LAC: after Panama's withdrawal, Colombia joins BRI - Analysis

• Over the past decade, Beijing has significantly deepened and diversified its activities in Latin America and the Caribbean (LAC). Primary interests are economic in nature, such as access to raw materials and emerging markets. As it has become more entrenched in the area, the China has also devoted increasing attention to promoting interests political and security interests.

• Currently, about two-thirds of Latin American countries have already joined the BRI.

• The addition of Colombia, a strategically important country for the United States in South America, represents a significant victory for China, especially after Panama's recent withdrawal from the initiative earlier this year.

• The LAC is a region comprising 33 countries, with a total population of more than 644 million and a gross domestic product (GDP) of nearly 6 trillion dollars in 2017. China has four overarching goals in its engagement with the LAC: (1) ensuring its access to abundant natural resources and consumer markets; (2) gaining support for its foreign policies (including a reduction in the number of countries that recognize Taiwan); (3) shape perceptions and discourse about China; (4) gain geopolitical influence in a region historically subject to U.S. influence.

• China and Colombia established diplomatic relations on February 7, 1980. China is Colombia's second largest trading partner, while Colombia is China's fifth largest trading partner in Latin America. According to China's customs statistics, the bilateral trade volume in 2024 was US$21.02 billion, an increase of 11.7 percent year-on-year, of which China's exports were US$14.78 billion, an increase of 19.5 percent year-on-year; imports were US$6.24 billion, a decrease of 3.2 percent from the previous year.

  
  

Colombia has officially signed a “joint cooperation plan” with China that places the South American nation in the sprawling Belt and Road Initiative (BRI), Beijing's multibillion-dollar global infrastructure strategy.

Chinese President Xi Jinping (R) shakes hands with Colombian President Gustavo Petro during a signing ceremony held at the Great Hall of the People on October 25, 2023 in Beijing, China. (Photo by Ken Ishii - Pool/Getty Images)

The announcement was made Wednesday by Chinese state media, marking an important diplomatic victory for Beijing, which is expanding its influence in Latin America amid rising global tensions.

China and Colombia established diplomatic relations on Feb. 7, 1980, and in 1981 they signed the Science and Technology Cooperation Agreement. In October 2023, Colombian President Gustavo Petro paid a state visit to China, and President Xi Jinping and Petro jointly announced the establishment of a strategic partnership between China and Colombia.

Petro formally announced the country's intention to join the BRI during a state visit to China on Monday. “We have decided to take a strong step forward in China-Latin America relations,” Petro said, framing the initiative as part of a broader strategy to strengthen economic and diplomatic ties with Beijing.

As part of the new agreement, Chinese President Xi Jinping reportedly offered Petro a number of incentives, including a commitment to increase imports of Colombian goods, support Chinese investment in Colombia and participate in infrastructure construction in the country.

These deals reflect Beijing's broader strategy to secure influence and access to resources in Latin America, presenting China as a partner in local development.

China is Colombia's second largest trading partner, while Colombia is China's fifth largest trading partner in Latin America. According to China's customs statistics, the bilateral trade volume in 2024 was US$21.02 billion, an increase of 11.7 percent year-on-year, of which China's exports were US$14.78 billion, an increase of 19.5 percent year-on-year; imports were US$6.24 billion, a decrease of 3.2 percent from the previous year. China mainly exports electronics, electrical equipment, automobiles, clothing, medicines and other raw materials, while it mainly imports crude oil, ferronickel, coffee, gems and other raw materials from Colombia. Economic cooperation between China and Colombia mainly covers areas such as oil exploration and development, infrastructure construction and telecommunications.

Panama was the first Latin American nation to join the BRI in 2018, but exited the program in February under pressure from U.S. officials, particularly Secretary of State Marco Rubio.

President Petro's visit to China coincided with the China-Community of Latin American and Caribbean States (CELAC) Forum, a meeting that Beijing is increasingly using as a platform to assert its influence in the region.

The forum brought together numerous Latin American leaders, many of whom expressed interest in expanding trade and diplomatic relations with China.

During the event, President Xi delivered an edgy speech that portrayed China as a benevolent global partner and subtly criticized the United States, particularly under President Donald Trump's administration. “There are no winners in tariff or trade wars,” Xi said.

“Only through unity and cooperation can countries safeguard global peace and stability and promote global development and prosperity.” His remarks seemed aimed at contrasting China's policies with the more protectionist and confrontational trade policies promoted by the United States in recent years.

Chinese Foreign Minister Wang Yi echoed Xi's sentiments, calling on CELAC member states to “unite” with China to resist what he described as U.S. “bullying” through the use of economic sanctions and tariffs.

In a further show of economic influence, Xi offered CELAC members a $9.2 billion line of credit, but with the stipulation that the funds would be disbursed in Chinese yuan rather than U.S. dollars.

This move reflects China's broader goal of internationalizing its currency and reducing global dependence on the U.S. dollar. Xi also announced plans to introduce visa-free travel for citizens of five Latin American countries, but without specifying which countries would be included.

Over the past decade, Beijing has significantly deepened and diversified its activities in Latin America and the Caribbean (LAC). Primary interests are economic in nature, such as access to raw materials and emerging markets. As it has become more entrenched in the area, the China has also devoted increasing attention to promoting interests political and security interests.

The LAC is a region comprising 33 countries, with a total population of more than 644 million and a gross domestic product (GDP) of nearly 6 trillion

dollars in 2017. China has four overarching goals in its engagement with the LAC:

• ensuring its access to abundant natural resources and consumer markets;

• gaining support for its foreign policies (including a reduction in the number of countries that recognize Taiwan);

• shape perceptions and discourse about China;

• gain geopolitical influence in a region historically subject to U.S. influence.

Beijing acts through an integrated strategy, coordinating the efforts of official representatives-such as embassies and political influence entities

affiliated with the CCP (the International Liaison Department, the United Front Labor Department and the Chinese People's Association for Friendship with Foreign Countries) - with state-owned enterprises (SOEs) and private and semi-government entities.

To further local interests, China often bypasses national governments and has also provided an economic lifeline to authoritarian regimes with its activities. Between 2012 and 2016, China improved relations with countries considered “strategic global partners” such as Brazil, Peru, Mexico, Argentina, Venezuela, Ecuador, and Chile. Since 2016, Uruguay, Bolivia and Jamaica have also been added. Bolivia is among the privileged security partners and is an important source of lithium for China's growing electric vehicle industry. China also has a long-standing relationship with Cuba and often refers to the country as a “good brother, a good comrade, a good friend” because of the shared political system.

Because of the shared political system. The CCP also exerts its influence to achieve political goals. Beijing has also secured diplomatic support from these countries for its violations of human rights and international law.

Strong economic relationships with raw material suppliers like Brazil, Chile, and Peru offer China the opportunity to turn to different trading partners in case of political or economic tensions. In 2018, for example, as retaliation for tariffs imposed by the United States on Chinese goods, Beijing reduced its soybean purchases from the USA from $9.1 billion to $3.1 billion, representing a decrease of 74.5% compared to 2017 levels.

Although the economic engagement with Latin America began with a focus on raw material purchases, Beijing is currently investing in entire supply chains, allowing it to exert greater control over the sectors in which it has a strategic interest in resource access or market building. Latin America, for example, has some of the largest deposits in the world of copper, iron ore, silver, lithium, and niobium, which are used to produce electronic components, such as rechargeable batteries and semiconductors.

Chinese investments in the mining sector reveal a model of vertical integration – with Chinese entities acquiring a greater share of value within individual mining supply chains – culminating in direct ownership of the mines. For example, in the case of lithium, Chinese companies have expanded investments along the entire supply chain (extraction, refining and production of ore in technologies such as lithium-ion batteries for electric vehicles). The "Lithium Triangle," which encompasses Argentina, Chile, and Bolivia, hosts more than half of the known lithium reserves in the world and has been a target of Chinese investments.

Chinese companies like Tianqi Lithium and Ganfeng Lithium have acquired significant stakes in production in Chile, funded the development of new mines in Argentina, and signed an agreement to develop lithium production in Bolivia. With the addition of investments in Australian lithium, China currently controls over 59% of the global lithium production. As China accumulates market power over the lithium supply chain, it also strengthens its ability to influence global supply and prices. This, as will be seen, represents a typical Chinese practice to make the economies of the more vulnerable countries weaker and more dependent on its power.

China has increasingly invested in the construction and acquisition of electricity generation and distribution resources. Between 2005 and 2020, 61% of Chinese investments in the region were allocated to the energy sector, with Chinese state-owned companies accounting for the majority of the investments. Through acquisitions and greenfield investments in the sector, Beijing is creating profitable markets for its energy generation and distribution technologies, such as solar panels.

China uses its vertically integrated approach to access agricultural resources that help it address internal food security issues. About half of China's demand for agricultural products from the region has been concentrated on Brazilian soybeans, with Chinese purchases accounting for about 73% of global exports in 2020. Chinese demand for imports of Brazilian beef and veal increased by 299% between 2017 and 2020, generating significant pressure on deforestation in Brazil. According to research by Trase, an NGO studying the connections between raw material trade and deforestation, in 2017 about 40,500 hectares of Brazilian rainforest were at risk due to the demand for Brazilian beef alone from mainland China and Hong Kong.

Beyond trade, major Chinese food companies are aiming for acquisitions and investments across various segments of the agricultural supply chain – including production, processing, and storage – and have acquired vertically integrated agricultural businesses such as the Brazilian Fiagril, which processes, markets, and transports grains.

To secure food resources, Chinese fishing fleets have become the main perpetrators of illegal, unreported, and unregulated (IUU) fishing in Latin America and the Caribbean. The Chinese high seas fishing fleet, which according to some estimates includes over 17,000 vessels, has been accused of illegal fishing, overfishing, capturing protected species, and polluting waters in the exclusive economic zones of other countries and in protected maritime areas.

A study by the U.S. NGO Oceana found that between July and August 2020, approximately 99% of the vessels suspected of IUU fishing around the Galapagos were Chinese. Chinese IUU fishing is also a direct violation of territorial sovereignty.

Latin America is heavily involved in China's port infrastructure expansion plans. Of the 100 largest ports in the world, 57 are controlled by Chinese companies.

Latin America is heavily involved in China's port infrastructure expansion plans. The port of Chancay, Peru, is one of the most important. Of the 100 largest ports in the world, 57 are controlled by Chinese companies.