Latin America Must Be More Strategic About Economic Ties With China

Latin America Must Be More Strategic About Economic Ties With China
Chinese President Xi Jinping shakes hands with Colombian President Gustavo Petro at the Great Hall of the People, in Beijing, China, Oct. 25, 2023 (Kyodo News photo via AP Images).

China’s expanding economic footprint in Latin America has arguably been the single largest story in the region over the past 25 years. Beijing’s investments and trade have driven economic growth and shifted the geopolitical narrative in many countries across the region. That said, China’s engagement hasn’t been a static story. The narrative has shifted as priorities have changed in China, Latin America and the United States. Several recent reports highlight the direction those shifts are taking as we move into 2024, at a time when Chinese growth is slowing and U.S.-China tensions are rising.

According to a new report by the Inter-American Dialogue, China’s investments in Latin America have shrunk in size, but are becoming more strategic. The authors estimate that China invested $6.4 billion in Latin America in 2022, down significantly from an average of $14 billion per year in the decade before the pandemic. However, those investments are now spread out across a large number of deals in strategic sectors that match Beijing’s economic priorities, particularly as it applies to emerging technologies.

Fewer infrastructure megaprojects like dams and roads are being funded. Instead, 5G technologies, datacenters and renewable energy projects are high on the list of priorities. Additionally, investments in previously prioritized sectors have shifted in purpose. In agriculture, for instance, they are more focused on machines and biotech to improve yields. And in the mining sector, investment is focused on efforts to control critical minerals for next-generation technologies and electric vehicle batteries, rather than the large-scale infrastructure buildout that defined the early 2000s.

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