Data shows that China has windingly surpassed the United States in trade terms in vast swathes across Latin America since U.S.-President Joe Biden’s election in January. This highlights how Washington is being held back in the region.
Complete Reuters analysis of U.N. trade data shows that China has overtaken America as Latin America’s top trade partner and has widened the gap since last year.
South America’s resource-rich countries drove the trend. It highlighted that the United States is losing ground in this region, even though Biden seeks to rebuild ties at the Summit of the Americas, Los Angeles, this week.
Mexico and America have had a free-trade agreement since the 1990s. Washington cannot compete with Mexico’s trade with Latin America because of the volume of commerce they do.
Despite Biden’s pledge to restore Washington as a global leader and refocus attention upon Latin America after years of “neglect,” the trade deficit with the United States has grown in the rest of the region. It was first opened to the United States under President Donald Trump in 2018.
Current and previous officials told Reuters that the US had failed to respond quickly enough and that China was the main buyer of metals and grains. They merely provided more opportunities for trade and business.
“The most significant commercial, financial, and industrial relations in Latin America have been undoubted with China, the top partner for this region, way above the US,” said Juan Carlos Capunay, Peru’s former diplomat to China.
However, he added that the region was still more politically affiliated with the US.
Last year, the overall trade flows (imports/exports) between Latin America and China were close to $247 billion, according to the most available data. That’s a lot more than the $174 b with the US. The data for 2021 excludes trade figures from specific locations, although the values are balanced regarding the US-China trade imbalance.
Mexico, the outsider in Latin America’s trade flows, was worth $607 billion last year. That’s up from $496 Billion in 2015. Its trade surplus with China was $110b in 2015, compared to $75b six years prior.
The White House was not immediately available to comment, nor did the U.S. State Department.
Senior U.S. officers claimed that Biden would proclaim an Americas collaboration plan during the Los Angeles summit. It would be aimed at helping the pandemic recovery, building upon current trade settlements.
According to officials, it would mobilize investments, revitalize the Inter-American Development Bank and create jobs in clean energy. It also aims to reinforce supply chains. However, such an upper hand may face U.S. protectionist resistance and questions about the region’s diverse economies and how they could work.
Biden’s aides have visited Latin America to persuade their associates that Washington is more trustworthy and transparent in doing business. They openly allege China uses investment to generate debt traps for other countries.
However, a senior US official, speaking anonymously, acknowledged that Washington faces a difficult task.
It would be a losing battle, according to the individual, as long as China is willing to pay.
The United States remains the dominating country due to massive trade flows between the two countries. This, however, ignores a bigger trend in the region, in which made-in-China goods are gaining traction and Beijing is stockpiling soybeans, corn, and copper.
China leads Argentina. Despite far-right President Jairbolsonaro’s fears about Chinese economic interests wielding too much power in Brazil, China has extended its advantage with Andean copper giants Chile and Peru and has experienced a phenomenal advance in Brazil.
Welber Barral is a Partner with BMJ Consultores in Brazil. He claims China invests in transportation and infrastructure, facilitating grain and metal transactions. Governments, on the other hand, believe the US is just talking.
“Governments in Latin America grumble about many discussions, but they wonder where the money is.” He went on to say.
The US-hosted Summit in Los Angeles is a critical venue for countering China. On the other hand, Biden has already been chastised by no-shows like Mexico’s Andres Manuel Lopez Omarrador for excluding Cuba and Venezuela.
According to Eric Farnsworth (an ex-White House official who now works at the Council of the Americas), rising commodity prices have bolstered Latin American and Chinese trade figures. He did admit, though, that the US domestic agenda and the war in Ukraine had diverted Biden’s attention.
He said that there is bipartisan agreement. The U.S. was not at the table. “The Summit can be part of that solution, but something concrete must come out of it.