How Latin America Should Navigate US-China Tensions
US-China tensions are unlikely to abate anytime soon, and Latin America will not be able to insulate itself fully from the fallout. But by heeding the lessons of the last three years, the region’s governments and businesses can better position themselves to succeed over the next three years and beyond.
SANTIAGO – Once a peripheral presence in Latin America, China has become one of the region’s most important partners. Bilateral trade expanded from $12 billion in 2000 to over $300 billion in 2020, raising China’s share of the region’s total trade from 1.7% to 14.4%. China has also become an increasingly significant source of foreign direct investment in Latin America, accounting for nearly 10% of inflows in recent years.
Growing Chinese influence in the Western Hemisphere has not gone unnoticed by the United States. With no reset in sight for US-China relations, the rivalry between the world’s two largest economies and trading countries continues to escalate globally and in Latin America.
In the short term, the politicization of COVID-19 vaccine access could become the latest trigger for renewed Sino-American tensions. Over the medium and long term – perhaps as soon as 2035 – China could replace the US as the region’s largest trading partner. The country is already the top trade partner of Brazil, Peru, and Chile, and receives 30-40% of their exports.