Over the past two decades, China has firmly established itself as a major player in Latin America's economic landscape. From strategic investments in infrastructure to energy and telecommunications, the region has become a crucial hub for Chinese interests. With projects spanning across multiple nations, Beijing's presence is reshaping the geopolitical dynamics of the area.

Peru: The gateway to Asia
China's relationship with Peru has grown significantly, with accumulated investments surpassing $31bn since 1992. A Free Trade Agreement signed in 2010 fuelled further collaboration, particularly in the mining and infrastructure sectors. Peru, a global powerhouse in copper and zinc production, has attracted Chinese capital keen on securing vital raw materials for its industries. This growing relationship has led to the construction of major projects, such as the Chancay Megaport, a joint venture between Peru’s Volcan and China’s Cosco Shipping.

The huge seaport, located just 80 km north of Lima, is a crucial element of China's trade ambitions. Once operational, it will cut shipping times between Peru and China by 15 days, making it a pivotal hub for direct trade with Asia. The project, expected to be completed by late 2024 at a cost of about $3.6bn, will be one of the largest on the Pacific coast, significantly enhancing Peru’s logistical capacity and boosting economic growth. Yet, there are concerns about the environmental and social impacts, with several controversies emerging during the port’s construction.

Colombia's multi-vector policy
Colombia has also been strengthening its ties with China. Following a visit by President Gustavo Petro in 2023, Bogota has been exploring potential integration into China's Belt and Road Initiative (BRI), a global infrastructure project aimed at enhancing connectivity. While negotiations are still in progress, Colombia’s interest highlights its desire to attract Chinese funding into key sectors such as clean energy, telecommunications, and transportation.

Chinese investments in the country have seen a sharp increase in recent years, with major firms participating in high-profile projects like the Bogotá Metro, a $4.5bn endeavour led by Chinese companies. This is one of many initiatives that mark Colombia’s growing role in China’s strategic expansion across the region. However, there are concerns about becoming overly dependent on Beijing, as the nation carefully balances its multi-vector foreign policy while fostering economic growth.

Argentina’s dams stuck in political limbo
The Jorge Cepernic and Néstor Kirchner dams in Santa Cruz have been stalled since December 2023, costing Argentina $3.5mn daily. The construction, initiated by the government of former president Cristina Fernández de Kirchner, is financed through a $4.7bn loan from a consortium of Chinese banks, including the China Development Bank, the Industrial and Commercial Bank of China (ICBC), and the Bank of China. So far, $1.85mn has been disbursed, with $800mn still available to reactivate the project. However, work remains frozen due to political delays in securing the next instalment.

Managed by a joint venture led by China’s Gezhouba (54%) and Argentina’s Eling Energía (36%), the dams are currently 42% and 20% complete. With no new funds arriving in 2023, the project risks facing financial penalties and further delays if the government of President Javier Milei does not request additional funding from China soon.

In the latest twist earlier this month, Milei, a self-described "anarcho-capitalist" strongly opposed to Kirchner's Peronist policies, made a significant pivot in his stance towards Beijing, describing the Asian giant as a "very interesting trading partner" and announcing plans to visit in January. This marks a stark departure from his previous rhetoric, where he had vowed never to trade with China due to its communist government.

Bolivia's lithium goldmine
Bolivia has strengthened its economic ties with China, particularly in the lithium sector, which is crucial for the global push towards renewable energy and electric vehicle production. With the largest lithium reserves in the world, Bolivia is strategically positioned to become a key supplier for Chinese manufacturers looking to secure materials for battery production. 

In 2021, Bolivia signed a landmark agreement with Chinese firm Sinovac, aiming to develop its lithium resources while establishing a lithium-ion battery industry domestically. This partnership is part of a broader trend, with Chinese investments in infrastructure, energy, and mining sectors in Bolivia reaching approximately $6bn. 

However, this influx of Chinese capital has sparked concerns over environmental degradation and the rights of local communities. Critics argue that while such investments could boost Bolivia’s economy, they must be managed carefully to ensure that resource extraction does not come at the expense of the nation's rich biodiversity and the well-being of its indigenous populations.

A broader regional trend
China’s influence isn't confined to Peru, Argentina, Colombia and Bolivia. Across Latin America, over 20 countries have already joined the Belt and Road Initiative, highlighting the widespread impact of Beijing’s financial muscle. Chinese companies have steadily increased their footprint in sectors like mining, energy, and infrastructure. In Colombia alone, there are more than 80 Chinese firms operating, driving forward vital projects that align with local development goals. The rise of brands like Huawei, DiDi, and BYD in the region is a testament to the Asian giant's robust economic strategy.

Yet, with the influx of Chinese capital comes growing unease. Many countries, including the United States, have expressed concern about China’s control over strategic assets in Latin America, such as ports, energy grids, and transport networks. The West accuses China of pursuing a policy of "debt-trap diplomacy," entangling developing nations in unsustainable loans with the aim of seizing the assets when they become insolvent. The Chancay Megaport, for example, has caught the attention of US policymakers, who see it as part of a broader strategy by Beijing to assert its influence in the Western Hemisphere.

Opportunities and challenges ahead
The future of China-Latin America relations holds immense potential, particularly in emerging sectors like renewable energy and the digital economy. Chinese companies bring advanced technologies and financial backing to a region in need of development, particularly in infrastructure. However, the risks of over-reliance on Chinese capital are significant, as countries may find themselves vulnerable to economic or political blackmail.

Latin American nations must cautiously navigate this complex relationship, balancing enticing economic opportunities with sovereignty and strategic independence. While China’s presence is likely to continue growing, the region will need to ensure that the benefits of these investments are equitably distributed and sustainable in the long term.