China and countries of the Latin American and Caribbean region are looking to the next stage of their cooperation

Ten years after the first ministerial meeting of the Forum between China and the Community of Latin American and Caribbean States held in Beijing in January 2015, China's position in Latin America has been considerably bolstered. Since 2017, four countries of the Latin American and Caribbean region, Panama, El Salvador, Dominican Republic and Nicaragua, have established diplomatic relations with the People's Republic of China; 22 countries have signed memorandums of understanding on the Belt and Road Initiative; eight countries have joined the Asian Infrastructure Investment Bank as full members; eight Latin American presidents visited China in 2023, the highest number ever; and in recent years, two countries in the region, Ecuador and Nicaragua, signed free trade agreements with China, which, added to Chile, Peru and Costa Rica, brings the total to five; eight Latin American nations have signed comprehensive strategic partnership agreements with China; and China has also signed close to 1,000 bilateral cooperation agreements with Latin American countries.

All this underlines one of the most significant developments in the region's international political economy in its two centuries of independent history. Until this century, Latin America had relied on two international reference points for its diplomacy, and its international trade and investment flows: one was the United States; the other was Europe. Suddenly, a third one has emerged: China. In the management of foreign relations — and this is especially true in today's globalized and interdependent economy — it is better for countries to have more, rather than fewer, alternatives at their disposal. It increases their options and makes it easier to manage the ups and downs of the international business cycle.

This is reflected in the growth of China-LAC links. After China joined the World Trade Organization in 2001, its trade with Latin America skyrocketed, going from around $12 billion in 2000 to nearly $500 billion in 2024, a 40-fold increase. President Xi Jinping forecast at the first ministerial meeting of the China-CELAC Forum in 2015 that the value of China-LAC trade over the next 10 years would increase to $500 billion, which is exactly what happened. Projections indicate this trade may reach $700 billion by 2035.

During the golden decade of the commodities super cycle (2003-12), Latin America grew like it had not done in 30 years, a little under 5 percent a year. This made it possible to weather the 2008-09 global financial crisis in an unprecedented manner, disproving the old saying "when the United States sneezes, Latin America catches a cold". Not a single Latin American bank went belly up during the 2008-09 global financial crisis, largely due to the ongoing China boom and its demand for the region's rich variety of products. This fortified the region's coffers, allowed countries to pay down their foreign debt, increase their hard currency reserves and better deal with the international economic turbulence. None of this would have been possible in the absence of this vigorous trade with China.

Today, China is the largest trading partner of South America. Brazil's bilateral trade with China has reached $180 billion, and Brazil exports more to China than it does to the US and the European Union combined. The same goes for Chile, 39 percent of whose exports go to China. China's foreign direct investment in the region has also increased considerably. Even countries that had lagged in Chinese foreign direct investment, such as Chile, have been making up for it, and in 2019 and 2021, China was one major originator of FDI in Chile. This investment has also expanded from the mining sector, on which it focused originally, to energy, infrastructure and transport. The state-of-the-art, $3.6 billion deep-water port of Chancay in Peru, was inaugurated last November. Built by Chinese company COSCO, it is Exhibit A of this kind of high impact investment.

In today's turbulent international environment of rampant protectionism and the weaponization of tariffs and economic sanctions as instruments of statecraft, Latin America remains committed to free trade and to increasing its commerce and investment flows with the rest of the world. In this, it finds a willing partner, China, a country that continues to open its economy and to work with countries from the Global South. Given China's pioneering role in green energy sources and e-mobility, and Latin America's extensive reserves of copper and lithium, among other key minerals required by the green economy, joint ventures that contribute to further industrialize Latin America by marrying Chinese technology and capital with these natural resources and the region's ample labor force are a natural next step.

The author is a research professor at the Frederick S. Pardee School of Global Studies, interim director of the Pardee Center for the Study of the Longer-Range Future at Boston University and the author of The Non-Aligned World: Striking Out in an Era of Great Power Competition. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn.