As China has strategically expanded its investments in Latin America, it has solidified its position as a key economic player in the region. This growing influence has raised concerns among US officials, particularly over Beijing’s involvement in sensitive areas like space and surveillance.

With the Trump administration poised to confront China, US policies are shifting toward economic realignment through nearshoring and targeted investments. However, hardline immigration measures, punitive tariffs and imperialist rhetoric may alienate Latin American nations, deepening US-China rivalry and leaving the region to navigate a more polarised geopolitical landscape.

China’s engagement in Latin America has unfolded in distinct phases, beginning in the late 1990s with a focus on securing natural resources from Venezuela, Peru and Argentina. Initial efforts centred on energy and agricultural commodities, trade relations and markets for low-cost manufactured goods. Over time, China diversified its focus to sectors like high-speed rail, 5G infrastructure, data centres and power systems, aligning with its broader goals of technological advancement and industrial upgrading.

Economic engagement hinges on four pillars: trade, foreign direct investment (FDI), official lending and infrastructure development. China is now the region’s largest trading partner and the primary investor in countries like Brazil, Argentina and Peru. Projects such as Bogotá’s metro and Ecuador’s hydroelectric dams highlight the depth of China’s development finance which amounted to US$286.1 billion between 2020 and 2023. Chinese state-owned enterprises (SOEs) have also secured control over ports and facilities near critical trade routes like the Panama Canal and the Strait of Magellan, amplifying Beijing’s strategic influence.

Since 2015, China has shifted from broad lending to sector-specific investments in electric vehicles (EVs), batteries, digitalisation and artificial intelligence (AI), with companies like BYD planning to establish EV manufacturing plants in Brazil. Control over mining operations for critical minerals strengthens China’s position in the global energy transition, while its “strategic partnerships” with key regional actors reflect its diplomatic ambitions.

Two cargo ships enter the Miraflores Locks of the Panama Canal in Panama City, Panama, on 22 January 2025. (Martin Bernetti/AFP)

China’s pragmatic investments in infrastructure and trade have reshaped regional dynamics, filling gaps left by Western disengagement. Projects like the Chancay Port in Peru, connecting South America directly to Asia-Pacific markets, symbolise China’s transformative impact. Even sceptical leaders, such as Argentina’s President Javier Milei, have reoriented policies to engage with China.

However, challenges persist. China’s focus on extractive industries has led to economic re-primarisation, undermining industrial diversification. Concerns over monopolistic behaviours and debt dependency have sparked resistance, as seen in Brazil and Peru.

The evolving geopolitical landscape has brought US influence in Latin America into sharper focus, particularly as China continues to expand its footprint in the region. Concerns have been raised over China’s growing influence in sectors such as space cooperation, technological development, military ties and intelligence-gathering operations, while some US missteps have allowed China to capitalise on opportunities that may have otherwise gone to American partners.

1. US concerns and strategic sectors

One of the most pressing concerns for the US is China’s growing presence in Latin America’s strategic sectors, particularly in space and surveillance. China’s space collaborations with countries like Chile and Argentina have drawn scrutiny, especially with projects like the proposed observatory in Chile and the Espacio Lejano Station in Argentina, where military implications are suspected beneath the surface of civilian scientific cooperation. Additionally, the presence of Chinese spy bases in Cuba has heightened US fears about potential interception of military and space communications.

Chinese technology companies, including Huawei, ZTE, Dahua and Hikvision, have also made inroads into Latin American cities, providing surveillance equipment under the guise of law enforcement enhancement. These developments have sparked concerns regarding the security implications for US interests in the region, including the potential for espionage.

A worker walks next to a container at China’s state-owned COSCO Shipping Chancay port inaugurated during the APEC summit, in Chancay, Peru, in this handout image released on 14 November 2024. (APEC Peru/Handout via Reuters)

2. US missteps and missed opportunities

While China’s expanding role in Latin America is notable, it is essential to consider how US policies, both historical and recent, have contributed to the erosion of its influence in the region. Over time, the US’s patterns of interventionism, episodic neglect and a tendency to focus on border security rather than long-term economic partnerships have left gaps that China has successfully filled. Countries like Uruguay and Ecuador have turned toward China following a perceived lack of US responsiveness to their economic needs and unfulfilled trade agreements.

Some US policymakers, including Secretary of State Marco Rubio, have raised concerns over China’s growing presence in the region, warning that Latin America risks being absorbed into a “private political-economic bloc” under Chinese influence. However, it is important to recognise that not all Chinese engagements are inherently detrimental. When PRC-based companies are selected and supervised through transparent transactions, they can, and they have contributed positively to commercial growth and infrastructure development in the region.

Despite Beijing’s significant inroads, not all developments have played in China’s favour. For example, Brazil has resisted formally joining China’s Belt and Road Initiative, citing dissatisfaction with limited reciprocal market access. Furthermore, China’s infrastructure investments in Latin America have often focused on extractive industries and export channels directly tied to China, overlooking broader regional connectivity needs, which has generated some discontent within the region.

Despite the growing awareness of China’s influence, the US has been criticised for not maintaining a consistent, proactive presence in the region. As noted by retired General Laura Richardson, former head of US Southern Command, “We are the partner of choice, but we’re not always there at the right time.” This highlights the timing and execution issues in US diplomatic and economic engagement.

3. Strategic shifts and existing frameworks

Despite these challenges, the US retains several key tools that could help it rebuild its standing in Latin America. Frameworks like the Americas Partnership for Economic Prosperity, which focuses on supply chain resilience, digital connectivity and semiconductor collaboration, are already in place to foster closer ties. Notably, initiatives like the Americas Partnership Semiconductor Symposium, which brings together countries such as Mexico, Costa Rica and Panama, are examples of growing US involvement in regional economic development.

Semiconductor chips are seen on a printed circuit board in this illustration picture taken on 17 February 2023. (Florence Lo/Illustration/Reuters)

Additionally, US investments through the International Development Finance Corporation (DFC) are substantial, with over US$11 billion committed to projects such as Brazil’s critical mineral extraction and Ecuador’s environmental conservation efforts. These projects contribute to the US’s broader economic and diplomatic engagement in the region.

The incoming Trump administration appears poised to bring heightened attention to Latin America, with its leadership team featuring individuals whose expertise and connections suggest a strategic focus on the region. Key appointments such as Marco Rubio as secretary of state, former ambassador to Mexico Christopher Landau as his deputy, and Mauricio Claver-Carone as a special envoy, signals an unprecedented concentration of Latin America specialists in top positions. Many regional leaders may welcome this level of attention, particularly as it underscores the region’s growing geopolitical significance.

However, this renewed focus on Latin America is shaped by a leadership style that emphasises transactional deal-making, personalistic decision-making, and a confrontational posture, heavily influenced by “China hawks” occupying key roles. While the administration’s emphasis on countering Beijing’s growing influence might resonate with some regional governments, its punitive measures and imperialist overtones could alienate others. The aggressive rhetoric, coupled with a reduced emphasis on multilateral cooperation, risks framing Latin America not as a partner but as a theatre for great-power rivalry.

1. Reasserting influence: nearshoring vs China’s development model

A cornerstone of the administration’s strategy appears to be economic realignment through nearshoring initiatives, designed to reduce regional reliance on China. Claver-Carone’s advocacy for bilateral agreements with “friendly” governments reflects a desire to counter China’s Belt and Road investments with targeted US partnerships, offering alternative pathways for infrastructure and industrial development.

Mexico’s President Claudia Sheinbaum speaks during her daily conference at the National Palace in Mexico City on 8 January 2025. Sheinbaum said that the US should be called “Mexican America”, in response to Trump’s proposal to rename the Gulf of Mexico the “Gulf of America”. (Alfredo Estrella/AFP)

However, this approach risks falling short of addressing the region’s broader development needs. China’s appeal in Latin America has largely stemmed from its emphasis on infrastructure financing, trade, and no-strings-attached economic support — elements that resonate with governments seeking tangible, near-term growth. If Trump’s policies fail to offer a compelling alternative that matches Beijing’s scope or flexibility, the US risks ceding further ground to China despite its heightened focus on the region.

2. Impact of imperialist posturing: strained regional relationships

During his inaugural address, President Trump revived the 19th century expansionist doctrine of “Manifest Destiny”, proclaiming the US was destined to expand territorially. He reiterated controversial aspirations, including acquiring the Panama Canal and renaming the Gulf of Mexico — claims promptly rejected by Panama. His dismissive comment when asked about US relations with Latin America, stating, “we don’t need them, they need us” is unlikely to foster goodwill or cooperation in the region.

Among the flurry of executive actions signed on his first day in office was a measure to designate certain drug cartels as terrorist organisations, signalling a securitisation of migration policy and paving the way for mass deportations. While some Latin American leaders have reaffirmed their willingness to work with the new US administration, others bristled at his rhetoric and policies.

Trump’s confrontational rhetoric and punitive policies could undermine efforts to strengthen ties with Latin American nations. Harsh immigration measures, dehumanising narratives, and a security-focused lens on the region risk alienating key partners, even among conservative governments wary of Chinese influence. Countries such as Mexico and Colombia, crucial allies in the US’s hemispheric strategy, may become increasingly reluctant to align fully with Washington if their collaboration is framed as subservience to US strategic interests rather than mutual benefit.

Left-leaning governments, including those in Cuba, Venezuela and Nicaragua, are particularly likely to deepen ties with China in response to heightened US scrutiny and sanctions. Beijing’s emphasis on non-interference and economic cooperation provides a stark contrast to Washington’s confrontational tone, potentially solidifying China’s role as an indispensable partner for these regimes.

3. Escalating US-China rivalry: risk of regional polarisation

Trump’s policies could further entrench the region into a polarised landscape defined by US-China rivalry. While the administration may aim to limit Beijing’s encroachment, an overly aggressive approach risks alienating governments that prefer to balance relations with both powers. Many Latin American countries value China as a critical trade partner and investor, even as they seek to maintain strong ties with the US. If forced into a binary choice, some nations may lean more heavily toward Beijing, especially if US policies appear coercive or dismissive of local priorities.

A woman gestures as people wait for US President Donald Trump, on the day Trump attends an event about the economy at the Circa Resort and Casino, in Las Vegas, Nevada, US, on 25 January 2025. (Leah Millis/Reuters)

This dynamic could also exacerbate intra-regional disparities, with “friendly” nations benefitting from US support while others are marginalised. Such an outcome would undermine the region’s stability and foster resentment toward Washington’s approach, potentially driving a greater number of governments toward China’s more inclusive, development-focused partnerships.

China’s influence in Latin America has surged in recent years, capitalising on US benign neglect and missteps, offering both opportunities and challenges for regional counterparts. Now, the Trump administration appears ready to re-engage, motivated by concerns over Beijing’s rising role. However, a policy approach that combines confrontational rhetoric with divisive measures may not only alienate regional partners but also entrench China’s position further, intensifying US-China competition in Latin America and deepening its polarisation, which could have detrimental effects on regional development and stability.

Original article: thinkchina.sg