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Ralph Jennings

China, eager to build up a foreign trade network while its ties with the United States languish, has been stepping up efforts to bolster its economic relations in Latin America this year.
Due to geographic proximity and long-standing political alliances, Latin America has traditionally looked to the US market as its top source of business.
But deals in the region improve China’s ability to break down trade barriers, call for joint development and advance international use of the yuan.
Argentina to pay Chinese imports in yuan as South America becomes battleground
The US remains Latin America’s biggest trade partner, but China ranks No 2 after two-way commerce hit a record last year.
Latin American countries exported around US$184 billion worth of goods to China and imported US$265 billion in 2022, according to the Global Development Policy Centre at Boston University.
Here are five inroads China has made in Latin America this year.
1. China-Ecuador free-trade agreement
The deal signed on May 11 took a year to negotiate, according to China’s Ministry of Commerce.
The ministry said the pact will create a “convenient and transparent” business climate for realising two-way trade potential.
China-Ecuador trade negotiations spark US fears of ‘erosion of influence’
China and Ecuador are unlikely to compete, as the small Latin American country will probably ship oil, mining goods and seafood to China, which will send manufactured products the other way, said Evan Ellis, a research professor of Latin American studies at the US Army War College’s Strategic Studies Institute.
[T]his is an indication of China’s continuation of the use of [free-trade agreements] to open markets and commercial engagement and influence
Evan Ellis
“Obviously, this is an indication of China’s continuation of the use of [free-trade agreements] to open markets and commercial engagement and influence,” Ellis said.
“The question is, what are the markets that China would compete in? And I think there’s the sense of complementarity.”
2. Taiwan cancels 15-year-old trade deal with El Salvador
Taiwan, a self-ruled island that Beijing regards as a breakaway province that needs to be reunited with the mainland – by force, if necessary – cancelled its free-trade agreement with El Salvador on May 15.
Taiwan Premier Chen Chien-jen said the economic impacts of stopping the trade deal with the largest country in Central America were “very limited”.
El Salvador broke official diplomatic ties with Taiwan in 2018 in favour of formally recognising mainland China.
China launches free-trade talks with El Salvador in America’s ‘backyard’
President Nayib Bukele said in 2022 that El Salvador and China would start their own free-trade talks and try to clinch a deal as soon as possible.
Taiwan’s trade agreement with El Salvador also includes Honduras, which cut diplomatic ties with Taiwan in March.
Honduras intends to negotiate its own free-trade deal with mainland China, media outlets in Latin America reported on May 12.
3. China, Brazil sign 15 agreements, agree to use yuan
Brazil, Latin America’s largest economy, reached 15 deals with China when President Luiz Inacio Lula da Silva travelled to Beijing in April.
Their accords cover joint development of satellites, the digital economy and trade facilitation.
China, Brazil to sign more than 20 deals during Lula’s state visit this week
Brazil and China had reached a yuan-settlement deal in February in a development seen as a way for both sides to cut US dollar exposure.
4. Argentina, China agree to settle imports in yuan
Argentina, South America’s second-largest economy, decided to use the Chinese yuan to pay for US$1.04 billion worth of Chinese imports in April, followed by US$790 million every month from May onwards.
Economy minister Sergio Massa announced the decision in April after a meeting with Chinese ambassador Zou Xiaoli.
Argentina hopes the yuan transactions will help it maintain US dollar reserves after a historic drought reduced exports by US$15 billion.
5. China, Nicaragua make initial import, export tariff cuts
From May 1, the Customs Tariff Commission of China’s State Council began allowing tariff-free imports of beef, seafood, cable and clothing from Nicaragua, state media outlets in Beijing said.
The tariff cuts extend other support by China for the impoverished Central American country that cut ties with Taiwan in 2021.


China in turn would export insecticides, herbicides, plastics and raw materials for toys, all tariff free, according to Chinese and Nicaraguan media reports.
The tariff cuts stem from an “early harvest” deal reached in July, when the two countries announced the start of talks toward a free-trade deal.
As Nicaragua’s top economic partner, the US buys half of all Nicaraguan exports and is responsible for 27 per cent of its imports, according to data from the US Department of State.


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5 trade moves China has made in 2023 in Latin America – the traditional backyard of the US

Argentine Economy Minister Sergio Massa and Chinese smbassador to Argentina Zou Xiaoli met in Buenos Aires in April. Photo: dpa

China’s Ambassador to El Salvador Ou Jianhong and Salvadorian President Nayib Bukele attend the first stone laying ceremony of the new National Library, financed by China, in San Salvador. Photo: Reuters

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In March, the yuan became the most widely used currency for cross-border transactions in China, overtaking the dollar for the first time. Photo: AP

In March, the yuan became the most widely used currency for cross-border transactions in China, overtaking the dollar for the first time. Photo: Reuters

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Australian trade minister Don Farrell speaks with Chinese commerce minister Wang Wentao in Beijing on Friday. Photo: AP

Australian trade minister Don Farrell, who is in China this week for high-level talks, visited the Forbidden City in Beijing on Friday. Photo: AP

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China trade: slowing exports to bottom out in late 2023 amid ‘increasingly clear’ weak demand

China’s exports rose by 8.5 per cent in April compared with a year earlier, while imports fell by 7.9 per cent last month. Photo: AP

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China has recently bolstered its relations with the likes of Ecuador, El Salvador, Brazil, Argentina and Nicaragua
Latin America traditionally looks to the United States as its top source of business


China has recently bolstered its relations with the likes of Ecuador, El Salvador, Brazil, Argentina and Nicaragua, even as Latin America traditionally looks to the United States as its top source of business.


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Explainer

Explainer | 5 trade moves China has made in 2023 in Latin America – the traditional backyard of the US

China has recently bolstered its relations with the likes of Ecuador, El Salvador, Brazil, Argentina and Nicaragua Latin America traditionally looks to the United States as its top source of business

1. China-Ecuador free-trade agreement

China has recently bolstered its relations with the likes of Ecuador, El Salvador, Brazil, Argentina and Nicaragua

Latin America traditionally looks to the United States as its top source of business