China Is Recalibrating Its Latin America Strategy

China’s influence in Latin America has inspired analysis, fascination and a fair amount of hysteria. Depending on whom you ask, it’s seen as everything from an opportunity for the region to rebalance its alliances and profit from Chinese ambitions to an economic invasion that puts the hemisphere’s geopolitics at risk. But given China’s economic heft, the nature of its regime and the rising stakes of its geopolitical rivalry with the US, when looking at this phenomenon it’s best to keep in mind a slogan favored by Deng Xiaoping, China’s former paramount leader: “Seek truth from facts.” And the facts are changing in important ways that all policymakers in the Americas must take into account.

Chinese investments flows are actually slowing drastically — but the Asian giant is much more active in seeking a position in innovative industries such as green energy and technology, which it sees as crucial for its own economic aspirations. According to a report by Margaret Myers, Ángel Melguizo and Yifang Wang for the Inter-American Dialogue, China spent $6.4 billion in direct investment in Latin America and the Caribbean in 2022, 17% below the annual average for the 2020-2021 period and less than half the $14.2 billion invested annually between 2010 and 2019 on average.

“This drops reflects a substantial recalibration on the part of China’s government and its companies,” according to the report, released Monday. At the same time, the authors find that a growing piece of that shrinking pie is going to what’s loosely known as “new infrastructure” industries, including information and communication technology, renewable energy and electric vehicles and high-end manufacturing, among other strategic businesses. Investment from the Asian nation in those areas accounted for nearly 60% of the total flows to the region in 2022, or around $3.7 billion.