More U.S. Engagement Needed to Challenge the Belt and Road Initiative in Latin America

China’s substantial and growing engagement in Latin America since the beginning of the 21st century presents both economic and political concerns for the United States. Through the Belt and Road Initiative (BRI), major Chinese state-owned enterprises (SOEs) have invested billions of dollars in Latin America, contributing to an overall value of trade recorded worth $482.6 billion in 2022. From 2000 to 2020, the People’s Republic of China (PRC) displaced the U.S. as a top-trading partner in several Latin American countries, resulting in a trade increase from $12 billion to $315 billion with an additional projected $700 billion in trade by 2035. The BRI has expanded to include 21 signatories, accounting for nearly 64% of all nations in Latin America.

The PRC’s Latin American business interests include the energy, digital technology, raw materials, and transportation sectors with the pursuit of geopolitical primacy also driving PRC activity in the region.  Operating under the direction of the Chinese government, major state investors from Beijing double as an extension of the Chinese Communist Party (CCP), in effect advancing the PRC’s diplomatic objectives and regulatory policies with the potential to engage in both military and commercial activities. The PRC’s pursuit of economic interests in the region has evolved to include security engagement, technological exchange, and foreign policy influence in the region.

Undermining the sovereignty of partnering nations and inflicting undue influence on municipal governments are risks associated with bilateral economic partnerships with China. Pressure to abandon recognition of Taiwan in favor of the PRC is often a prerequisite for doing business with China. Over the  past decade, several countries in the western hemisphere including Honduras, the Dominican Republic, Panama, El Salvador, and Nicaragua have shifted their allegiance from Taipei to Beijing in exchange for Chinese SOE investments.

Examples of the PRC’s assiduous influence on the region includes debt trap diplomacy, opaque contracts for the purpose of gathering natural resources and strategic monopoly of ports and communications technology. Trends in the Latin American countries chosen by the Chinese SOEs for economic contracts suggest a strategic targeting of countries with poor institutions and abundant natural resources such as natural gas, minerals, and other ore deposits. Despite the considerable growth of Chinese influence in Latin America, China’s eschewing rule of law, poor labor standards, and environmental degradation has caused local opposition and increased demand for alternative investors, giving the United States an opening to increase engagement in the region.

Chinese owned technology and communications manufacturers such as Huawei Technologies Co. Ltd. have grown to be one of the largest in the world despite being labeled by the U.S. as a Chinese surveillance instrument and national security risk. Huawei has established an alarming strategic economic foothold in Latin America, including a $120 million dollar contract to build telecommunications infrastructure in rural areas in Bolivia and $800 million dollar investments in the construction of a manufacturing plant for 5G equipment in Brazil.

Huawei’s involvement with the PRC suggests they function as a commercial extension of the CCP. Therefore, their success raises security concerns for the U.S. due to insinuating espionage and violations of international sanctions. Huawei, however, continues to be an unfavorable partner according to local governments for their unethical workforce standards, intellectual property theft, and privacy concerns. ALEC’s model policy advising states to prohibit contracts with Chinese government-owned or affiliated technology manufacturers presents an example of how states can defend America and diminish Beijing’s proactive efforts in the U.S. However, it does nothing to limit PRC influence in our hemisphere.

The United States has failed to provide Latin American countries with alternative investment opportunities to China. Simply highlighting the dangers of an economically dependent relationship with China and threatening a strained relationship with the U.S. is no longer enough to sway Latin American countries away from the enticing CCP promises. Moreover, U.S. sanctions in the region have not had the intended effect on the PRC’s economic success, and China has even avoided steep American tariffs on Chinese exports by routing goods bound for the US through Mexico.

Private investments in industries ripe for growth such as green energy, infrastructure, and digital technology offer an avenue for states to provide an alternative to Chinese SOEs. By mobilizing major private investors’  involvement in critical industries, states can act as an extension of U.S. soft power providing investment opportunities that are free of corruption, more transparent, and not tied to unambiguous reciprocal requirements of the CCP.

Latin America is not the only region where the PRC is attempting to make economic inroads – ALEC’s The Belt and Road Initiative: China’s Strategy to Bring Nations around the World into Its Orbit details BRI activity in South Asia. If the United States fails to compete with China in Latin America, our nation and our states will remain highly vulnerable to Chinese influence campaigns, and a clear opportunity for mutually beneficial economic prosperity will be lost. This will ultimately result in the overall decline of U.S. regional influence and the strategic exposure that involves. The time is now to extend an alternative to the Belt and Road Initiative to strengthen ties with our partners in the western hemisphere.