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1 1 (June 23, 2023)

handle is hein.crs/govembj0001 and id is 1 raw text is: aCongressional Research &e pasadisu lnfrming the Iegislathve debate since 191 Updated June 23, 2023 China's Engagement with Latin America and the Caribbean Relations between the People's Republic of China (PRC, or China) and the countries of Latin America and the Caribbean (LAC) have grown substantially over the past 20 years. This growing engagement, which remains primarily economic and diplomatic, has led some U.S. policymakers to consider the potential implications of strengthening PRC- LAC ties for U.S. interests. Dipkmacy Beijing's diplomatic initiatives in LAC have helped advance China's economic priorities, institutionalize its engagement in the region, and garner support in international fora. Some analysts assess that the PRC's activities in LAC do not appear to be aimed at challenging the United States directly or militarily, yet reflect a global strategy to counter U.S. influence. China's diplomatic efforts include being an observer at the Organization of American States, a member of the Inter-American Development Bank and the Caribbean Development Bank, and a participant in the Asia Pacific Economic Cooperation (APEC) forum. Since 2014, China has sought to engage with the region through the Community of Latin American and Caribbean States (CELAC), a region-wide organization that excludes the United States and Canada. During the Third Ministers' Meeting of the China-CELAC Forum in December 2021, the parties adopted a China-CELAC Joint Action Plan (2022-2024) to guide cooperation in areas including politics and security, economy, and infrastructure. In his most recent address to the grouping in January 2023, China's leader Xi Jinping expressed China's support for LAC regional integration and characterized CELAC as China's key partner in enhancing solidarity among developing countries and furthering South-South cooperation. One of Beijing's goals in the region appears to be to isolate Taiwan by incentivizing LAC countries to end formal diplomatic ties with the self-governing democracy, over which the PRC claims sovereignty, and which officially calls itself the Republic of China. Currently, seven governments in LAC (out of 13 governments worldwide) maintain formal diplomatic relations with Taiwan. The remaining 26 maintain formal diplomatic relations with the PRC. Since 2017, five LAC governments have established formal diplomatic relations with the PRC, ending their formal recognition of Taiwan; the country to do this most recently was Honduras in March 2023. Economic R ations China's economic priorities in LAC include securing access to raw materials and agricultural goods (e.g., petroleum, soybeans, and minerals including lithium); fostering markets for Chinese goods and services, including in the information and communications technologies (ICT) sector; and partnering with LAC firms to access and jointly develop technology. China also has sought opportunities in LAC for PRC infrastructure firms as a way for these firms both to internationalize and offload excess capacity. Data published by the General Administration of Customs of the PRC estimated the total value of China-LAC trade at $482.6 billion in 2022. That year China's imports from LAC amounted to $231.1 billion, consisting primarily of ores (32%), oil seeds (18%), and mineral fuels and oils (12%). China's exports to the region meanwhile totaled $251.5 billion, with major exports including electrical machinery and equipment (23%), machinery and mechanical appliances (14%), and motor vehicles and parts (8%). China is the largest trading partner of Brazil, Chile, Peru, and Uruguay and the second-largest trading partner for many other countries. China has free-trade agreements with Chile, Costa Rica, Peru and, as of May 2023, Ecuador. China's projected slower economic growth in the near term may result in weaker PRC demand for LAC exports and reduced PRC capital flows to the region. According to the American Enterprise Institute's China Global Investment Tracker, Chinese entities invested $148.9 billion in LAC countries between 2005 and 2022, with Brazil accounting for $66 billion (44%) and Peru $25.5 billion (17%). Energy projects accounted for 62% of investments and metals/mining accounted for 21%. The database also shows that PRC construction projects in LAC over the same period were valued at $68.6 billion, mainly in the energy (50%) and transportation (30%) sectors. Figure I. China: Financing to LAC, 2005-2022 Venezuela $60.0 Brazil $31.0 Ecuador $18.2 Argentina 517.0 Bolivia $3.2 Total financing, Jamaica $2.1 2005-2022: Mexico $1.0 $136.5 billion Suriname Uss in billions; Other LAC $3.3 LAC: Latin Ameria and Caribbean Source: Created by CRS with data from Kevin P. Gallagher and Margaret Myers, China-Latin America Finance Database, Inter- American Dialogue, 2023, at https://www.thedialogue.org/maplist. China's state-owned policy banks (i.e., China Development Bank and the Export-Import Bank of China) have made numerous loan commitments to the region over the past 20 years (see Figure 1). According to the Inter-American Dialogue, from 2005 to 2022, LAC countries borrowed a

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