This post is also available in: Português Español

Latin America was not the subject of much, if any, attention at the recent US-China summit meeting California. Although Chinese President Xi Jinping and US President Barack Obama and Vice President Joe Biden all traveled to Latin America in the past month, with considerable overlap in their itineraries, the region is simply not a high priority item on the agenda of either nation. No serious disputes relating to Latin America have so far emerged between China and the US. Nor is there any evidence that the US is particularly troubled by China’s rapidly escalating presence—or that the two countries regard themselves as adversaries or rivals, contending for power, resources, and allies in the region.
Xi effectively explained this absence of conflict and contention when he said in Mexico that “The more Latin America develops, the better it is for China.” In separate op-eds in the Miami Herald, Obama and Biden echoed similar sentiments, i.e., that the US benefits a great deal from a prosperous Latin America. That simple message explains why both the US and China should, and apparently do, welcome each other’s commercial engagement with Latin America.

There is wide agreement—in Washington and the region—that China’s trade (and more recently investment and loans) has been key to much of Latin America’s vibrant economic performance over the past decade. According to the World Bank, the IMF, and virtually every Wall Street analyst, Chinese imports have generated a forceful tailwind propelling the region’s growth. A deep or prolonged slowdown in China’s purchases would be a harsh blow that would be felt immediately. From less than $15 billion in 2000, Chinese trade with Latin America swelled to around $200 billion last year. It is true that Mexico and a few other countries have lost ground as China has take chunks of their international markets, particularly in the US and Latin America, but that is a result of China’s overall industrial and commercial expansion, not its specific involvement in Latin America. And Mexico is regaining sales as Chinese wages rise and Mexico becomes more competitive.

Similarly, China is well aware of how much Latin America’s prosperity depends on the region’s access to US markets, investment capital, technology, and remittances. That is why 11 of the region’s 18 countries have signed free trade agreements with the US. (China now has three such agreements, with Chile, Peru, and Costa Rica—all partners of the US.) China’s leaders knows that any slackening of the US economic role in Latin America would shrink China’s exports to the region, and make the region far less attractive for new Chinese investments.

There is no denying that the US and China are competing for markets and investment opportunities in Latin America, but so far in ways that are not dramatically different than US competition with Europe or Japan. To be sure, US economic preeminence in the region has waned while China’s presence has increased many times over. A dozen years ago, some 55 percent of Latin American imports originated in the US. Last year, the US supplied only about one third of the region’s imports. China’s share of trade in Brazil, Chile, and Peru has surpassed that of the US, and is a close second in Colombia and Argentina. But even as the US share of Latin America’s market has diminished by some 40 percent since 2000, the absolute value of US exports to the region has doubled and investments have surged, growing significantly faster than exports worldwide. The fact is that China’s enormous commodity purchases from Latin America are making the region a bigger and better customer for US goods.

In short, Washington should continue to welcome China’s active and expanding presence in Latin America, just as China should embrace a robust US role in the region. Far from being sidelined by China in Latin America, the US economy is benefitting more than ever before from its trade and investment in the region. To date, China has been content to focus mainly on economic goals and has shown little interest in political or security objectives.

Xi’s visit to Latin America appeared to be all about economics. Some observers have, however, suggested that his visit to three US neighbors and close trade partners—Mexico, Costa Rica, and Trinidad and Tobago—was, in effect, an intrusion on US turf and should be understood as a political challenge to Washington, perhaps even a signal of China’s concern about the Obama Administration’s decision last year to raise the US profile in Asia. Maybe. But all three of Xi’s ports of call are important partners for China too. If China decides to finance the multi-billion development of a new canal through Nicaragua, my guess is that US banks and companies will rush to be involved as well, and there will be plenty of benefits to go around.

So far, Latin America has proven to be a win-win situation for both China and the US, and with few exceptions, for the region itself—and it should remain that way for some time. That is one reason that region was not on the agenda of Xi and Obama in California.