The Growing Chinese Presence in the Americas (Changes over commercial dominion in the region)
This article analyzes China's economic penetration of Latin America, assessing its role as a top trade partner and primary lender. It examines the structure of this relationship: exports of raw materials from the region in exchange for imported manufactured goods and capital. The economic impact is dual-faceted, generating growth in commodity sectors but also fostering deindustrialization, trade imbalances, and significant debt obligations linked to infrastructure financing. The conclusion weighs the net economic effect, questioning the long-term sustainability of this model for Latin American development and economic sovereignty.
The geopolitical map of the Americas has been largely defined by a single, powerful neighbor to the north. But a new, and profoundly different, player is steadily redrawing the lines of economic and political influence from the south upward. Different from other periods of changes in the region, this one is not accompanied by grand ideological declarations, but by something far more subtle and infrastructural. China's growing presence in the Americas is woven not through military alliances, but through ports, power grids, and promises of development. It is a presence that offers a tantalizing alternative to traditional partners, building bridges—both literal and figurative—that are reshaping the hemisphere's future, one loan and one trade deal at a time. How does this affect the region? Is China already the biggest trade partner?
The arrival of the new century
At the beginning of 2000, China's economic expansion has significantly transformed global trade dynamics in recent years. The nation's rapid industrial growth and insatiable demand for raw materials have turned its attention to resource-rich developing nations, particularly in Latin America. This economic relationship has proven largely beneficial for the region, creating both direct export opportunities and indirect improvements in trade conditions.
The Chinese market has emerged as a vital outlet for Latin American commodities, driven by China's limited arable land and booming industrial sector. By 2005, trade and investment flows between China and Latin America had already reached $50 billion, establishing China as a key economic partner. The relationship particularly favors countries specializing in raw material exports, as China remains a net importer of these goods.
Commodity trade statistics reveal dramatic growth patterns at the beginning of the new century: between 2000 and 2003, Brazilian exports to China surged by 500%, Argentina's by 360%, and Chile's by 240%. Even Mexico, primarily a manufacturer-exporter, recorded a remarkable 1000% increase in exports to China during this period. The trade composition shows heavy concentration in specific commodities soybeans dominate Brazil and Argentina's exports (accounting for 75% of Brazil's total exports to China), while Chile and Peru primarily export copper.
Latin America's strategic importance in global commodity markets aligns perfectly with China's needs, supplying 47% of the world's soybeans and 40% of global copper exports in 2005. This symbiotic relationship has positioned China as the fastest-growing export market for several Latin American nations. The trade surge reflects China's status as the world's leading consumer of key industrial materials, including copper, zinc, platinum, iron, and steel. In fact, China is becoming a global buyer of raw materials. In 2003 it was already the world’s largest importer of cotton, copper and soybeans and the fourth largest importer of oil.
Source: OECD. 2007. Development Centre Studies The Visible Hand of China in Latin America
Nowadays
Almost 20 years later, China has emerged as Latin America's second-largest trading partner after the United States, with bilateral trade reaching $430 billion surpassing the European Union's trade volume with the region. The Asian giant has also become Latin America's top sovereign creditor. Chinese infrastructure investments in the region have surpassed $100 billion, exceeding combined financing from the World Bank and Inter-American Development Bank, encompassing 200 energy and transportation projects (ports, airports, and railways) through state loans and direct corporate investments.
Between 2000-2022, Chinese investments across all productive sectors in Latin America totaled $300 billion. Trade growth has been particularly striking: from just $12 billion in 2000 to $430 billion in 2021. While the US remains the region's largest overall trading partner ($895 billion in 2021), this position depends heavily on trade with Mexico. Excluding Mexico, China's trade with Latin America has exceeded US-Latin America trade since 2018, currently standing 42% higher.
The trade relationship shows structural imbalances: Latin American countries export goods equivalent to 3.6% of their GDP to China while importing Chinese goods worth 4.8% of GDP, resulting in a 1.2% of GDP deficit. This trade gap widened during the COVID-19 pandemic as Chinese exports grew faster. The composition of trade reveals Latin America's commodity-dependent exports. China receives 14% of the region's total goods exports, comprising 34% of extractive resources (mining/oil) and 20% of agricultural products, with these shares steadily increasing over twenty years.
Direct Investment
From 2000 to 2021, Chinese companies established 305 new projects across Latin America, channeling $51 billion in investments and generating 344,000 jobs. While foreign direct investment nearly halted in 2020 during the pandemic, it rebounded in 2021, resuming its growth trajectory. During this same period, Chinese firms completed 219 acquisitions of Latin American assets, with these corporate purchases totaling $121 billion in investment value.
Brazil received the largest share (35%) of China's direct investments during these two decades, emerging as the primary beneficiary. Peru ranked second with 17% of investments, followed by Chile (12%), Mexico (10%), and Argentina (9%). This distribution reflects China's strategic focus on the region's resource-rich economies and key markets.
Source: CEU-CEFAS. 2023. China’s influence in Latin America
China has maintained substantial foreign direct investment (FDI) in Latin America over the past twenty years, even as overall investment flows have declined. The region now ranks as the second-largest destination for Chinese capital globally, trailing only Asia. While precise investment data remains challenging to verify, estimates place cumulative Chinese FDI in Latin America and the Caribbean (LAC) at $187.5 billion still significantly less than European or American investment volumes. For context, EU FDI stocks in LAC reached approximately $765 billion in 2022, according to European External Action Service figures.
Chinese investment averaged $14.2 billion annually from 2010 to 2019 before decreasing to $7.7 billion during 2020-2021 and $6.4 billion in 2022. Analysts at the Inter-American Dialogue suggest this decline reflects not waning interest but rather a strategic reorientation from large-scale infrastructure toward "new infrastructure" sectors like telecommunications, renewable energy, and critical raw materials production.
Approximately two-thirds of Chinese capital targets energy, mining, and raw materials extraction. Between 2015-2021, natural resources accounted for 46% of total Chinese FDI, with critical minerals projects representing 98% of mining investments. China's energy sector footprint is particularly notable in Brazil, Chinese firms operate over 300 power plants and control half of São Paulo's hydroelectric capacity, collectively representing 10% of national generation. Chinese companies similarly dominate 57% of Chile's electricity distribution market.
According to a 2025 Konrad-Adenauer-Stiftung study, China's two policy banks the China Development Bank and Export-Import Bank have provided $141 billion in loans to LAC since 2005, exceeding combined lending by the World Bank, IDB, and CAF Development Bank. This positions Latin America as the second-largest recipient (24%) of Chinese global financing after Asia (29%), ahead of Africa (23%). The data underscores China's growing financial influence across the region's strategic sectors.
A new partner, new horizons
The trading relationship between China and Latin America has evolved dramatically over the past few decades, transforming from a minor engagement to a central pillar of both regions' economies. This burgeoning partnership is characterized by significant opportunities and complex challenges.
The trade relationship is fundamentally complementary. Latin America, rich in natural resources, primarily exports commodities like iron ore, copper, crude oil, and agricultural products (e.g., soybeans and beef) to China. In return, China exports a wide range of manufactured goods, including machinery, electronics, and increasingly, motor vehicles and high-tech equipment.
This structure, however, creates a potential for a "resource-for-goods" dependency, which can hinder Latin American countries' efforts to develop their own value-added industries.
The heavy reliance on commodity exports makes Latin American economies vulnerable to fluctuations in global commodity prices, which are largely dictated by Chinese demand.
The influx of inexpensive, mass-produced Chinese goods can undercut and stifle the development of local manufacturing and other domestic industries.
In conclusion, the China-Latin America trading relationship is a powerful and multifaceted force that has profoundly impacted the region's economy and its place in the global order. While it offers undeniable opportunities for growth and diversification, it also presents significant challenges related to economic dependency, competition, and geopolitical alignment. The future of this relationship will depend on how Latin American nations manage these complexities and leverage their position to secure a more balanced and sustainable partnership.