In recent decades, China has gone from having a negligible presence in Latin America to becoming the region's leading trading partner and one of its main investors. Chinese capital now controls a large share of critical sectors such as energy, infrastructure, and mining.
The beginning of the business relationship
The economic rise of the People's Republic of China brought with it an exponential increase in demand for raw materials, energy, and intermediate goods to sustain the country's rapid industrial growth, and that is precisely what the Latin American region offered. With massive exports of products such as soybeans, oil, copper, and iron, China became Latin America's second-largest trading partner in 2010, surpassing the European Union. Latin American countries, for their part, began importing all kinds of manufactured goods, from industrial machinery to consumer goods, becoming a significant market for Chinese companies.
Oil is one of the most sought-after products by the Chinese, which largely explains their interest in hydrocarbon-producing countries such as Venezuela, Brazil, Colombia, and Ecuador. This has led giants like Sinopec—a Chinese state-owned company and one of the world's largest energy and petrochemical conglomerates—to develop strategic bilateral alliances with some of these countries. Food is another highly demanded product. This is related to the enormous population they have to feed and insufficient domestic agricultural production.
Finance
Since 2005, China's major state-owned banks—the China Development Bank and the China Export-Import Bank—have provided billions of dollars in loans to Latin American countries, surpassing the World Bank, the Inter-American Development Bank, and the Development Bank of Latin America. Ninety-three percent of these loans have gone to just four countries: Argentina, Brazil, Peru, and Venezuela. The majority of the money has been invested in energy-related projects (69%) and infrastructure projects (19%), fostering the development of sectors from which China greatly benefits.
The Belt and Road Initiative
Currently, 21 Latin American countries have joined the Belt and Road Initiative. Its objective is to integrate transportation, energy, and communications infrastructure, facilitate trade and financial flows, and establish frameworks for bilateral cooperation.
With 22% of the world's oil reserves, 66% of lithium reserves, 47% of copper reserves and 45% of silver reserves, among others, the Latin American region was a key target.
Cultural exchange
Beyond economic ties, the Chinese government has made significant efforts to strengthen cultural relations. One of the most visible instruments is the more than 40 Confucius Institutes in the region – centers funded by Chinese public universities and dedicated to promoting the country's language and culture.
Furthermore, the main state-run media outlets – Xinhua and CGTN – have established agreements with national media and expanded their content offerings in Spanish and Portuguese. This aims to attract Latin American viewers and disseminate a narrative that improves their perception of the country.
Ecuador
Today, the direct influence of the Asian giant on the Ecuadorian economy amounts to between 9% and 10% of GDP, and Chinese state-owned enterprises already control 90% of the country's oil exports. China is not only Ecuador's second-largest trading partner—after the United States—but also its main source of foreign direct investment, its largest buyer of non-oil products, and one of the dominant players in strategic sectors such as oil, mining, and the automotive industry.
In 2022, both countries signed a free trade agreement with the goal of increasing trade by $3-4 billion over a decade.
Argentina
In Argentina, Beijing also follows Washington as its main trading partner, and several state-owned companies have direct involvement in projects related to the exploitation of lithium, gold, silver, and copper deposits. The Chinese presence in Argentina also includes the only space station that Beijing operates outside of China. The most significant investment is in the hydroelectric plants in Santa Fe. CruzA $4.700 billion megaproject that promises to transform the country's energy matrix. It is important to note, however, that most of the projects involving China are currently stalled.
Brazil
Despite not participating in the Belt and Road Initiative, Brazil is the leading destination for Chinese capital among emerging economies. In 2024 alone, the country received $4.180 billion in investment, a 113% increase over the previous year.
The energy sector attracts the most financing, specifically 34% of the total. The state-owned State Grid Corporation of China currently holds some of the largest Brazilian electricity concessions, allowing it to control a large part of the national power grid. Also noteworthy is the significant Chinese investment in the Belo Monte hydroelectric plant – one of the largest in the world – in oil exploration, and in the Port of [unspecified location]. Santos – the largest in Latin America.
Venezuela
China has been Venezuela's largest external financier since the first decade of this century, with commitments exceeding $60-100 billion in loans and investments. The cornerstone of this relationship is oil. With an extremely weak economy, it was agreed that the Venezuelan government would repay its debt with barrels and production rights of this resource. Thus, China secured access to the world's largest oil reserves, and Venezuela obtained financing that no other country was willing to provide.
Due to a drop in oil production, the Latin American country has been unable to meet its commitments, leading China to adopt a much more cautious strategy. Since the arrest of Nicolás Maduro, this situation has worsened: the diversion of Venezuelan oil exports to the United States reduces the volume of crude destined for China, and political instability hinders the operations of Chinese companies. Consequently, the expected short-term profitability of energy investments has decreased significantly.
Peru
In Peru, investment has focused on the transportation sector, specifically maritime transport. Of all the projects, the Port of Chancay stands out as the first smart and automated port in South America, intended to make Peru the main logistics hub of the South Pacific. Linked to this port is the Ancón Industrial Park—also largely financed with Chinese capital—conceived as a “productive city” that will boost exports, cargo movement, and the country's productive activity.
China is also Peru's main trading partner, and the two countries have maintained a free trade agreement since 2010. This relationship has intensified with the construction of the port of Chancay, as it allows for reduced logistics costs and transport time.
Colombia
Beijing has established itself as the most important public works contractor in Colombia, leading projects that aim to transform the country's urban mobility. The most significant project is Bogotá's first metro line, slated to open in 2028. This is complemented by the Regiotram de Occidente – a 100% electric light rail system – and the Autopista Mar 2. Megaprojects that seek to improve connectivity between large cities and the rest of the municipalities.
Chile
Investment in Chile aims to control the entire energy production chain, from generation to distribution. In 2020, the Chinese firm State Grid acquired almost all of the shares of the distributor CGE—the largest by number of customers—taking control of more than 50% of the country's electricity distribution and becoming the main player in the Chilean electricity market.
Lithium production has also attracted significant investment, as its supply is considered a priority by China. One example is the state-owned company Tianqi Lithium, which acquired a 24% stake in one of the world's leading lithium producers.
Mexico
With flows exceeding $100 billion in 2024, Mexico is by far the leading destination for Chinese exports in the region. Furthermore, 49% of companies with industrial projects in Mexico are of Chinese origin. The country is a favorite destination for nearshoring investments due to its proximity to the United States. Its strategic location, situated alongside an extensive network of free trade agreements, makes it ideal for reducing costs.
Conclusion
Under a model of massive export of raw materials and import of manufactured goods – especially high value-added technology and industrial machinery – China has consolidated itself as one of the main trading partners of Latin American countries.
This presence is supported by an investment that has transcended the commercial sphere to concentrate on sectors critical to regional development: infrastructure, through the construction of ports and transport networks; energy, through the control of electricity distribution and renewable projects; and the mining of strategic minerals such as lithium and copper.
