The writer is an economist, an anchor, and a geopolitical analyst
and the President of the All Pakistan Private Schools’ Federation
president@Pakistanprivateschools.com
Latin America is at the centre of a geopolitical tug-of-war between the United States and China, two global superpowers with competing economic and strategic interests. Latin America is navigating a complex balance between the US and China, with China’s trade exceeding $500 billion in 2024 and the US increasing efforts to counter this influence. It seems likely that Latin American countries are leveraging economic opportunities from both powers while facing geopolitical pressures, with strategies like diversification and regional integration being crucial. The evidence leans toward sustainable development being key, with recommendations including transparency, local capacity building, and balancing economic and geopolitical interests. In 2025, Latin America finds itself at a geopolitical crossroads, balancing the economic and political influences of the United States and China. This dynamic presents both opportunities for growth and challenges in maintaining strategic autonomy. Let’s explore how Latin American countries are navigating this landscape and what sustainable strategies they can adopt. China has significantly expanded its footprint in Latin America, with trade surpassing $500 billion in 2024, making it South America’s largest trading partner. Key investments include infrastructure projects like Peru’s Port of Chancay and a $9 billion credit line announced in May 2025. Diplomatic efforts, such as visa-free travel for several Latin American countries, further strengthen ties. The US, under the Trump administration, has recognised the strategic importance of Latin America in its competition with China. In February 2025, Secretary of State Marco Rubio made his first overseas trip to four Central American countries and the Dominican Republic, warning about Chinese influence in the Panama Canal. Panama’s subsequent decision not to renew its BRI agreement with China was seen as a victory for the US, though Panama emphasised maintaining overall ties with China, illustrating the complexity of these relationships. The US, under the Trump administration, has ramped up engagement, with Secretary of State Marco Rubio visiting the region in February 2025 to counter Chinese influence, notably in the Panama Canal. Initiatives like the Americas Partnership for Economic Prosperity aim to deepen economic ties, focusing on supply chains and technology. Latin American countries, such as Brazil and Mexico, are pragmatically engaging both powers, leveraging trade while protecting local industries. Sustainable strategies include diversifying partnerships, focusing on environmentally friendly projects, and strengthening regional integration to negotiate better terms. China’s engagement with Latin America has grown significantly over the past two decades, with trade reaching a record $500 billion in 2024, as reported by the Council on Foreign Relations. This figure underscores China’s position as South America’s largest trading partner, driven by key commodities such as soy from Brazil, copper from Chile, and lithium from Argentina. Brazil, for instance, supplied over 70% of China’s soy imports in 2024, with plans to boost exports further due to US-China trade tensions, potentially adding $7 billion in profits.
Investments in infrastructure are a cornerstone of China’s strategy. The Port of Chancay in Peru, inaugurated in November 2024 with Chinese funding, is expected to reduce trans-Pacific transit times and enhance trade for South America, with an estimated capacity increase from 4.5 million tons to 14 million tons by 2026 for Brazilian exports. In May 2025, during a summit in Beijing, President Xi Jinping announced a $9 billion investment credit line for Latin America and the Caribbean, reinforcing China’s commitment to the Belt and Road Initiative (BRI). Diplomatic and cultural ties have also deepened. In June 2025, China offered visa-free entry to citizens from Argentina, Brazil, Chile, Peru, and Uruguay, facilitating easier travel and potentially increasing people-to-people exchanges. These efforts are part of China’s broader strategy to build soft power and counterbalance US influence, including isolating Taiwan and supporting authoritarian regimes like Venezuela and Cuba. However, concerns persist about China’s practices, such as debt traps, dependency on raw materials, and security risks from dual-use infrastructure, like ports near the Panama Canal and the Strait of Magellan, which could have military implications. The US has also launched initiatives like the Americas Partnership for Economic Prosperity, focusing on resilient supply chains, digital connectivity, and the semiconductor ecosystem, with investments in countries like Mexico, Costa Rica, and Panama. The Development Finance Corporation (DFC) has invested $11 billion in the Western Hemisphere, supporting projects like loans to Honduran small businesses and conservation in Ecuador’s Galapagos. Cultural and academic exchanges, such as the Fulbright program, also reinforce US ties. Despite these efforts, the US faces challenges, including competition from China’s pricing in technology sectors like 5G, where Huawei and ZTE dominate, and the risk of Chinese companies infiltrating nearshoring initiatives in Mexico. Latin American countries are navigating this competition with a mix of pragmatism and caution. Brazil, for example, has leveraged its soy exports to China, with Chinese state-owned Cofco building a major export terminal at the Port of Santos, expected to boost exports from 4.5 million tons to 14 million tons by 2026. However, Brazil has also warned against over-reliance on foreign funding, indicating a desire for strategic autonomy. Mexico’s Plan Mexico, rolled out in January 2025, aims to boost domestic manufacturing and reduce reliance on Chinese imports, focusing on automotive, aerospace, and textiles, aligning with US interests. Argentina, meanwhile, renewed a $5 billion currency swap line with China in April 2025, despite US criticism, highlighting its need for foreign reserves. Peru, while benefiting from Chinese investments like the Port of Chancay, has launched anti-dumping investigations into Chinese steel imports, protecting local industries. Regional organisations like CELAC play a crucial role, with China’s engagement at the May 2025 summit providing a platform for collective negotiation. However, Latin American countries must also engage with other partners, such as the EU and Japan, to diversify their alliances.
The US will need to reassess its approach, moving beyond a Cold War-style mindset and instead offering viable alternatives, such as expanded nearshoring opportunities, judicial cooperation, and science and technology collaboration to counter China’s growing influence in the region. Ultimately, the fate of Latin America’s balancing act will depend on its ability to adapt to the evolving geopolitical landscape, leveraging partnerships with both the US and China to fuel economic growth, stability, and prosperity.
To navigate these relationships sustainably, Latin American countries must adopt strategies that prioritise long-term development and strategic autonomy. A May 2025 report by the Economic Commission for Latin America and the Caribbean (ECLAC) highlights areas of opportunity for more productive, inclusive, and sustainable development, focusing on trade, investment, financing, infrastructure, and science and technology cooperation. Based on this and other analyses, the following strategies are recommended: Diversify Partnerships; Focus on Sustainable Development; Strengthen Regional Integration; Build Local Capacity; Transparency and Good Governance; Balance Economic and Geopolitical Interests; Engage with multiple global partners, including the EU, Japan, and other Asian nations, to reduce dependency on the US or China. This diversification can provide greater leverage in negotiations and mitigate risks associated with geopolitical shifts. For example, the EU’s Global Gateway initiative, with $45 billion invested, offers an alternative for infrastructure and connectivity. Ensure that trade and investment agreements prioritise environmentally friendly projects, social inclusion, and equitable distribution of benefits. China’s investments, while economically beneficial, have raised concerns about debt traps and environmental degradation, necessitating scrutiny for long-term sustainability. Enhance cooperation among Latin American countries through organisations like CELAC and Mercosur to present a unified front in international negotiations. This can lead to better terms in trade agreements and investment deals, amplifying the region’s global voice. Invest in education, technology, and innovation to reduce dependency on foreign expertise. This will help create high-value jobs and foster economic resilience, ensuring Latin America can compete in global markets. For instance, Mexico’s Plan Mexico aims to increase national content in global value chains by 15% by 2030. Implement transparent procurement processes and ensure all deals with foreign partners are scrutinised for their long-term impact. This includes ensuring infrastructure projects, like those under China’s BRI, do not lead to debt traps or resource exploitation. Strong institutions and anti-corruption measures are essential to safeguarding national interests. While economic benefits are critical, Latin American countries must consider the geopolitical implications of their choices. Maintaining strategic autonomy means avoiding alignment with any one superpower that could compromise long-term sovereignty, as seen in Panama’s nuanced approach to China. Latin America’s relationship with the US and China is a complex balancing act, offering economic opportunities while posing geopolitical challenges. By adopting sustainable strategies that prioritise diversification, regional integration, and good governance, Latin American countries can navigate this landscape to secure their sovereignty and prosperity. As the world moves toward a multipolar future, Latin America’s ability to chart its own course will determine its place in the global order, ensuring long-term development for its people. As Latin America navigates the complex web of US-China great power competition, the region’s governments are likely to maintain a delicate balancing act, extracting investments, support, and respect from both countries without getting entangled in a direct superpower conflict. To thrive in this shifting landscape, Latin American countries will prioritise economic opportunities without strings attached, while being cautious of China’s predatory practices, lack of transparency, and human rights abuses. Meanwhile, the US will need to reassess its approach, moving beyond a Cold War-style mindset and instead offering viable alternatives, such as expanded nearshoring opportunities, judicial cooperation, and science and technology collaboration. By doing so, the US can strengthen its relationships with Latin American countries, promote healthy democratic institutions, and counter China’s growing influence in the region. Ultimately, the fate of Latin America’s balancing act will depend on its ability to adapt to the evolving geopolitical landscape, leveraging partnerships with both the US and China to fuel economic growth, stability, and prosperity.
