LatAm and China: A Maturing Relationship Rather Than a Weakening One
Latin America and the Caribbean (LAC) have seen a significant shift in their economic relationship with China over the past year.
LAC governments have strengthened ties with China, focusing on telecommunications and renewable energy supply chains.
Lower-technology mineral and agricultural commodities still dominate LAC exports to China.
However, Chinese companies are diversifying their interests. They are investing in automotive manufacturing in Mexico, energy projects in South America, and transportation initiatives throughout LAC.
The 2024 Edition of the China-Latin America and the Caribbean Economic Bulletin details these developments.
Key findings from the bulletin include:
- Presidential Engagement: Eight LAC presidents visited China in 2023, focusing on renewable energy, telecommunications, and trade agreements for traditional exports like beef and petroleum.
- Trade Dynamics: LAC exports to China rose to approximately $208 billion in 2023. Chinese exports to LAC fell to around $242 billion. This reduced LAC’s trade deficit with China to about $33 billion, or 0.5% of regional GDP.
- Mineral Exports: LAC’s mineral exports to China declined in 2022 due to lagging Chilean copper output. However, the trend partially reversed in 2023. China now accounts for 34% of LAC’s mineral exports.
- Beef Exports: For the first time, beef entered the top five regional exports to China in 2023. Falling copper prices and rising beef trade drove this change. Beef trade has doubled in volume over the past five years.
LatAm and China: A Maturing Relationship Rather Than a Weakening One. (Photo Internet reproduction) One-stop referenceCompany IntelligenceEvery listed company in Latin America — financials, ownership and structure for 1,450+ companies across 26 exchanges, in one place.Browse the directory → - Transition Minerals: LAC-China exports now represent about half of global trade in unprocessed lithium carbonate and copper ores and concentrates.
- Chinese Investment: Chinese investment in LAC has diversified, with significant projects in manufacturing, particularly automotive sectors in Mexico. In 2023, Solarever invested $1 billion. Ningbo Xusheng Group invested $350 million in electric vehicle manufacturing in Mexico.
- Energy Investments: Chinese firms like Chengxin Lithium Group and Zijin Mining Group invested heavily in Argentina’s lithium sector. State Grid Corporation and PowerChina made substantial acquisitions in Peru and Brazil, respectively.
- Infrastructure Contracts: Transportation, especially long-distance cargo rail and urban light rail, has been the primary focus of Chinese infrastructure projects in LAC over the past four years.
- Development Finance: Chinese development finance to LAC dwindled to $1.3 billion in 2023. New commitments were limited to loans from the China Development Bank to Brazil’s BNDES.
- Debt Dynamics: Suriname has the highest public and publicly guaranteed (PPG) debt to China in LAC, amounting to 14.6% of its GDP in 2022. However, no LAC country owes more to China than to other major creditors. Significant debt restructuring will require broad creditor participation.
The authors predict that while LAC-China exports have benefited from rising global commodity prices, these prices are unlikely to remain high.
Consequently, LAC may see its trade deficit with China rebound unless there is significant diversification or an increase in commodity export volumes.
Chinese firms are increasingly bypassing DFIs in favor of direct investments and infrastructure contracts.
This trend signifies a maturing relationship rather than a weakening one. The shift towards electric vehicles, rail transportation, renewable energy, and transition minerals presents mixed prospects for sustainable development in the region.
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173,714.08
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66,358.81
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10,886.14
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3,199,934
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| Instrument | Last | Change | YoY | Prev. | High | Low | Volume |
|---|---|---|---|---|---|---|---|
| IBOV | 173,714.08 | -0.06% | +28.14% | 173,825.27 | 174,505 | 173,285 | — |
| USD/BRL | 5.11 | +0.19% | -8.19% | 5.10 | 5.13 | 5.10 | — |
| SELIC | 14.25% | — | — | — | — | — | |
| PETR4 | 40.90 | +2.53% | +29.97% | 39.89 | 41.11 | 40.41 | 32,095,300 |
| VALE3 | 72.94 | -0.05% | +34.33% | 72.98 | 73.12 | 72.10 | 13,456,000 |
| ITUB4 | 41.96 | -1.39% | +20.99% | 42.55 | 42.61 | 41.87 | 19,560,900 |
| BBDC4 | 18.29 | -0.65% | +14.10% | 18.41 | 18.48 | 18.21 | 55,066,000 |
| BBAS3 | 20.49 | -1.30% | -1.21% | 20.76 | 20.83 | 20.26 | 35,688,400 |
| B3SA3 | 15.20 | -1.23% | +10.63% | 15.39 | 15.37 | 15.17 | 48,828,300 |
| ABEV3 | 15.63 | +0.19% | +16.12% | 15.60 | 15.75 | 15.51 | 16,130,200 |
| WEGE3 | 43.63 | +0.32% | +3.66% | 43.49 | 44.02 | 43.15 | 8,199,700 |
| PRIO3 | 57.85 | +1.87% | +33.60% | 56.79 | 58.00 | 57.07 | 5,305,500 |
| SUZB3 | 41.93 | +0.55% | -16.97% | 41.70 | 42.62 | 41.40 | 8,204,800 |
| RENT3 | 38.23 | -1.62% | +2.33% | 38.86 | 38.80 | 37.87 | 5,880,400 |
| AZZA3 | 18.59 | +0.32% | -48.91% | 18.53 | 18.74 | 18.32 | 1,449,200 |
| CSNA3 | 5.05 | -0.98% | -36.16% | 5.10 | 5.11 | 5.00 | 7,618,200 |
| GGBR4 | 24.04 | +0.54% | +47.03% | 23.91 | 24.24 | 23.59 | 5,371,200 |
| ENEV3 | 25.68 | -1.04% | +86.63% | 25.95 | 26.18 | 25.66 | 12,331,200 |
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