WHAT APEC AND G20 UNCOVERED

The recently concluded APEC and G20 Summits, and developments on their sidelines, were a metaphor for the power realignment in a region once characterised as America’s backyard. The optics and outcomes of the diplomatic gatherings in Peru and Brazil reveal how China’s regional engagement is outmanoeuvring US involvement in Latin America.

Overshadowing the APEC Summit, China’s strategically-timed inaugural of the Chancay Port has left the US looking less involved in the region than it perhaps should. Even the Biden-Xi meeting foreshadows the uncertain future of US engagement; the Trump presidency is likely to be relatively less involved in South and Central America, or worse, negatively predisposed to the region. With America poised to pursue an ‘America First’ policy at home under Trump, China is steadily advancing its mineral and food security interests in the region, edging out the US in South and Central America. Emerging from the APEC and G20 Summits, China increasingly looks the safer bet for a stable partnership to a region facing uncertain times. 

All That Glitters Isn’t Gold

The inaugural of the Chancay port in Peru, with the capacity to handle 1 million TEUs annually and cut shipping time to China by 12 days, hints at Beijing’s economic stratagem for Latin America. With US tariffs looming, Beijing is fortifying supply chains for critical technologies by building infrastructure to transfer South and Central America’s mineral and agricultural raw materials back to its processing facilities and factories in the Chinese mainland. With investments accounting for 34 percent of LAC’s mineral exports in 2023, China is positioned as a vital mineral trade and investment partner for countries. 

For instance, the China-owned mines of Las Bambas, Toromocho and Maracona in Peru are sources for vital inputs in the development of advanced technologies like semiconductors. Around 70% of China’s imports from Peru were copper ore, iron ore and zinc, and China controls around 30% of Peru’s mining portfolio and seven of its largest mines. Mineral security concerns motivate Beijing’s engagement in Chile as well, where nearly 70% (25 billion USD) of exports to China are copper and iron ore. China is moving fast in the Lithium Triangle of South American countries Argentina, Bolivia and Chile to secure access to rare earths minerals as well. With investments by companies like Ganfeng and Zijin Mining in the Centenario-Ratones and Pastos Grandes mines, China alone accounts for 43% of lithium exports from Argentina. In Bolivia, Chinese battery manufacturer CATL invested 1.4 billion USD to extract lithium from the Uyuni and Oruro salt flats and in Brazil, China Molybendnum acquired mines in that give Beijing control of over 10% of global columbite production. It isn’t just to feed its advanced technology ambitions that Beijing is invested heavily in the region; food security concerns feature prominently in Beijing’s strategy for the region.

Food security is a strategic priority for China. Given its status as the world’s biggest food importer (soybean, corn, rice, sorghum, beef, pork etc) and vulnerability to tariffs on agricultural imports from the US, China has identified countries in Latin America to support robust agriculture supply chains. While headlines about China’s land grabs or purchases in Latin America may have exaggerated the nature of engagement, Beijing’s imports and investments are establishing strong partnerships with countries like Brazil and Argentina. Brazil overtook the US in 2023 as China’s largest supplier of soybeans, and is the largest supplier of corn, beef, pork and chicken to China. Through mergers and acquisitions, China has also secured access to supply chains of agricultural exporters of major companies like Noble and Nidera in Argentina and Fiagril and Belagricola in Brazil. Beijing is also leveraging the Food Silk Road to establish channels to import agricultural products from the region. Moreover, with the Amazon region opening up for resource extraction, China is building trade facilitation infrastructure, like the Chancay port, to expedite and expand resource exports.

The Influence of Infrastructure

Latin American countries are increasingly looking to China for investments in infrastructure. From highways and dams in the Amazon region to metro lines in capital cities, hundreds of Chinese infrastructure projects in Latin America are positioning Beijing as a primary development partner. China’s infrastructure investments have steadily increased to 46 billion USD in 2020-2023, compared to 37.2 billion USD in 2016-2019 and 14.2 billion USD from 2012-2015. Most development finance projects were focused on the transportation sector and undertaken by state-owned enterprises, reinforcing Beijing’s objective of securing supply chains for vital resources like minerals and agricultural products. Equally importantly, they have cultivated goodwill and influence among the ruling elites of Latin America in favour of Beijing. 

The inauguration of Chancay offered a stark contrast between China and US’s engagement in the region, demonstrating how Beijing is endearing itself to elites. While China inaugurated a multi-billion-dollar port, the US government’s provision of helicopters for an anti-drug program and donation of second-hand trains for the Lima metro system appears miniscule. In Brazil too, for the G20, Xi Jinping discussed multi-billion-dollar investments while Biden announced a 50 million USD donation to a conservation fund. The enthusiasm for China’s engagement and lukewarm interest in USs’ offering was reflected in the optics at APEC and G20. With America’s initiatives for economic development in the region, like the Americas Partnership for Economic Prosperity, failing to produce any major outcomes, China has been guaranteed a wide berth to expand its foreign policy interests.

Foreign Policy Implications

The symbolic significance of China’s economic engagement eclipsing the US’s involvement in its immediate periphery was apparent at the diplomatic gatherings of APEC and G20. Chinese foreign policy is poised to make further gains by leveraging its economic investments in the region. So far, investing heavily in countries willing to sever diplomatic relations with Taiwan has yielded results. Since 2017, five LAC countries ended their formal recognition of Taiwan, establishing diplomatic relations with China, most recently Honduras in March 2023. LAC countries are increasingly willing to align with China’s position on Taiwan; Peru even placed roadblocks to Taiwan’s participation at APEC meetings. With an unofficial embargo on investments to Taiwan’s remaining allies like Paraguay and Guatemala, China is gradually eroding support for Taiwan in Latin America and furthering its One-China policy interests. 

China diplomatic standing also benefits from Latin American countries’ stake in the Global South. With countries in the region expressing their preference for China as a development partner and actively endorsing the Global Development Initiative, Global Security Initiative and Global Civilisation Initiative, Beijing’s international image and initiatives are gaining currency. For instance, Brazil’s and China’s Ukraine-Russia peace plan highlights the region’s partnership with China on development and security issues. 

At the national level, the Chinese Communist Party has established linkages with various regional communist parties through the China-CELAC Political Parties Forum, increasing engagement with 27 parties in 2015 to more than 100 in 2021. Beijing is also building linkages in the defence sector by providing professional military education and training for Latin American military officials in China. By deepening linkages with Latin America, Chinese foreign policy has advanced its interests in the region and is strengthening support for its international image and initiatives. 

With the arrival of the Trump administration, the gap between US and China’s engagement in South and Central America is expected to widen. Beijing is likely to take advantage of Washington’s receding engagement, leverage the region for supply chain security and cultivate greater influence with regional elites. Although some US military officials have warned that China is “on the 20-yard line”, referring to the proximity of China-owned and controlled ports to the US mainland, the real danger to the US lies in playing catch up with China in its own immediate neighbourhood.