The Belt and Road Initiative (BRI) in Latin America: Opportunity or trap?
- LatamSinFiltro
- Jun 2
- 10 min read
On May 12, 2025, in an interview with Bloomberg, Colombian President Gustavo Petro announced that Colombia would join China's Belt and Road Initiative (BRI), becoming the twenty-first Latin American country to integrate the project. President Petro stated that joining the BRI would be a driving force for"cutting-edge industrial development". Given the recent tensions between US President Donald Trump and Gustavo Petro over the deportation of Colombian migrants and the imposition of tariffs on Colombian products, Petro has decided to seek new strategic allies.
This is not the first time we have discussed China's growing influence in Latin America here on Latam Sin Filtro. The rapprochement with the Asian power started at the beginning of the 21st century. I invite you to take a look at my article “The Panama Canal and trade war between the United States and China” to learn more about this topic and China’s Belt and Road Initiative. For the newcomers, welcome, and here’s a quick summary for you:
In September 2013, Chinese President Xi Jinping announced the launch of the BRI, "Belt Road Initiative", an ambitious commercial and geopolitical project involving the injection of financial resources and the construction of transportation infrastructure such as roads, bridges, railways and ports in strategic points of the world, aiming at consolidating the global presence of China and its companies. 21 Latin American countries already joined the project but Panama decided to withdraw in 2025, a few months before Petro announced the integration of Colombia.
Indeed, Latin America is a strategic area for the Chinese project, firstly because of the size of its market, but also because the region possesses one of the world's largest hydrocarbon reserves, with 22% of the world's oil reserves. It also has one of the world's largest freshwater reserves as well as 66% of the world's lithium reserves, 47% of its copper reserves, 45% of its silver reserves, 23% of its nickel reserves and 14% of its iron reserves.[1] Finally (there are many other advantages), Latin America has a lot of productive arable land.
Is the Belt Road Initiative a driver of industrial development for Latin America?
Positive impacts of the Belt and road initiative in Latin America
TRADE
First of all, according to an article published by the National Council for Scientific and Technical Research of Argentina (CONICET), in 2023[2], the growing influence of China in the region and the adhesion of several latin american countries to the BRI have allowed them to considerably increase their exports, reducing their need for external financing, since exports allow them to fill their foreign exchange reserves.
As you can see in the graph below, according to United Nations data, exports to China from most South American countries like Peru or Brazil have skyrocketed between 2000 and 2019.
When it comes to Chile, its exports to China represented just over 5% of its total exports in 2000; in 2019, these represented 30%. We can also highlight the evolution of Brazilian and Peruvian exports to China, which more than doubled over the same period.
Trade between the region and China is estimated to have increased by 22 between 2000 and 2013, reaching US$266 billion in 2017.[3].
Furthermore, the CONICET report highlights that the region's rapprochement with China has also resulted in an increase in Chinese investment in Latin America, particularly after the 2008 subprime crisis. Investments are particularly significant in South America, probably because it has most of the region's natural resources. According to Chinese government data, at the end of 2022, Chinese direct investment in Latin America and the Caribbean amounted to US$596.2 billion. Between 2013 and 2022, Chinese investment in the region increased sevenfold.[4]
Financing solutions and infrastructure projects
According to an article published by Juan Sebastián Schulz of the University of Buenos Aires in 2021[5], since 2005, China has provided nearly US$120 billion in loans to Latin American countries and companies. Venezuela has received about US$56.3 billion and Brazil US$22 billion through Chinese loans.
Among the largest infrastructure projects resulting from the BRI, there is the construction of an interoceanic canal in Nicaragua that would allow ships to pass between the Atlantic and Pacific Oceans (competing with the Panama Canal, which mostly benefits the United States); a major railway project that would connect the Brazilian port of Santos to the Peruvian port of Ilo in the Pacific; and the mega-port of Chancay in Peru. Latin American countries are expected to benefit from these projects which should allow them to become more competitive and increase regional as well as international trade. I want that none of these projects are yet completed, and many have not even begun.
China-Latin America: an asymmetrical relationship and the phenomenon of reprimarization
As demonstrated in the first part of this article, the growing Chinese influence in the region, largely linked to China's economic growth and its new vision of international relations in a multipolar world, has had a rather positive commercial impact for Latin America, especially in terms of exports.
However, we will now see that the Belt and Road Initiative is also one of the main drivers of Latin America’s deindustrialization.
Based on Xi Jinping's speech and on the goals of the Chinese project, the BRI should provide both parties with "mutual benefits”. China claims to offer an alternative to the historical presence of the United States in the region through South-South cooperation.
However, a study carried out by ECLAC in 2021[6] shows that relations between China and Latin America, instead of promoting industrial development in Latin American countries, rather reinforce the "center-periphery" model which could harm industrial and technological development.
What is the center-periphery theory?
The center-periphery theory was coined by Argentine economist Raúl Prebisch, former executive secretary of ECLAC. This theory establishes that trade and the global economy is organized as follows:
A center formed by developed countries that dominate capitalist production techniques, have high productivity and a diversified economy. Most of them are countries that export manufactured goods.
A periphery formed of countries specialized in the production and export of raw materials. These countries generally have a low-productivity industry.
Profits of the industrial, retail, and wholesale sectors are generated and spent in the center. Profits of the raw materials sector are generated in the periphery but also spent in the center.
The relationship between Latin America and China does not seem to respect the principle of mutual benefits and turn out to be quite asymmetrical. The new Chinese actor who likes to see itself as an alternative to American neocolonialism and imperialism in the region actually seems to maintain very similar economic relations with Latin America. Let’s see that:
Imports/exports
In the graph below, we can see that in most South American countries, Latin American exports to China are mainly raw materials or products from low or medium tech sectors. There are exceptions like Costa Rica, which has long produced computer components, notably through Intel.
Exports to China, 2011 (Latin America and "rest of the world"), in percentages
The following document is a table representing the variation of latin american exports by sector:
Variation of exports by sector from selected Latin American countries and the rest of the world to China, 2011
In most of the countries studied, exports of raw materials increased while exports in other sectors decreased. However, this trend seems to be global, since the "rest of the world" only recorded an increase in exports in the services and raw materials sectors.
Below is a graph from the same ECLAC report that represents the different types of products imported from China by Latin America:
Latin American and the world's imports from China, 2011
With the exception of Panama and Chile, Latin American countries mainly import high-tech products.
All this leads us to note that Latin America's trade model is still based on the export of raw materials and low value-added goods and the import of high value-added manufactured goods. The ECLAC report indicates that low value-added products and raw materials represent less than 10% of the goods imported from China by Latin America.
Similarly, in 2013, China purchased 15% of total Latin American agricultural and mining exports while only purchasing 2% of its finished product exports.[7]
In 2018, less than 5% of exports to China were medium- and high-tech products, while more than 60% of imported goods from China were from medium- and high-tech sectors. Finally, 80% of Latin American exports to China were commodities such as soybeans, minerals, and petroleum.[8]
Industrial development
Variation of production by sector in selected Latin American countries, China and the rest of the world, 2011
In this table, we can see that all the Latin American countries selected for this study recorded a decline in the production of high-tech goods and, in general, the region recorded a decline in all medium and low-tech sectors (just like the rest of the world).
Lucia Bravo, researcher at the Observatory of Chinese Capital Activity in Argentina and Latin America [9], states that after more than 10 years of relations with China, no substantial changes have been observed in the socio-economic structure of Latin American countries. On the contrary, Sino-Latin American relations have deepened the phenomenon of reprimarization of Latin American economies.
Competition
The growing presence of Chinese companies and their products in Latin American markets could hinder the progress and innovation of Latin American industry and intensify competition for local companies that are not yet well developed.
Chinese investments and financing
Several studies highlight that Chinese investments in infrastructure projects facilitating trade between the Asian power and Latin America could deepen the center-periphery trade model and the extractivism in the region, involving a significant dependence on foreign investment.
Moreover, most Chinese investments are oriented towards the primary sector and Chinese credits are used to build transport infrastructure that allows the export of raw materials, among other things. China seeks direct access to the natural resources it needs for its vast industry.
On the contrary, there is very little investment made in industrial research and development. Indeed, developed countries, and in this case China (even though it is not yet considered a developed country), conduct research activities within its own territory.
Regarding the loans granted by China to Latin American countries, although the traditional austerity conditions established by the United States, Europe or multilateral organizations for granting loans are not imposed, the credits and their payment are made according to the same coercive practices, typical of center-periphery relationship [10].
Coercive practices:Harming or threatening to harm the debtor and his property to force him to pay his debt.
With all these elements, we can therefore observe that the development of relationship between China and Latin America rather deepen the reprimarization of Latin American economies: instead of investing in industry and R&D, Latin American countries are once again basing their economies on the production and export of raw materials (from agriculture, livestock, mining activities, etc.), the prices of which are determined by the international economic context. This model is rather unstable and also has negative environmental and social impacts.
Moreover, profits generated by the primary sector often benefit multinationals, particularly in the mining sector, that invest and/or produce. To attract investment from large foreign multinationals, the latter usually benefit from low income tax.
Conclusion
Overall, the positive results of the integration of Latin American countries into the Belt and Road Initiative must be qualified. Although China's rapprochement with Latin America allowed the emergence of a new middle class in the region in the early 2000s, notably thanks to the commodity supercycle, China also largely participates in the deindustrialization as well as the reprimarization of Latin America. Countries are once again basing their economies on an extractivist model.
Thus, apart from the intensification of trade and the rise in exports to China, no significant benefits have been observed following integration into the Chinese project. China is currently neither a solution nor an alternative to Latin America's dependence on the United States; the Asian power is instead seeking to become the new dominant player in this strategic region. The Belt and Road initiative is above all a geopolitical project.
It is necessary to review the role of the state in the economy and reactivate Latin American regionalism in order to limit Latin America's dependence on China and its companies. Latin American states must find ways to attract more Chinese investment to other, more productive sectors of the economy and to stimulate exports of higher value-added goods.
[1] Pedrosa, M. J. (2017). “China se posiciona en la minería latinoamericana”. Minería Panamericana, https://www.mineria-pa.com/reportajes/china-se-posiciona-la-mineria-latinoamericana/.
[2] Andrés Wainer, “¿Un puente al desarrollo? Cambios en el comercio de América Latina con Estados Unidos y China”, Problemas del desarrollo 54, no 213 (junio de 2023): 3–30, https://doi.org/10.22201/iiec.20078951e.2023.213.69938.
[3] Molina Díaz, E. y Regalado Florido, E. (2017) “Relaciones China-América Latina y el Caribe: por un futuro mejor”. Economía y Desarrollo, vol. 158, no.2, p. 105-116, La Habana jul.-dic. 2017.
[4] “Cooperación en inversión China-América Latina y Caribe registra mejora de calidad - Portal de la Franja y la Ruta”, accedido 26 de mayo de 2025, https://esp.yidaiyilu.gov.cn/p/00QOVBU9.html.
[5] Juan Sebastián Schulz, “La Nueva Ruta de la Seda en América Latina y el Caribe : ¿Oportunidad multipolar o nueva colonialidad dependiente?”, e-l@tina 19, no 76 (2021): 1–4, https://www.memoria.fahce.unlp.edu.ar/library?a=d&c=arti&d=Jpr12712.
[6] “Política industrial, crecimiento económico e inserción internacional: comparación de países seleccionados”, CEPAL, Revista CEPAL, no 135 (Diciembre de de 2021): 159-177.
[7] Juan Sebastián Schulz, “La Nueva Ruta de la Seda en América Latina y el Caribe : ¿Oportunidad multipolar o nueva colonialidad dependiente?”, e-l@tina 19, no 76 (2021): 1–4, https://www.memoria.fahce.unlp.edu.ar/library?a=d&c=arti&d=Jpr12712.
[8] AGRAMONT, D. & BONIFAZ, G. (2018). “El desembarco chino en América Latina y su manifestación en Bolivia”, Plural Ediciones, La Paz.
[9] Lucía Bravo, “Los desafíos de la Nueva Ruta de la seda para América Latina: : entre la autonomía y la dependencia”, Perspectivas: revista de ciencias sociales 5, no 10 (2020): 173–86, https://dialnet.unirioja.es/servlet/articulo?codigo=9175683.
[10] Ariel Martín Slipak, “América Latina y China: ¿cooperación sur-sur o consenso de Beijing?”, abril de 2014, https://ri.conicet.gov.ar/handle/11336/92337.
Bibliography:
Bravo, Lucía. “Los desafíos de la Nueva Ruta de la seda para América Latina: : entre la autonomía y la dependencia.” Perspectivas: revista de ciencias sociales 5, no. 10 (2020): 173–86. https://dialnet.unirioja.es/servlet/articulo?codigo=9175683.
“Cooperación en inversión China-América Latina y Caribe registra mejora de calidad - Portal de la Franja y la Ruta.” Accessed May 26, 2025. https://esp.yidaiyilu.gov.cn/p/00QOVBU9.html.
“Foreign Direct Investment in Latin America and the Caribbean 2021 | Comisión Económica para América Latina y el Caribe.” Accessed May 26, 2025. https://www.cepal.org/es/publicaciones/47147-foreign-direct-investment-latin-america-and-caribbean-2021.
Maya, Juan Carlos Gachúz. “Comercio e inversión de China en el sector minero de Chile, Perú y Bolivia.” Interacción Sino-Iberoamericana / Sino-Iberoamerican Interaction 2, no. 1 (March 1, 2022): 43–65. https://doi.org/10.1515/sai-2022-0001.
“Política Industrial, Crecimiento Económico e Inserción Internacional: Comparación de Países Seleccionados.” CEPAL, Revista CEPAL, no. 135 (Diciembre de 2021): 245.
Puyana Mutis, Alicia. “El retorno al extractivismo en América Latina. ¿Ruptura o profundización del modelo de economía liberal y por qué ahora?” Espiral (Guadalajara) 24, no. 69 (August 2017): 73–113. http://www.scielo.org.mx/scielo.php?script=sci_abstract&pid=S1665-05652017000200073&lng=es&nrm=iso&tlng=es.
Schulz, Juan Sebastián. “La Nueva Ruta de la Seda en América Latina y el Caribe : ¿Oportunidad multipolar o nueva colonialidad dependiente?” e-l@tina 19, no. 76 (2021): 1–4. https://www.memoria.fahce.unlp.edu.ar/library?a=d&c=arti&d=Jpr12712.
Slipak, Ariel Martín. “América Latina y China: ¿cooperación sur-sur o consenso de Beijing?,” April 2014. https://ri.conicet.gov.ar/handle/11336/92337.
Wainer, Andrés. “¿Un puente al desarrollo? Cambios en el comercio de América Latina con Estados Unidos y China.” Problemas del desarrollo 54, no. 213 (June 2023): 3–30. https://doi.org/10.22201/iiec.20078951e.2023.213.69938.
Комментарии