Over the past two decades, Latin America has witnessed a redrawing of the map, in terms of the role played by global powers in its nations. While the United States was the undisputed top economic partner in the region for much of the 20th century, today that position is being challenged – and in many cases already surpassed – by China. The magnitude of the change is such that it is no longer just a commercial shift, but a process that is redefining political, diplomatic and strategic balances.
This is the backdrop for Economic Displacement: China and the End of US Primacy in Latin America, a new book by Francisco Urdinez. An associate professor in political science at the Pontifical Catholic University of Chile, he also directs the Millennium Nucleus on the Impacts of China in Latin America (ICLAC) research group. Using case studies and data, his book shows how China filled an “economic void” created amid a progressive withdrawal from Latin America by the US between 2001 and 2020. Urdinez argues this has reduced US political influence in the region.
Here, Urdinez discusses how he came to write the book, his main findings and their implications for Latin American policymakers.
Dialogue Earth: What motivated you to write this book, and why did you feel it was the right time?
Francisco Urdinez: My doctoral thesis focused on how the United States had lost influence in Latin America and how China was filling that void, which is one of the central ideas of the book.
At the time, in 2017, the analysis was more basic in terms of data. Over time, I discovered that one of the biggest problems was the lack of systematic information: the academic and political communities did not have enough data to answer my research question. That is why I devoted myself to collaborating on projects that collected information on investments, financing and donations, and conducted surveys among elites and citizens to gauge perceptions of China’s rise.
My premise was always that China’s economic growth would inevitably translate into political influence, as has been the case with other emerging powers throughout history. The key was to construct an index that measured China’s economic weight and compare it with that of the United States, which allowed me to clearly narrate the shift that was taking place.
China is not a “black box” that simply buys raw materials, but a network of hundreds of actors that influence the regional economy
The book is divided into two main parts. The first explains why the concept of economic displacement matters, how it is measured, and what it reveals about the United States’ loss of relative weight in the region.
The second part analyses the political effects of this process, in particular the erosion of the legitimacy of the order built by Washington in Latin America over the past five decades. This dual perspective – methodological and political – seeks to show that the phenomenon is not only economic, but also structural in terms of international power.
How do you define ‘economic displacement’ in the context of relations between the United States, China and Latin America?
It is the moment when China becomes the most important economic partner of a Latin American country, surpassing the United States. To measure this, I constructed an index that aggregates all relevant economic actors: companies, banks, cooperation agencies and credit providers, both Chinese and American.
The aim was to show that China is not a “black box” that simply buys raw materials, but a network of hundreds of actors that influence the regional economy. Doing the same exercise with the United States was even more complex, but it allowed us to have two comparable indices. Both are expressed as a percentage of the GDP of each Latin American country.
The shift occurs when China’s economic “weight”, having started from zero, exceeds that of the United States. It is a clear and simple way to capture a continuous and progressive process of US influence loss in the face of China’s rise.
You argue that the United States has ‘retreated’ economically in the region. What is the best evidence of this decline?
The data is compelling: in the 1970s and 1980s, the United States was the main source of investment and external financing in Latin America – a role it had played since the early 20th century. Washington consolidated its global power first as an economic and technological powerhouse, before projecting its cultural and political influence. That transformative role has gradually faded, as China took on the task of providing capital, goods and technologies.
In recent decades, Latin America ceased to be a priority for Washington, which focused its attention on regions considered more strategic. Many US companies lost interest and capital fled, leaving room for China to fill the void. For years, even sectors of the political elite in Washington welcomed China’s revitalisation of economies where the United States was absent, without perceiving it as a threat. It was only in 2016 that this view began to change, when China’s rise came to be interpreted as a direct geopolitical challenge.
How has China’s economic rise transformed trade and investment patterns in Latin America?
The transformation has been historic and comparable to similar processes in Africa and Southeast Asia. In just a few years [in the early 2000s], Chinese demand for raw materials generated an unprecedented concentration [towards China] in the region’s exports.
My book dismisses alternative explanations, such as this being solely due to a boom in commodity prices, or ideological affinities with left-wing governments. The key point is that, at the subnational level, economic actors discovered that China was a reliable buyer, and an investor willing to take risks quickly and without excessive bureaucracy.
In less than a decade, Beijing went from being a marginal player to becoming one of the main providers of foreign capital in the region. This forced governments and companies to quickly adapt to a new scenario that no one had anticipated. The convergence between Latin America’s appetite for fresh capital and China’s willingness to provide it explains much of the phenomenon.
The rivalry between the US and China in the region has been compared to a new Cold War. Why do you question that analogy in your book?
The Cold War was an ideological and technological dispute between incompatible models, in which the Soviet Union did not offer any alternatives to the west. The current competition is different: there will be no direct military confrontation, but rather a struggle for dominance in strategic sectors such as artificial intelligence, semiconductors and the energy transition. China does not reject capitalism: it practises a model of state capitalism based on the accumulation of capital and profits.
The rivalry with the United States, therefore, is not ideological but economic and technological. Both countries are competing to control critical industries that will define the global order in the coming decades. We are facing an explicit and lasting rivalry from which there is no turning back.
To what extent are Latin American countries active players in this process, rather than simply arenas for competition between major powers?
Latin American agency is central. The book shows both “bottom-up” and “top-down” dynamics. In some cases, subnational governments took the lead and established direct links with China, such as São Paulo during the pandemic when negotiating vaccines. In others, provinces took advantage of their alignment with national governments to strengthen negotiations, as was the case with the Santa Cruz dams in Argentina. There are also examples of private initiatives, such as the port of Chancay in Peru, which was born out of an agreement between companies before the states got involved.
These dynamics show that the relationship is not only between nation states but involves multiple local actors. Much of the current story can be explained by these “bottom-up” movements.
You talk about the varying impacts of China’s economic advance in the region. Could you give examples of how this shift is experienced differently depending on the country?
In South America, China has almost completely displaced the United States, except in Colombia and Paraguay, the latter due to its diplomatic relationship with Taiwan.
In Central America and Mexico, however, the dynamic is different. There, the economic weight of the United States remains predominant and has even grown in the past 20 years.
The most profound case of linkage with China is Brazil, which has become the regional engine of the relationship, in sectors such as renewable energy and mining. Chile, for its part, depends on China for nearly 40% of its exports, one of the highest rates of trade dependence in the world.
These are structural realities that are not reversed by changes in government, as demonstrated by the cases of former Brazilian president Jair Bolsonaro and current Argentine president Javier Milei [who set out strong anti-China positions]. Economic interdependence with China is here to stay.
What role does ideology play in the way Latin American governments relate to the US and China?
Ideology plays a secondary role. The case of Argentina under former president Mauricio Macri illustrates this well: despite his initial criticism, he ended up deepening relations with China. Something similar happened with Jair Bolsonaro and Javier Milei, who questioned Beijing but did not reduce ties. There are also examples to the contrary, such as Chile, where relations were more fluid under the right-wing government of former president Sebastián Piñera than with current president Gabriel Boric, who raises objections on human rights and the environment.
Ultimately, what weighs more than ideology is economic complementarity and the actions of subnational and private actors. Ideology may influence discourse, but it rarely alters structural dynamics.
Do you see the United States trying to counter China’s growing role? And if so, how effective have those initiatives been?
US policy has been reactive, slow and coercive. Instead of offering alternatives, it has relied on sanctions and warnings, which has led to frustration in the region.
For many countries, China is not the ideal option, but it is the only one available for obtaining rapid financing without excessive conditions. Washington has tools such as the Inter-American Development Bank and the International Monetary Fund, but it does not use them with the same agility as Beijing. This is why tensions arise when poor countries are asked not to adopt technologies such as 5G, without an equivalent option.
If the United States does not adapt its strategy to provide alternative goods, it risks pushing Latin America even further towards China.
For policymakers in Latin America, what lessons or warnings does your book offer on how to navigate this shift in balance?
The main lesson is that it will become increasingly difficult to maintain a balance between the United States and China. For three decades, some countries managed to benefit from both, such as Chile and Peru with free trade agreements with the two powers. But Washington is moving towards a binary “friend or foe” policy that will force countries to choose. This will open up internal debates that could shape presidential campaigns and state policies in the next decade.
The challenge will be enormous, and it is unclear whether the region has the maturity to face it. That is why I insist on the need to train new generations of experts capable of resisting external pressures and understanding that the relationship with China is unlikely to be reversed. Barring a radical change in US strategy, China will remain the main economic partner for much of Latin America.
Economic Displacement: China and the End of US Primacy in Latin America by Francisco Urdinez is published by Cambridge University Press.
