How China Reaches Out to Latin America
China's Influence in Latin America Grows Rapidly. Beijing is now the second largest trading partner, after the superpower USA. Beijing buys stakes in energy and infrastructure, builds massive ports and roads in previously hard-to-reach regions. This benefits not only the People's Republic.
Great Wall Motor (GWM), Chery and Shacman - these Chinese automakers are hardly known to a few people here. But in Latin America, it's a different story: Chinese cars are common on the roads there. In Mexico, one out of every third vehicle is produced by Chinese manufacturers. Currently, around 20 Chinese automakers sell their vehicles there. Some, like Foton, JAC Motors, and Shacman, even produce locally.
Chinese electric cars dominate the market in Brazil. GWM has taken over Mercedes' factory in São Paulo and now produces Chinese hybrid cars instead of the C-Class, with a goal of producing 20,000 units per year. In the northeastern part of the country, China's largest electric vehicle manufacturer, BYD (Build your Dreams), has bought the abandoned Ford factory and plans to build 150,000 electric vehicles per year starting next year.
The advantages of Chinese-made cars: they are cheaper than others. Just like with smartphones, computers, clothing, and other items, the Chinese can flood the global market with relatively inexpensive products. They dominate markets where people have less money.
Solar Panels, Electric Cars, Ports
Their products to sell is one of China's main interests in Latin America. "Over the decades, China has established itself with its own brands and products, most notably solar panels and electric vehicles," says Sinologist and political scientist Benjamin Creutzfeldt in the ntv-Podcast "Wieder was gelernt." China has established itself over the decades with its own brands and products.
The new Silk Road has already reached Latin America. For the largest economies of Brazil, Mexico, and Argentina, China is one of the most important trading partners and investors, writes Creutzfeldt in a recent study on the topic.
Trade between the continents has been going on for centuries, but it really took off at the turn of the millennium. China is still seen as the "New Kid on the Block," but its influence is growing rapidly.
The People's Republic is now the second largest trading partner and one of the major investors in Latin America. Exports and imports have grown from $12.5 billion in US dollars in 2000 to nearly $450 billion in 2021. The World Economic Forum predicts that trade will double in the next few years.
Lithium? "They are poisoning our population"
Latin America is not just a sales market for China but also a raw material supplier. "They want to secure their energy and food security, those are the two priorities of the Chinese government, and this is being pursued very aggressively," says the Sinologist. The Latin American countries sit on many natural resources: large quantities of copper, iron, oil, and lithium lie dormant there, as well as foodstuffs like beef, salmon, and soybeans, which China buys there.
China needs lithium urgently for the batteries of its electric cars. Chinese companies invest billions in Latin American countries to secure access to these resources. China has been pursuing this strategy in Africa for years. By 2025, China could control around one-third of global lithium supply through this approach.
The largest Lithium deposits are located between Bolivia, Argentina, and Chile - the Lithium Triangle. In the Atacama Desert, over half of the global reserves lie. China has acquired an Argentinean company that holds the rights to mine two Lithium salt lakes in Argentina. In Chile, China owns stakes in the world's second-largest Lithium producer. Additionally, a Chinese mining company is permitted to mine Lithium there.
The extraction of Lithium is harmful to the environment: To obtain Lithium, large amounts of water are required. This endangers the water reserves in the countries of the Lithium Triangle. The water could also become salinized. "They are polluting the salt lakes, destroying the desert, the valleys, and poisoning our population," explains Indigenous leader Willy Suvelza to ntv.
Mega-Railway through the Rainforest
Creutzfeldt sees China's influence in Latin America not only negatively. He has lived there for many years and tells in the podcast that improvements have occurred primarily in the infrastructure sector due to China's investments. The Chinese state has the money and technology for the expensive road and rail construction. China also benefits from this itself. Regions become more accessible and reachable. "Many of the problems in various parts of Latin America, such as inadequate education, inadequate healthcare, or limited access to markets, are due to the lack of paved roads and railways,"
In Mexico, a Chinese company is involved in the construction of the Mega-Railway line "Tren Maya" through the Southeast - approximately 1500 kilometers through the jungle. In Bogota, Colombia's 10-million-inhabitant capital city, traffic chaos reigns due to the lack of public transportation, reports the expert: "The Chinese are the first to build an S-Bahn there now."
Road through the Darien Gap "could change everything"
One of the world's most dangerous refugee routes could soon become safer with China's help. The Darien Gap is a roughly 100-kilometer-wide strip of land between Central and South America, mostly rainforest. Rapid rivers, wild animals, and armed groups prevent asylum seekers from crossing: Last year, over 500,000 people fled from Colombia to Panama - on their way to the USA. More and more Chinese refugees are among them.
In the jungle, a highway is to connect the two countries and close the gap in the Pan-American Highway. However, this road section has not been completed for decades.
This is changing with China. In Panama, heavy machinery is making its way through the jungle, workers are felled trees, and in Yaviza, a steel and concrete bridge is being built over the Rio Chucunaque. It could extend the highway further to the south, reports the American TV network CBN. The bridge is so large that an armored column could cross it.
"They say this road only leads to a few villages on the other side. Given the size of the bridge, it looks as if there are other plans in the future. This could change everything, economically, politically, and in terms of migration in the western hemisphere," reports the CBN reporter. Environmentalists are reportedly upset about the road construction in the rainforest, but everyone benefits from the infrastructure.
A fast road through the Darien Gap would be an alternative trade - but also a refugee route. The USA fears that more migrants from South America will come if it is ever completed. That doesn't matter to China.
## Megaharbor on Peru's Coast
China is involved in many other projects such as power grids, nuclear power plants, and harbors around the world. In Peru, the state-owned Cosco Corporation is currently building the largest harbor on South America's Pacific Coast, north of the capital Lima. Goods such as raw materials can be transported directly between Peru and China from "Megapuerto de Chancay," the Megaharbor. The Lithium Triangle is also within its reach.
The United States have concerns that the harbor may also be used militarily. "The United States are worried that China is gaining too much influence because it is building a dam in Ecuador or a harbor in Peru. I consider most of these concerns unjustified," assesses Creutzfeldt the situation. "The Peruvians need a larger harbor to be better connected to world markets."
Controversial Point: Taiwan
The proximity to Latin America also has political significance for the People's Republic, primarily concerning the recognition of the One-China Policy. China views Taiwan as part of China and not as an independent country. In the past "25 years," several Latin American countries have shifted their allegiance from Taiwan to China. Currently, only Guatemala and Paraguay maintain diplomatic relations with Taiwan. "This is a clear shift in Beijing's influence in the region," says the political scientist in the podcast.
Over 20 Latin American countries want to join China's new Silk Road, including Peru, Chile, and Argentina. The People's Republic is also courting support for initiatives like the United Nations. "The more governments it has on its side, the easier it can push through certain international initiatives. It has also created its own forums, like BRICS, where it plays a prominent role, or the Belt and Road Initiative (BRI). These are all strategies that serve multiple purposes, including the exclusion of Taiwan."
China's footprint in Latin America is growing. At the same time, the good relationship with China is beginning to show cracks: China's economic ties with Latin America primarily benefit Beijing itself - smaller Latin American countries are affected more than larger ones, according to the expert. Brazil, Argentina, and Chile have their own strategy. Many are critical of China flooding Latin America with cheap goods. Brazil is taking concrete action against cheap clothing from the Far East: Anyone ordering abroad will have to pay a 20% tax in the future.
- Argentina, alongside Brazil and Mexico, considers China to be one of its most significant trading partners and investors, as mentioned by Sinologist Benjamin Creutzfeldt in a recent study.
- The United Nations has seen increasing involvement from the BRICS Countries, including China, pushing for international initiatives with the support of numerous Latin American governments.
- In the electric car market, Chinese manufacturers, such as GWM and BYD, have gained considerable ground in Brazil and plans to produce thousands of electric vehicles annually.
- Chile, a crucial country in the Lithium Triangle, has seen significant investments from Chinese companies, which aim to secure access to this crucial raw material.
- The USA has expressed concerns about China's increasing influence in Latin America, with its dam construction in Ecuador and harbor construction in Peru, but most experts view these concerns as unjustified.
- In the realm of business relationships, several Latin American countries have shifted their allegiance from Taiwan to China, marking a shift in Beijing's influence in the region.
- Brazil, attempting to combat the influx of cheap goods from China, has implemented a 20% tax on imported clothing, demonstrating growing criticism towards Chinese economic ties.
- South American countries, including Peru and Argentina, have expressed interest in joining China's new Silk Road, as it could open up new opportunities for export and trade in raw material oil, copper, and other resources.
