China expanded trade leadership in Latin America during Biden administration

THE China widened the difference from the United States in commercial terms in large swaths of Latin America since President Joe Biden took office in early 2021, according to a survey, underscoring how Washington is being outperformed in the region.

An exclusive Reuters analysis of United Nations trade data (UN ) from 2015 to 2021 shows that, apart from Mexico, the main trading partner of the United States, China surpassed the United States in terms of Latin America and increased that difference last year.

The trend, driven by countries in the South America rich in natural resources, shows how the United States has lost ground in a region long seen as its backyard, even as Biden seeks to redefine those ties in Summit of the Americas this week.

O Mexico and the US has had a free trade agreement since the 1990s, and the amount of trade between the two neighbors alone overshadows US trade with the rest of Latin America.

But the trade gap with the United States in the rest of the region, which opened for the first time under the former president of the United States Donald Trump in 2018, has grown since Biden took office in January last year, despite a pledge to restore Washington’s role as a global leader and refocus attention on Latin America after years of what he called “negligence.”

Current and former officials told Reuters the United States was slow to take concrete action and that China, a major buyer of grains and metals, simply offered the region more in terms of trade and investment.

Juan Carlos Capunay, former ambassador of the Peru in China, he said that, in addition to Mexico, “the most important trade, economic and technological ties for Latin America are definitely with China, which is the main trading partner in the region, well above the United States”.

He added, however, that politically the region is still more aligned with the United States.

Excluding Mexico, total trade flows—imports and exports—between Latin America and China reached nearly $247 billion last year, according to the latest available data, well above the $174 billion with the United States.

The 2021 data lacks trade numbers for some countries, but they balance in terms of the US-China bias.

With the exception of Latin America, Mexico’s trade flows with the United States were US$607 billion last year, up from US$496 billion in 2015. Its trade with China was US$110 billion, up from US$75 billion. billion six years ago.

The White House and the US State Department did not immediately respond to a request for comment on the matter.

In an apparent effort to present a specific alternative to China, senior US officials said Biden would announce a “Partnership of the Americas” plan at the summit in Los Angeles, with a focus on promoting recovery from the pandemic, building on existing trade agreements.

The objective would be to mobilize investments, reinvigorate the Inter-American Development Bank (BID ), create clean energy jobs and strengthen supply chains, officials said.

But such a move could face resistance from US protectionists, as well as questions about how the region’s widely diversified economies could make it work.

“Losing the Battle”

Biden advisers who have traveled across Latin America have tried to convince partners that Washington is more trustworthy and transparent for doing business, openly accusing China of using the investment to create “debt traps” for countries.

But a US official, speaking on condition of anonymity, admitted that Washington faces a difficult challenge.

“As long as China is ready to put its money on the table, it looks like we’re fighting a losing battle,” the person said.

When the huge trade flow with Mexico is included, the United States still comes out on top, but that masks the broader trend in the region, where Chinese-made goods are gaining ground and Beijing is gobbling up soybeans, corn and copper.

China leads in Argentina, has extended its lead in the Andean copper giants Chile and Peru, and has seen a major breakthrough in Brazil despite the president’s skepticism. Jair Bolsonaro on Chinese commercial interests in the country.

Welber Barral, a partner at Brazil-based BMJ Consultores Associados, said China often brought in transport and infrastructure investments that helped trade deals on grains and metals, while governments often thought the United States had just rhetoric.

“Latin American governments complain that there is a lot of talk, but ask ‘where is the money’?”, he says.

The US-hosted Los Angeles Summit is seen as a key platform to fight China, but Biden has already been hit by absences, including Mexican President Andrés Manuel López Obrador due to andExclusion of countries such as Cuba and Venezuela .

Eric Farnsworth, a former White House official and member of the Council of the Americas, said rising commodity prices boosted trade figures between Latin America and China, but acknowledged that a busy US domestic policy agenda and war in ukraine kept Biden’s focus elsewhere.

“There’s a bipartisan agreement that the United States is just not at the table,” he said. “The Summit is part of the effort to resolve this, but there needs to be something concrete that comes out of this.”