Geopolitics and final reflections

South America remains significantly behind in terms of economic and political integration. In principle, few regions of comparable size and population share so many elements of cohesion: A common colonial history, mutually intelligible languages such as Spanish and Portuguese, a predominantly Catholic tradition and the absence of large-scale interstate wars since the independence movements of the 19th century.

Intuitively, these factors should have laid the groundwork for solid integration. However, South America has the lowest levels of intraregional trade in the world. Only about 13% of its trade takes place within the region,⁹ compared to about 60% in the European Union and 40% in Asia. Cross-border infrastructure is equally weak. There are no regional rail networks, air transport is costly and fragmented, and energy interconnections remain limited.¹⁰

The recurrent failure and dysfunction of regional integration schemes—from the Andean Pact¹¹ to more recent groupings such as UNASUR¹² and CELAC¹³—reflect chronic discontinuity, shifting political priorities, weak bureaucracies and divergent national models.

In addition to slowing economic development, this fragmentation has direct consequences for South America’s energy transition. In the absence of common standards on tax, environmental protection and domestic‑participation rules, countries compete with each other to attract investment, often under favorable conditions for external actors. The result is a race-to-the-bottom pattern, in which concessions are granted in exchange for short-term capital and collective bargaining power is weakened.

Mercosur, a trade bloc made up of Argentina, Brazil, Paraguay, Uruguay and Bolivia—Venezuela is a member although it has been suspended since 2017 due to the breakdown of the democratic order in the country—stands out as a partial exception¹⁴ Despite recurring disputes among its members and limited impact on intraregional trade, it has proven to be more durable than most regional integration efforts. In fact, under the current uncertain geopolitical environment, the bloc has also taken on renewed strategic relevance.

Negotiations for the trade agreement between Mercosur and the European Union began in 1999 and spanned more than two decades, culminating in a political agreement in December 2024. The agreement’s revival was catalyzed by Russia’s war against Ukraine, which exposed Europe’s vulnerabilities in energy and supply chains and led Brussels to diversify its sources, moving away from both Russian hydrocarbons and certain dependencies on China. Therefore, Mercosur’s performance as an integration mechanism—the very rationale behind its creation—has increasingly taken a back seat to its function as a strategic platform for engaging external actors at a moment when global rivalries are reshaping trade and investment patterns.¹⁵

Institutional asymmetry further deepens these constraints, as the strength of governance and regulatory institutions varies considerably across the subcontinent. Some countries have well-established regulatory institutions and a strong rule of law, while others rely on discretionary decisions by the executive branch or on opaque negotiating channels. Even within countries, subnational governments can set the tone, with some provinces applying stricter environmental and social standards and others prioritizing speed and flexibility. An unequal institutional environment favors external actors willing to operate through discretionary or opaque mechanisms. A project that would face rigorous scrutiny in one jurisdiction may move forward with limited oversight in another, fragmenting the regional landscape and making it difficult to consolidate common standards.

Fragmentation, paradoxically, is not an obstacle for external actors, but an opportunity. By adapting their strategies to national and subnational contexts, international actors can ensure flexible and direct agreements without facing a unified negotiating position. For South America, the cost is strategic: The region dilutes the value of its resource endowment and weakens its capacity to define the rules of engagement.

From the PRC’s perspective, South America is a strategic supplier of critical minerals, food and energy, and a relevant space to strengthen Beijing’s diplomatic position on Taiwan. Even though the region occupies a peripheral position relative to China’s primary geopolitical focus in East Asia, these overlapping incentives have strengthened its relevance within Chinese foreign policy.

China’s foreign policy is often described as “pragmatic” or “non-ideological,” particularly because Beijing engages with democracies, hybrid regimes, and authoritarian governments without tying its relationships to conventional left-right alignments, or liberal criteria regarding democracy and human rights. China does not lack ideology; rather, its foreign policy is organized around its own ideological framework that structures international relations differently from the conventional political categories employed in the West and Latin America.

That framework is increasingly organized around a division between an “us”—presented as the Global South—and a “them,” associated primarily with the West. Within this narrative, China projects itself as a representative and partner of countries historically marginalized by colonial and post-colonial dynamics. Latin America clearly fits into that “us,” while the United States occupies the place of the main “other” in the hemispheric context.

This ideological framework guides China’s actions in practice. Beijing offers financing, trade and investment with few explicit political conditionalities, avoiding the demands for transparency, governance or institutional reform commonly associated with Western actors and multilateral organizations. At the same time, it promotes its own diplomatic priorities, including the one-China principle, alternative human rights definitions and normative preferences in multilateral forums.

In operational terms, China acts through state banks, construction companies, manufacturing companies, technology firms and provincial governments. Its model favors direct contact with national and subnational elites, which allows it to negotiate projects at multiple levels of government and accelerate decision-making processes. While the first phase of engagement, in the early 21^st century, focused mainly on the national level, subnational entry points have gained relevance, particularly in federal countries such as Brazil and Argentina. By establishing agreements with local authorities, Chinese companies and entities can bypass slower national bureaucracies and maintain continuity even amid political volatility in the central government.

In the financial sphere, China’s comparative advantage is difficult to match. Over the past two decades, public policy banks such as China Development Bank and Export-Import Bank of China have provided more than US$120 billion in loans for energy, mining and infrastructure projects¹⁶—a figure comparable to the cumulative approvals of the Development Bank of Latin America (CAF) during the 2010s, which averaged between US$9 billion and US$13 billion per year and totaled around US$110–120 billion over the same period¹⁷

In practice, Chinese banks have not replaced multilateral institutions such as CAF, the Inter-American Development Bank (IDB) or the International Monetary Fund (IMF). Rather, they have become an additional pillar in the region’s development finance architecture, expanding the availability of long-term capital to governments with persistent infrastructure needs.

Minerals form the next tier of the relationship. Copper, lithium, iron ore and oil support South American exports of natural resources to China and are central to Beijing’s industrial agenda, including “Made in China 2025”¹⁸ and the “dual circulation” strategy¹⁹ Far from reducing its dependence, China’s drive toward technological self-sufficiency has deepened its dependence on South American inputs. Agreements with companies such as Ganfeng Lithium in Argentina or Jiangxi Copper in Peru illustrate how critical minerals and energy transition are integrated into Beijing’s broader strategic calculus.

Although the first wave of Chinese expansion in the region was dominated by state-owned enterprises, today the private sector has taken on at least equal importance. Its presence closely follows the industrial priorities defined by the Chinese state and extends Beijing’s influence through market mechanisms. The fastest growing companies are those aligned with strategic domestic sectors: Electric mobility, batteries, telecommunications, cloud services, fintech, surveillance and smart city systems.

As the United States and Europe restrict the participation of Chinese suppliers in sensitive technology sectors, South America—which has largely avoided securitizing its relationship with China—is emerging as an attractive destination for the relocation of sales, services and digital infrastructure. The result is a gradual integration of Chinese technology ecosystems in the region, from electric vehicles and batteries to networks, data platforms and digital services. This trend can generate gains in connectivity and investment, but also reinforce long-term dependencies on Chinese standards, suppliers, and technology architectures²⁰

At the diplomatic level, the Chinese approach to Latin America remains strongly bilateral. Although the China-CELAC Forum provides a regional platform, it functions primarily as a consultative and declarative mechanism, without operational capacity comparable to that of a robust regional institution. In practice, most relevant agreements are negotiated directly with national governments, subnational authorities, political parties and elites. This approach allows Beijing to take advantage of the lack of coordination in Latin America and tailor its ties to the preferences of each government. On the other hand, it also exposes Chinese projects to electoral cycles, leadership changes and breaks in administrative continuity.

When it comes to soft power, it plays a more limited role than is usually assumed. While Confucius Institutes, scholarship programs and Chinese state media have a presence in the region, their impact is modest compared to the organic cultural influence of the United States, Europe or even South Korea and Japan. What is most appealing to South American countries is not Chinese culture or its political system, but its development trajectory.

China’s transformation from an agrarian and poor economy to a global industrial and technological power is a compelling benchmark for public policy makers in South America. Its track record in infrastructure, industrialization and poverty reduction offers a particularly persuasive narrative in a region that, despite levels of economic and social development higher than China’s during the 1960s and 1970s, failed to achieve a comparable structural transformation.

This attraction, however, generates obvious tension. The Chinese model is based on an authoritarian one-party system, while most South American countries are formally organized around democratic and republican frameworks. Even in contexts of democratic backsliding, such as Venezuela, political traditions and social demands oriented toward the restoration or strengthening of democracy persist. Thus, China’s appeal rests less on cultural or political affinities than on its material performance, its state capacity and its promise of accelerated modernization.

The relationship between China and South America is often analyzed through the lens of Latin American dependence on China. The reality is much more complex. As Beijing deepens its technological and industrial transition, its access to critical minerals, energy and food from the region becomes increasingly important. This interdependence does not eliminate existing power asymmetries, but it does give South American countries greater bargaining room than is often acknowledged. The central question is whether the region will be able to turn that strategic relevance into a development agenda of its own.