China is invading Latin America with strategic investments in mines, ports, and factories, particularly aimed at the growing electric vehicle (EV) market. U.S.-based China-focused news platform The China Project highlighted in a late 2023 report these investments as a clear indication of Beijing’s ambition to rule the region.
The report stresses how the Asian country is ensuring access to essential metals such as lithium, abundant in Latin America. It also uses any negotiation to monopolize this key material to manufacture batteries for EVs, the BBC reported.
“This expansion is directly related to the strategic exploitation […] of the South American region known as the lithium triangle, where the world’s largest reserves of this metal are located,” Sergio Cesarin, coordinator of the Center for Asia-Pacific and India Studies at the Tres de Febrero National University in Argentina, told Diálogo.
To ensure constant supply of lithium, Beijing is developing the port of Chancay, in Peru. The mega port, which seeks to be the largest maritime port in the South American Pacific and a key exchange point between Asia and the region, will be ready in November 2024, French news network RFI reported.
Chancay will have an investment of more than $3.5 billion and 15 docks, RFI indicated. This project, led by Cosco Shipping, a Chinese state-owned company, owns 60 percent of the wharf. Cosco has a presence in 37 ports in the world and owns more than 1,300 vessels, according to RFI.
Economist Julia Cuadros of Peruvian nongovernmental organization CoperAcción, told RFI that China, with notable investments in sectors such as mining, electricity, hydrocarbons, and infrastructure in Peru, “will be the main beneficiary of the Chancay Port, receiving 48 percent of the country’s mineral exports.”
Cesarin said that Chancay is designed to boost Chinese companies’ activities, providing a logistics route that will connect Brazil, Bolivia, and Chile. This connection seeks to take full advantage of the region’s resources and geographic location, especially lithium for the EV industry and batteries, which are in high demand.
According to the Economic Commission for Latin America and the Caribbean, the lithium triangle made up of Argentina, Bolivia, and Chile, holds 56 percent of the world’s lithium reserves. Other countries, such as Brazil, Mexico, and Peru, hold lithium deposits, bringing regional resources to almost 60 percent of the global total.
Internationalization vs. security
Chinese EV companies are investing heavily in Latin American countries such as Argentina, Brazil, and Mexico, taking advantage of regional market growth and these nations’ interest in emissions reduction.
In Brazil, Chinese battery manufacturer BYD plans to build an export base for Latin America. In Argentina, Chinese companies Chery and Gotion have joined forces to manufacture 20 electric vehicle models near their lithium reserves. In Mexico, several Chinese companies are already assembling vehicles with a view to exporting to the United States, Diálogo Chino, an investigative journalism platform, reported.
Professor Jim Saker, president of the Institute of the Motor Industry in the United Kingdom, warned of the potential security threat from Chinese EVs. In an interview with British newspaper Telegraph, he said that there is a huge possibility that these vehicles could be remotely manipulated, causing considerable downtime.
Saker said that “a Shanghai-based automaker could stop between 100,000 and 300,000 vehicles across Europe, paralyzing a country, despite regulatory efforts to detect malicious software or other weaknesses.”
He also highlighted the complexity of conducting extensive testing on thousands of vehicles, which represents a significant challenge in terms of security and control. The Telegraph reported that the Chinese Communist Party intends to create a major EV export industry.
To advance in this market, the Chinese government subsidizes and grants tax breaks to the new energy vehicle industry, a strategy that has been replicated in other countries. Its investments in the global EV market grew from $605 million to more than $24 billion between 2016 and 2022, the Telegraph reported.
“There is no doubt that the international expansion of Chinese companies is backed in consistent state subsidies, a standard practice in their internationalization strategy over the past three decades,” Cesarin said.
According to Cesarin, this support has triggered disputes and controversies in international bodies such as the World Trade Organization.
“the acquisition of European companies such as Volvo has strengthened the internationalization of Chinese companies in the automotive industry, allowing them to access relevant technology, knowledge, expertise, and markets,” Cesarin added.
“While Chinese EVs may be more affordable, Western vehicles tend to be more rugged and safer. But, this higher quality comes with a higher price tag,” Cesarin said. “Sometimes, as consumers in Latin America, we opt for the cheaper option. This choice involves a complex equation that we are sometimes unaware of as buyers.”
According to Mexican magazine Expansión, Luis Fernando Pedrucci, president of Renault Latin America, warned about the unequal competition created by the advantages granted by the Chinese government to its local manufacturers, which could restrict investments in electric vehicles in Latin America.
“It’s as if we were playing a soccer match at home, following the rules, while the opposing team has significant arbitration advantages. This upsets the balance and in the end benefits some to the detriment of everyone else,” Pedrucci said, highlighting the lack of imposition of tariffs on EVs imported from China by Latin governments.
“The protests and complaints from other companies do not surprise me, given China’s approach. Beijing seeks to destabilize the global market and through its companies seeks to exhibit superiority over Western economies, gain ground in markets, and displace Western production,” Cesarin said.