China’s economic statecraft in Latin America

This paper analyses China’s economic statecraft in Latin America, how it is changing the strategic environment in the region, and what the strategic implications are for the United States. Having been slow to react to China’s geo-economic advance, the United States not only risks being displaced economically, but also losing important political influence. China’s economic expansion into Latin America provides it with the potential means to wield political influence over issues such as the Taiwan question, and by binding the region more tightly to itself through longer-term financial and investment deals, it sets the stage for a more far-reaching pivot amongst Latin American countries towards China. The chapter argues that geo-economics is well suited for such a binding strategy, through which target states are made increasingly economically dependent on the rising power and who therefore gains political leverage. Herein, while the various trade, finance and investment deals offer a host of short-term economic benefits to the targeted countries, they may come at the expense of political concessions over the longer-term. Such a geo-economic strategy is not only easier to conceal than traditional geopolitics, but it actively creates interest groups with incentives to lobby for it.