In June 2022, the ninth Summit of the Americas took place in Los Angeles. The summit marked twenty-eight years since the U.S. last hosted this important conference of Western Hemisphere countries. One of the main differences since the last US-led summit has been the emergence and influence of the People’s Republic of China in the region. Over the last 28 years, China has strengthened its diplomatic relations with many Latin American countries and has become a principal trading partner with several. China has also signed comprehensive strategic partnerships, participated in several international organizations, and funded projects throughout South and Central America. This China relationship, in turn, is having a major influence on Latin American and the Caribbean (LAC) governments and economies. This article explores what has transpired in LAC countries over the last 20 years that has led to China increased interest in the Western Hemisphere. 

The two pink tides: The leftist governments in Latin America

Since 2018, a new “pink tide” in Latin American politics has emerged in which a leftist wave has gained support and won elections. In many ways, the new pink tide is similar to the first pink tide that dominated many LACs from 2000 to 2010. This “turn to the left” tide started with Hugo Chavez in Venezuela (1999-2013), Lula da Silva in Brazil (2003-2011), Tabaré Vazquez and José Mujica in Uruguay (2005-2015), Nestor and Cristina Krichner in Argentina (2003-2015), and Michelle Bachelet in Chile (2006-2010), as well as governments and coalitions in Bolivia, Ecuador, El Salvador, Guatemala, Honduras, Paraguay, Panamá, Nicaragua, and Peru. Cuba, in turn, has been ruled by authoritarian regimes since 1959 and Nicaragua since 2007.  

From 2010 to 2019, many LACs benefited from rising commodity prices (fueled mostly by oil, soybeans, and metals). As a result of the higher commodities prices, Macri in Argentina, Bolsonaro in Brazil, Piñera in Chile, and Kuczynski in Peru moved their countries to the right. With improved economic conditions, these governments were able to deliver subsidies and social welfare programs.

Map # 1: The Economist

Over the last two years, however, many LACs have experienced a second pink tide. A number of Latin American experts have argued that this tide is a reaction to the right-leaning and conservative governments. They note that this anti-incumbent sentiment is a response to corruption cases, mismanagement of the COVID-19 crisis, low economic growth, and rising deficits. As with the first pink tide, there is growing social discontent, protests, rising income inequality, a migration crisis, high inflation, unemployment, and rising poverty.

The new pink tide started with Mexico’s 2018 election of President Andrés Obrador (AMLO). This was followed by the 2021 elections of Alberto Fernandez (Argentina), Luis Arce (Bolivia), Pedro Castillo (Peru), Gabriel Boric (Chile), and Xiomara Castro (Honduras).  In June 2022, Gustavo Petro was elected as Colombia’s first left-wing president. In October of 2022, Brazil elected Luis Inácio Lula Da Silva. The Brazilian election of Lula and defeat of conservative incumbent Jair Bolsonaro marked a move to the left of South America’s biggest country. As a result, most of South and Central American nations are governed once again by leftist regimes.

Jorge Castano, an analyst for the Foreign Affairs Magazine, points out that there are three types of leftist governments during both tides. First, there are the “moderate and reformist” regimes of Lula da Silva in Brazil, Mojica in Uruguay, and Bachelet in Chile. Second, there are the “nationalist, strident and close-minded” regimes that represent the populist waves that have governed Ecuador, Argentina, and Bolivia for years, as well as the current Peruvian government under President Pedro Castillo. Finally, there are the authoritarian regimes of Cuba, Nicaragua, and Venezuela that prohibit free elections, democratic institutions, free speech, and basic human rights protection. This latter group is beset by widespread corruption, inflation, violence, and the lack of basic necessities.  

While these pink tide governments differ, they share some common characteristics: an anti-American sentiment, inefficient and unaccountable bureaucratic governance, excessive economic dependence on commodities, large social expenditures, and the use of a populist message as a political tool with proposed social reforms.

The Peoples Republic of China (PRC) has been one of the chief beneficiaries of this LAC move to the left, expanding its influence over the region using both soft power and economic influence with any government who is willing to increase its economic engagement with them. China has especially benefited from the anti-Americanism sentiment that has characterized several of the pink tide governments and its constituents. Just two weeks before the Russian invasion of Ukraine, Argentinian President Alberto Fernandez’s visited Moscow and Beijing. In Russia, he met with Vladimir Putin and spoke of his intentions of developing closer relations with Russia and China. In Moscow, he added that “Argentina has to stop being so dependent on the International Monetary Fund and the United States and has to open up to other places.” Later in China, he signed the long-anticipated agreement for Argentina to participate in China’s Belt and Road Initiative. Shortly after Fernandez’s visit, Jair Bolsonaro from Brazil also traveled to Moscow, against all of Washington’s warnings and concerns about his visit. He met with Putin and proclaimed a new and stronger Brazilian partnership and cooperation agreement with Russia. Perhaps, the most shocking part is that he did not meet with President Joe Biden until the Los Angeles summit in June.

Map # 2: The Dialogue: Leadership for the Americas

Economic Relations between LAC and China: The Good Times

Most of the pink tide governments have found in China a strategic economic partner that has resulted in an increase in trade, loans, and investments to the region. The economic relations with China have seen historic growth, and the trend is expected to continue and improve in the future. According to The Economist, the total trade between LACs and China increased from $18 billion in 2002 to approximately $449 billion in 2021, and it is expected to reach $750 billion by 2035. China has been able to establish new markets for its goods. In 2021, China’s exports to LAC totaled $228 billion dollars, with electrical machinery and equipment accounting for 21% of the exports, followed by machinery and mechanical appliances (15%), and motor vehicles and parts (7%). China, in turn, has also been able to import raw materials needed for its supply chain and production. In 2021, China imported $221 billion from LAC countries; 42% of its imports were natural resources and ores, 16% soybeans, 10% mineral fuels and oil, 6% meat, 5% copper, and 21% others (including lithium). As of 2021, 24% of all Latin American products were exported to Asia, compared to 18% in 2017.

China has especially benefited from the pink tide’s extraction policies, matching with its growing demand for resources needed for its own development. China is now the top trading partner with Brazil, Peru, Chile, and Uruguay. China has also negotiated a Comprehensive Strategic Partnerships (China’s highest economic classification to LAC countries) with Argentina, Brazil, Chile, Ecuador, Mexico, Peru, and Venezuela, as well as a Strategic Partnerships with Bolivia and Uruguay. Furthermore, China has entered Free Trade Agreements with Chile, Costa Rica, and Peru.

China’s Belt and Road Initiative (BRI) is the Chinese Government’s global investment plan, supporting infrastructure projects in different countries and promoting economic development and connectivity. Over the last 30 years, the BRI has established economic relations with many left-wing developing nations. Twenty-one countries in Latin America and the Caribbean have now joined this strategic economic program. Some LAC experts warn that the BRI could be a debt-trap diplomacy tool for China to gain influence and leverage around the world and now in LACs. From the LAC perspective, it is well known that China has pressured several countries in its path to isolate Taiwan. More recently Panama (2017), the Dominican Republic (2018), El Salvador (2018), and Nicaragua (2021) have shifted their foreign policy away from Taiwan towards China, as China increases it direct investment and financing of their infrastructure projects. Eight countries in Latin America (Belize, Guatemala, Haiti, Honduras, Paraguay, St. Kitts and Nevis, Saint Lucia, and St. Vincent and the Grenadines) have also recently moved away from Taiwan.

Loans from China's biggest commercial banks since 2005

In terms of direct investment, the numbers have also significantly increased over the years. China’s direct investment in LAC from 2005 to 2021 amounted $140 billion, with 59% allocated to energy projects and 24% to metal and mining. Brazil has been the major benefactor of China’s direct investment with over $64 billion in investments, followed by Peru with $25 billion. China is also building a military-run space station in Argentina, constructing dams in the south (Santa Cruz), and developing an immense solar plant in Jujuy. A Chinese company manages Bogota’s metro construction and the Chancay Port (one of the biggest in the South American Pacific coast). China also constructed Mexico’s Dos Bocas refinery and in 2020 acquired Mexico’s largest independent renewable energy company—Zuma Energy.  The list keeps growing of Chinese multibillion projects all across Latin America and the Caribbean. According to Bloomberg:

 “While U.S.-based capital remains more bountiful, Chinese companies have built bridges in Panama, highways in Argentina, ports in Peru, and electricity grids in Brazil. China, in turn, owns the biggest copper mines in Peru, half of Chile’s power distribution, gold mines in Argentina, and soy-growing land in Brazil.”

From 2005 to 2021, China Development Bank and the Export-Import Bank of China made over $138 billion loans to the LAC nations. A large percentage of the loans were used to finance LAC’s energy projects (69%) and infrastructure (19%). Different from U.S. loans, Chinese loans are easier to procure.  In a 2022 report, The Congressional Research Office pointed out that “Chinese loans typically lack policy conditions and have less stringent terms and less rigorous environmental guidelines compared with the loans of major international financial institutions.” The $138 billion loans to LAC countries exceed the combined loans from the World Bank, the Inter-American Development Bank, and the Caribbean Development Bank during the same period of time. While this is an impressive investment, it also signals the increased economic dependence of pink tide LACs on China.

The role of China in the LAC countries has significantly increased over the last decade.

China has also crafted a new policy aimed at enhancing its “goodwill” all over the region that experts say has been effective. For example, China provided its Sinovac COVID-19 vaccine to the LAC countries, being the first vaccine available for many LACs; a gesture that was well-received as a sign of cooperation and reciprocity between nations. China support of pink tide regimes has also helped to spread the anti-western narratives, especially in economically unstable countries like Venezuela, Argentina, and possibly Brazil. The rise of the pink tide in LACs and emergence of China as a trading partner, direct investor, and lender poses a great challenge to the United States. The U.S. has responded to this threat by creating new partnerships, free trade deals, and infrastructure investments in many LACs, and promoting the creation of Free Trade Area of the Americas that was first crafted during the 1994 Summit of the Americas.

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