China’s partnerships in Latin America and the Caribbean can indirectly weaken U.S. influence in its own hemisphere.

China is doing this by challenging the U.S. as the region's dominant economic partner, offering an alternative model of engagement, and expanding its political and military presence in a way that undermines U.S. security interests.

Economic Displacement and Leverage 

For decades, the United States was the unquestioned top trading partner and source of investment for Latin American and Caribbean nations. However, China has rapidly altered this dynamic, creating a form of economic displacement that gives it significant leverage.

• Trade and Investment: China has become the second-largest trading partner for the region as a whole and the top trading partner for countries like Brazil, Chile, and Peru. Beijing's demand for raw materials, such as soybeans, copper, and oil, has fueled economic growth in these nations. China's state-owned banks have also provided billions of dollars in loans for infrastructure projects, often with fewer conditions than loans from Western institutions. This economic reality means that Latin American nations now have a powerful alternative to the U.S., reducing their need to align with Washington's policy positions.

• The Belt and Road Initiative (BRI): China has successfully integrated many Latin American countries into its BRI. These investments include ports, railways, and energy projects. For example, China is developing a major deepwater port in Peru, which will serve as a hub for Chinese trade in the region. This gives China a physical presence and control over critical infrastructure, which could have both commercial and military implications.

This economic foothold allows China to use its market and investment as a tool for coercion. A country that depends on China for trade or loans may be less willing to support U.S. policy or to criticize China's human rights record or its actions in the South China Sea.

Political and Diplomatic Challenge 

China’s influence extends beyond economics to the political and diplomatic spheres, where it challenges the U.S. for regional leadership.

• Ideological Alternative: China offers a development model that doesn't include Western-style democratic or human rights conditions. This "no-strings-attached" approach is attractive to authoritarian regimes, like Venezuela and Nicaragua, which have been isolated by the U.S. China’s economic lifelines to these nations undermine U.S. efforts to promote democracy and stability in the region.

• Diplomatic Pressure on Taiwan: China actively uses its economic leverage to persuade countries in the region to sever diplomatic ties with Taiwan. In recent years, several countries, including Panama, the Dominican Republic, and Nicaragua, have switched their diplomatic recognition from Taiwan to China. This is a significant diplomatic victory for Beijing and a direct challenge to the U.S., which maintains unofficial ties with Taiwan and seeks to prevent its further diplomatic isolation.

Security Concerns and Military Presence 

While China’s military presence in Latin America is not on the same scale as the U.S., its actions still pose a challenge to U.S. security and intelligence.

• Dual-Use Infrastructure: Chinese-funded projects, such as ports and space-tracking stations, can have dual-use capabilities, serving both commercial and military purposes. For example, China's space station in Argentina, ostensibly for scientific research, is operated by the People's Liberation Army (PLA) and could be used for intelligence gathering or to support China's military satellite programs.

• Military Engagement: China has also increased its military engagement with the region through arms sales, joint exercises, and officer exchanges. While these activities are not a direct threat to the U.S., they erode U.S. influence and provide China with a better understanding of the region's security environment.

• Intelligence Gathering: U.S. officials have expressed concern about China's intelligence-gathering activities in the region, including reports of a suspected Chinese spy base in Cuba. This presence, so close to the U.S. mainland, is a direct threat to U.S. national security.

In essence, China is systematically eroding U.S. influence by filling a perceived vacuum left by the U.S.'s focus on other parts of the world. By offering an alternative to the U.S. in trade, investment, and diplomacy, China is providing Latin American nations with the option to move away from a U.S.-centric foreign policy, making it more difficult for Washington to maintain its traditional dominance in the Western Hemisphere.