LAC, challenging traditional U.S. dominance. Deepening economic dependencies and liberally investing in regional infrastructure has enabled China not only to gain access to crucial resources but also to reshape the political orientation of the region.
The U.S. neglect has left a gap that Beijing has been able to capitalise on. China’s outgoing diplomacy and President Xi’s itinerant attentiveness underscore its commitment to embedding itself in the region as a key player, reinforcing its ability to push back against U.S. démarches in the Pacific and cement its position in the competition with Washington.
China’s strategic interest in Latin America, including Taiwan
The Taiwan issue is central to China’s strategic interest in Latin America. The region remains home to seven of Taiwan’s dwindling number of diplomatic allies, making it a critical arena in case Beijing should need to isolate Taipei on the global stage. At present, Beijing has established diplomatic ties with 26 of the 33 countries in the region, with the remaining seven still holding out for relations with Taipei. This makes LAC the largest region that still supports independent Taiwan.
China’s strategy, as seen from countries like Panama, involves patient diplomacy aimed at picking off Taiwan’s allies one by one by offering lucrative economic and prestigious political incentives. This approach ensures that Beijing will be able to dictate the pace and extent of these diplomatic shifts, the better to consolidate its One China Policy.
Latin American countries are increasingly aligning with Beijing, and Taiwan’s international recognition continues to shrink. Leveraging its economic clout for political influence is advancing China’s reunification ambitions and showcasing its erosion of U.S. dominance in a region Washington has long taken for granted as the steadfast anchor of its strategic sphere of influence.
