China has gone from from hardly trading with Latin America at the turn of the century to overtaking the United States to become the top trading partner for South America, and the second almost everywhere else in Latin America. Annual goods trade between China and Latin America rose to $445bn in 2021, up from $12bn in 2000…. Latin America is increasingly useful to China in geopolitical terms, too.

On June 8th, 2023 the Wall Street Journal reported that the Communist government of Cuba had secretly agreed to allow China to set up an electronic-spying facility in the country. At first American and Cuban officials denied the story. Two days later the White House admitted that a base has existed for some time…China has long been thought to have a small military presence in Cuba and access to listening stations. It has several satellite ground-stations in Latin America, which are believed to also have spying purposes. A space observatory in Argentina is run by the Chinese army and its activities are opaque.

Deepening geopolitical ties follow closer economic ones. China is a big source of cash for the region. Between 2005 and 2021 Chinese state-owned banks loaned $139bn to Latin American governments. It has invested billions of dollars in the region, mainly in energy and mining. Some 21 countries in Latin America and the Caribbean have signed up to China’s Belt and Road Initiative, a massive global infrastructure-building spree.

Latin American countries are also turning to the yuan for trade and to include in their central-bank reserves. On June 2nd, 2023 Argentina doubled its currency-swap line with China, meaning that around a third of its central-bank reserves, which stand at $32bn, will effectively be in yuan. Last year, the yuan surpassed the euro to become the second-most important foreign currency in Brazil’s central-bank vaults… In April 2023 a Chinese state-owned power company reached an agreement to purchase two power suppliers in Peru that would give China a near-monopoly over the country’s energy grid. Some fret over Chinese construction of ports in the region, such as the Chancay megaport near Lima in Peru, fearing that they could be repurposed to military ends….China…has trained police forces from countries including Argentina and Brazil, donated cars and investigative equipment to Nicaragua and Costa Rica, and sold surveillance equipment to Ecuador….

Excerpts from China and Latin America: Comrades Across Continents, Economist, June 15, 2023