By: Charlotte Sparling
Latin America and the Caribbean (LAC) region are crucial regional trading partners with the United States. Beyond their geographic proximity, these countries share economic interests and security concerns. Therefore, it is crucial to have strong relationships as instability concerns in LAC often impact the United States.
As such, US Congressional members have sought to strengthen relations with LAC. However, the US is not alone in its interest in the region. China has increasingly inserted itself as a major player.
Following the Venezuelan elections, which were widely viewed as fraudulent, President Xi Jinping of China was among the first to congratulate Nicolas Maduro on his victory. Instances like these concern the United States that China’s presence in the region is a stability concern.
Currently, the United States provides roughly 31% of LAC merchandise imports and 16% of foreign direct investments to the region. Among LAC, however, Mexico is the United States’s biggest trade partner, accounting for 71% of trade. In turn, 62% of US exports to LAC go to Mexico.
While the United States has sought to continue its regional involvement, US investors face challenges in the region. These include transportation problems, corruption, lacking property rights protection, and nontransparent regulatory and legal frameworks.
Continued efforts, including President Biden’s America’s Partnership for Economic Prosperity plan to increase competition and investment in the region to bolster supply chains, have sought to strengthen relations. However, what has been done so far is not enough.
Over the past decade, China has surpassed the US as South America’s biggest trading partner. China has sought influence through coordinating financing, trade, and investment. From 2005 to 2020, they provided over $138 billion in loans to Latin America, and from 2000 to 2021, regional trade increased from $12 billion to $445 billion. Such programs have placed China in a valuable role as an indispensable trade partner to several LAC countries. This threatens the United States presence in the region and could disrupt trade relations with the US.
In addition to trade and economic efforts, China has invested in public messaging to boost their image as an invaluable ally through efforts that include bidding for high-profile projects.
Worryingly, since 2012, President Xi Jinping has visited the region eleven times, in contrast to President Obama, who visited the region twelve times, and President Trump, who only visited once during his first term. Undeniably, Chinese efforts have seen success. China’s Belt and Road Initiative has twenty-one Latin American countries' signatures. Brazil, Argentina, and Mexico saw China’s involvement as a net positive. However, there are growing sentiments of weariness over bad behavior by the Chinese, “including debt traps, cheap goods flooding the market, and crowding out domestic manufacturers.”
In Brazil, Chinese investments fell to an all-time low in thirteen years. In Panama, 68% said the Chinese government was “untrustworthy” in both 2018 and 2021, a rise from 48% in 2016. Similar to Chinese involvement in Africa, the Chinese government’s foreign direct investments did not live up to their initial claims. Adding to this, since their peak in the 2010s, Chinese investments have slowed down, creating a window of opportunity for the US.
The United States should prioritize meaningful engagement to address pressing and specific issues through positive messaging. Instead of combating China head on, the US should allow China to continue its existing programs which have already shown the people of LAC the long term associated costs. Instead, the United States should focus on what it can do to improve its own reputation in the region.
Already, US companies have been shown to operate with “transparency, environmental standards, and labor standards.” Unlike the Chinese Belt and Road Initiative, the US hires local workers. While benefiting the US, this involvement also helps the region as a whole.
The seeds of doubt towards China have been sowed; it is now time for the US to take advantage of this gap and revamp its efforts in the region to ensure strong US-LAC relations.
