As the US-China rivalry heats up, Beijing has made yet another attempt to woo countries in the US backyard by projecting itself as the defender of the multilateral order, and unveiling a US$9.2 billion credit line and infrastructure investment fund for Latin American and Caribbean countries.
The credit line was unveiled on May 13 at the ministerial summit of the three-yearly China-Community of Latin American and Caribbean States’ (CELAC) forum.
The Chinese President Xi Jinping told the forum’s opening ceremony in Beijing that “bullying and hegemony will only lead to self-isolation,” while promising billions in development credit and deeper cooperation, including on infrastructure and clean energy.
Speaking at the forum just a day after the United States and China announced a deal to drastically reduce tit-for-tat tariffs for 90 days, Xi cast Beijing as a defender of peace and stability.
“There are no winners in tariff wars or trade wars,” Xi said. “Only through unity and cooperation can countries safeguard global peace and stability and promote worldwide development and prosperity,” he said.
Notably, the unveiling of the Chinese credit lines comes at a particularly precarious time. Several countries from Latin America and the Caribbean are working on improving terms of trade with the US after the Donald Trump administration imposed a series of tariffs on them as part of a broader “America First” trade policy aimed at reducing trade deficits and protecting domestic industries.
In fact, as per some reports, these tariffs on Latin American and Caribbean countries were also aimed at countering China’s growing influence.
Thus, the further deepening of cooperation and Chinese investment in the region could throw another spanner in Washington’s way. The Latin American region, for one, has emerged as a key battleground in Donald Trump’s confrontation with China, and Washington is pressuring the regional nations to pick a side.
This was evident in the Chinese Foreign Minister Wang Yi’s message to the ministers attending the summit. He called on the Latin American nations to “join hands” with China to defend their rights against a country that is “using tariffs as a weapon to bully other countries”.
Earlier, in April 2025, Lin Jian, the Spokesperson of the Ministry of Foreign Affairs of China, posted a caricature on the social media site X with a caption: “China carries out practical cooperation with countries in Latin America and the Caribbean (LAC) on the basis of mutual respect, equality, and mutual benefit. This cooperation has significantly boosted socioeconomic development in LAC countries and has been widely welcomed and commended. In contrast, the United States’ long-term bullying and plundering have left Latin America with open veins. The US is in no position to point fingers at the cooperation between China and LAC countries.”
China’s Inroads In Latin America
China’s growing investment in Latin America has alarmed the US because the capital growth also entails expansion in influence, deeper military ties, and establishing infrastructure with dual-use applications.
China has become South America’s largest trading partner, surpassing the United States. Bilateral trade reached US$427 billion from January to September 2024.
Meanwhile, the US has said rather clearly that the growing role of the Chinese Communist Party (CCP) in the Western Hemisphere threatens the United States’ interests.
China has free trade agreements (FTAs) with Chile, Costa Rica, and Peru. In November 2024, it signed an enhanced FTA with Peru that is anticipated to increase bilateral trade by 50%.
While previous reports suggested that China’s negotiations for an FTA with Ecuador began in 2022, other countries like Brazil, Argentina, Paraguay, and Uruguay have reportedly expressed interest in a trade deal to address trade deficits.
Chinese state-owned businesses have made significant investments in the mining, technology, and energy industries. China’s recent investments in the region include factories for electric vehicles (EVs) in Mexico and Brazil, as well as lithium projects in Argentina, Bolivia, and Chile, which are critical for battery construction.
For decades, China has poured hundreds of billions of dollars into building critical infrastructure like ports, roads, and power plants, which many see as an attempt to buy power and influence in the region.
China’s strongest link to the region is through the Belt and Road Initiative (BRI). So far, 22 countries in the region have signed BRI cooperation documents with China. While Panama exited the BRI in February 2025 amid pressure from the United States, the latest reports suggest that Colombian President Gustavo Petro is willing to join the BRI.
The Chinese Belt and Road Initiative (BRI) is one tool Beijing has used to further its ambition of becoming a world power.
The United States has consistently warned Latin American countries about the risks of participating in China’s Belt and Road Initiative (BRI), emphasizing concerns over debt traps, sovereignty, transparency, and strategic influence.
The US argues that BRI loans come with high interest rates and opaque terms, which can create unpredictable debt situations. US officials frequently cite the case of Sri Lanka’s Hambantota Port, which was leased to China after Sri Lanka failed to pay its debt.
China’s banks, the Export-Import Bank and the China Development Bank, gave Latin American governments more than US$141 billion in loans between 2005 and 2020, most of which were for infrastructure and energy-related projects.
China’s injection of massive capital for building infrastructure has been repeatedly red-flagged by the US, albeit with little effect. For instance, Beijing’s flagship BRI project, the new Chancay Port in Peru, was constructed by China at an estimated cost of US$3.5 billion. The Chinese shipping giant COSCO is the port’s sole operator.
Although Chancay port is 4,500 miles from San Francisco, it is situated on America’s “20-yard line” from a geopolitical standpoint. The US is primarily worried that Beijing will use the port for military objectives, providing it with a deep-water port near the US but far enough to allow it to survive in the event of conflict.
Washington is particularly concerned about the relationship between Chinese commercial enterprises and the government, especially regarding military implications.
Ports and their associated equipment can serve dual purposes, enabling both commercial activities and potential military uses by the Chinese Navy. For instance, the US Southern Command earlier warned that the deep-water Chancay port could house Chinese military boats and survey vessels, which China extensively uses to collect intelligence.
Earlier this year, the US also launched a diplomatic offensive against China in Panama by flagging China’s growing influence in the country, particularly around the Panama Canal, which was originally constructed by the US.
In February this year, Secretary of State Marco Rubio warned Panama’s President Jose Raul Mulino that Washington would “take measures necessary” if Panama did not immediately take steps to end China’s influence. This ultimately led to Panama succumbing to pressure, snapping key agreements, and exiting the BRI.
China also established a Space Agency station called Espacio Lejano in Argentina, which the US fears could be used to track satellites. The lingering concern is that these facilities may track or interfere with US and other partner satellites, despite being supposedly employed for space research.
Furthermore, some researchers say these sites could help the PLA guide hypersonic missiles, potentially boosting China’s capability to strike the US.
Over the years, China has emerged as a supplier of military equipment to Latin American countries, particularly those with strained US relations or those particularly seeking affordable alternatives. However, the equipment transfer has remained relatively limited. China had earlier tried to sell the JF-17 Block III aircraft to Argentina. However, the US diplomacy won, and the Argentine government chose a retired Danish F-16 instead.
Unlike the US, which has military bases in the region, China has no permanent military presence in Latin America. Nonetheless, the US has also been worried about many Latin American countries using Chinese firms like Huawei, which have alleged links to the Chinese military, in their 3G-4G networks. A Brazilian firm has also reportedly signed a memorandum of understanding with Huawei to build a prototype 5G network in a city.
Moreover, Huawei supplies surveillance technology, including facial recognition systems, to Peru and Bolivia, which could enhance internal security but enable data collection for Beijing and pose a long-term threat.
For this reason, the Chinese reference to the US as a bully and unveiling a massive credit line for countries in the US backyard could unsettle Washington and sour ties between the two rivals even further.
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