Is the US losing its influence to China across Latin America?

14 mins read
Is the US losing its influence to China across Latin America?

Washington has long considered Latin America as its backyard, but the region has slowly moved out of the US orbit, solidifying its ties with the rising China.

Murat Sofuoglu
Murat Sofuoglu is a staff writer at TRT World.

South America, unlike North America, has gained a reputation for being home to many festering conflicts where unstable governments have repeatedly been disrupted by US-backed meddling and military coups. The chronic inequality and disorganised, corruption-ridden economy has empowered leftist groups with an ardent anti-American outlook. 

While the US currently wants to develop better ties with the region, its aggressive and interventionist policies have left some indelible marks on the public memory across the region. The growing disillusionment and disgruntlement with the US caused by these interventions has allowed China to increase its influence across Latin America.  

During the recent Americas summit, which was held in Los Angeles for the first time after nearly three decades, there were clear signs of US power having significantly diminished. Four Latin American countries including Mexico boycotted the summit, citing the fact that Washington refused to invite Cuba, Nicaragua and Venezuela — three outlier countries led by anti-American leftist governments.

“In terms of economic or diplomatic soft power, US power in Latin America is waning in relative terms. There remains a high degree of solidarity among Latin American and Caribbean nations that pushes back against US policy when it sows divisions,” says Alexander Moldovan, a researcher on social movements and security in Latin America at York University, referring to the summit boycotting of Honduras, El Salvador, Bolivia and Mexico. 

Moldovan believes that these countries are attempting to structurally reorient their trade policies towards Asia and implicitly away from the West, favouring countries like China, the world’s second-largest economy. 

President Joe Biden hosted the Summit of the Americas in Los Angeles. He did not invite Cuba, Nicaragua and Venezuela, leading to countries like Mexico to boycott the meeting.

“The Latin American diplomatic push-back against over 100 years of US meddling remains a feature of foreign policy in the region at the same time as there are explicit pivots to China in search for investment and trade opportunities,” he tells TRT World

“There can be no Americas Summit if all the countries of the American continent do not participate,” said Andreas Manuel López Obrado, the Mexican president, in reaction to the US’ exclusion of some Latin American countries for the summit. In May, when Lopez Obrado visited Cuba, a communist state, he infuriated US leadership. While Mexico is a US ally and Washington’s biggest trading partner in the region, the country appears to be increasingly alienated from Washington.

But Luz Piedad Caicedo, deputy director of Corporacion Humanas, a Colombian human rights group, believes that the influence of the US in Latin America remains very strong.

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“Despite the fact that some countries refused to attend the Summit of the Americas due to the US veto against Cuba, Nicaragua and Venezuela, the vast majority of States attended,” Caicedo tells TRT World

On the other hand, she points out that “China has made huge economic investments in Latin America, many of them in infrastructure,” adding that Chinese influence across Latin America is mostly economic, “not political.”

But that’s a typical Chinese conduct because Beijing’s foreign policy is based on using its financial strength as a soft-power instrument to develop better economic and political ties with other countries. 

People walk past a stand that sells toys and other products imported from China at Central Market in Lima, Peru.

Chinese investments

In the last two decades, China has heavily invested in Latin America, making the region the second-largest recipient of Beijing’s direct investment following Asia. As a result, China has become South America’s biggest trading partner, persuading more than 20 countries in the region to join its trademark Belt and Road Project, a global transportation initiative. 

China has even figured in Mexico, a neighbour to the US, which has exerted much influence over Mexico City for a long time, making itself the second-biggest trade partner for Latin America as a whole. “Despite these Chinese investments, trade between the US and Latin America is very important,” says Caicedo. 

Latin America as a geography includes all non-English-speaking countries, while South America refers to countries in the region except Mexico and Central American nations. 

“Chinese economic involvement in South America has never been stronger. Chinese investment in the region grew from $12-billion in 2000 to $315-billion in 2020. These investments are rooted in the extractive sectors of the economy with special attention to petroleum and strategic minerals like lithium,” says Moldovan. 

Latin America is rich in various metals, holding the world’s biggest reserves of lithium. Minerals like lithium are crucial to run the 21st-century economy, which is largely dependent on energy resources. As a result, there is a great power rivalry for access to reserves of those minerals and Latin America is one of the regions where strategic competition is fierce, particularly between the US and China. 

In 2018, China's President Xi Jinping visited Panama, marking the country’s expansion in Latin America to build ports and other trade-related facilities and stirring the US anxiety.

“The US has not been able to effectively curb Latin American enthusiasm for Chinese investments in a way that it has been able to do elsewhere,” says Moldovan. While US allies like New Zealand, Australia and Canada ban Huawei from 5G development, no such actions have taken place on a national scale in US-friendly countries like Mexico or Colombia, despite pressure from the US. 

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“At the same time, when the US moves to isolate a government that it does not think is friendly enough (Cuba or Venezuela), Chinese investors are happy to step into these captive markets to make deals. Simply put, China is edging out the US in terms of investment and there is nothing really the US is doing about it,” the researcher says. 

China’s construction of dozens of ports across the region from Argentina to Mexico have also raised concerns in Washington. Even in countries like Panama, a country whose former president Manuel Noriega was ousted by a US military operation in 1989, China’s growing influence makes many American decision-makers worried.

The US has long exerted a strong influence over Panama, where the American army built the Panama Canal, connecting the Pacific Ocean to the Atlantic. The US had controlled the strategic waterway from 1913 to 1999, when Washington handed control over Panama. 

But now in places like Colon, a city near the Panama Canal where the US built a free-trade zone in the 1940s, Chinese firms dominate the Colon Free Trade Zone (ZLC) — not US companies. “China accounts for the largest share of imports that come into the zone, 40 percent of the total,” Giovanni Ferrari, manager of the ZLC, told Time last year. 

Is US soft power declining? 

Despite China’s rising status across Latin America, Debora Thome, a Brazilian writer and academic at Brazil’s Universidade Federal Fluminense (UFF), still believes that the US soft power is not diminishing across the region: “On soft power, not at all,” she tells TRT World

While Brazil’s far-right President Jair Bolsonaro, a pro-Trump politician, does not like Joe Biden much, he has aggressively lobbied to have a half-hour conversation with the US President, signalling how much Washington matters for a country like Brazil, South America’s largest country. 

“I got three hours with Putin!”said Bolsonaro, referring to the value of 30 minutes with Biden. But even Bolsonaro, who ran an anti-China election campaign, reversed his political course “when faced with the stark reality that China is the destination for almost 30 percent of Brazilian exports,” according to Moldovan.

China is now the most important market for exports from Brazil, alongside Chile, Peru, Cuba and Uruguay. As an example, the biggest buyer of Brazil’s soybean crop exports is China. “It’s just more profitable to sell here than anywhere else,” said Paulo Estivallet, Brazil’s ambassador to China in 2021. 

China’s political positions, which diplomatically support sovereignty, are liked by both right-wing populists like Bolsonaro and left-wing leaders like Cuba’s Miguel Diaz-Canel, facilitating Beijing’s access to countries, which have become tired of “the history of gun-boat diplomacy” that overshadows US and European influence in the region, according to Moldovan. 

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“Thus, from an economic and diplomatic standpoint, China has been able to make never-before-seen gains in a region that the US has ‘claimed’ as its ‘backyard’ for well over 100 years,” says the political analyst. 

Under fast-changing political and economic conditions, which favour a multipolar world order rather than superpower domination, many Latin American countries want to follow an independent path. “In this globalised world, we don’t want to be any country’s backyard,” said Sixto Pereira, an anti-American Paraguay senator, who advocates more ties with China. 

But if Latin American countries are pushed hard by Washington, they might even choose China over the US, according to experts from the region. 

US hard power

Despite US economic setbacks in Latin America, Washington remains the region’s most powerful military with many bases across countries like Colombia. China has no military bases across Latin America and has never invaded or colonised any countries in the region in the past. 

But US military interventions in the region have a long history dating back to the 18th century, making the US hard power “so unpopular that when it happens in one country it sends shock waves of anti-Americanism throughout the region,” Moldovan views. 

As a result, assessing US hard power in Latin America is “more complex,” says Moldovan. Anti-imperialist and anti-American socialist movements across the region from Brazil to Chile and Bolivia are very active, keeping left-wing governments in power in countries like Cuba, Nicaragua and Venezuela for many years. 

“An entrenched American military influence is not likely to go anywhere soon, but any US adventurism in Latin America is likely to have adverse effects on US influence in the region,” says Moldovan. 

But Moldovan also thinks that this great power competition between the US and China will not evolve to include a military dimension, according to the Latin America expert. 

“The US is likely to retain regional military hegemony. However, Latin American calls for a multipolar world order have been present since the early 2000s and Chinese foreign policy makers are keen to nurture this sentiment,” says Moldovan. 

“In this respect, we can expect to see closer diplomatic cooperation between China and Latin American countries in multilateral forums, like the United Nations Security Council, to curb US influence in the region.” 

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p dir=”ltr”>Source: TRT World

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