China’s increasing presence in Latin America: Implications for the European Union

Written by Marc Jütten.

Within just two decades, China has transformed from an insignificant player to a dominant force in Latin America, alongside the United States (US) and the European Union (EU). Predictions suggest that by 2035, China may even overtake the US as Latin America’s most important trading partner.

China has been South America’s top trading partner for quite some time. The region holds strategic importance for the future of the global economy due to its abundance of resources and critical raw materials, such as lithium and copper. In parallel to maintaining economic ties with Latin America and the Caribbean (LAC), China is also enhancing its political relationship with the region, primarily through the China-Community of Latin American and Caribbean States (CELAC) forum. In 2018, China extended its vast global infrastructure development strategy – the Belt and Road Initiative – to Latin America. A recent example of Chinese strategic investment in the region is the Chancay megaport in Peru, which could be a game changer in Latin American logistics, as it will reroute trade between Latin America and Asia, bypassing the Atlantic and the Panama Canal.

Recent actions by the Trump administration aimed at countering China’s influence in LAC may inadvertently strengthen China’s position in the region even further, as was seen during the first Trump administration. For the EU, which is in urgent need of a diversified supply of critical raw materials to navigate the clean and digital transition of its economy, the LAC region is now more strategically important than ever. The EU’s envisaged partnership agreement with Mercosur, the South American trading block, will test the EU’s commitment to deepening its partnership with Latin America through the conclusion of this agreement. The European Parliament is expected to vote on the proposed agreement during its current legislative term.

Read the complete briefing on ‘China’s increasing presence in Latin America: Implications for the European Union‘ in the Think Tank pages of the European Parliament.