from spending a decade sowing ports and trains to reaping with their electric cars

For more than a decade, Beijing has been building the infrastructure, alliances and agreements that allow it to gain an advantage in a continent that has just opened its doors wide. And after having conquered Europe, and in the process of doing the same in Canada With its new energy and industrial vehicles, Latin America has for years been a pending strategic point for China in which to transfer a good part of its technology in exchange for raw materials.

A fertilized land. Although China has had an eye on Latin America for many years, its strategy is now entering a different phase. For years, his play has focused on ports, railways, loans and commodities. Today, to this is added an automobile industry that urgently need to exportand that finds in Latin America a terrain that has already been fertilized with patience.

Infrastructure. The most visible example is the Chancay megaporton the central coast of Peru, operated by the Chinese state shipping company Cosco Shipping. With the capacity to receive the largest container ships in the world, its objective is to reduce transit times between South America and Asia from the current 40 days to just 28.

Robert Evan Ellis of the US Army Institute for Strategic Studies. he described it to the BBC some time ago as the transition from a route that “previously made all the stops” to another that “goes directly to the destination.” Peru, with China as its main trading partner for more than a decade, is not the only country: 22 countries in Latin America and the Caribbean are already part of the Belt and Road Initiative, Beijing’s great global connection project.

Added to that are the railways. It is estimated that Latin America has more than 150 railway projects on the table with an estimated investment of 384 billion dollars until 2050, according to the Development Bank of Latin America and the Caribbean. China plays a central role in its financing, from the 16 billion dollars in road modernization in Argentina to the Bioceánica Railway, the 3,700 kilometer corridor that It will connect the Atlantic with the Pacific, crossing Brazil, Bolivia and Peru.. A work that not only connects countries, but shortens China’s route to the continent’s raw materials.

lthe cars chinese. While the country is building all this logistics operations, China has been facing a serious problem for some time: a chronically overproduced automobile industrymargins under pressure and a cooling domestic market. BYD, its best-known manufacturer, saw the state withdraw subsidies for plug-in vehicles, making it its sales suffered. The answer to preventing its economy from sinking has been foreign expansion. Europe knows this perfectly, and Latin America has also been at the center of the plan for some time.

To continue with the example of BYD, despite being a privately held company, already produces in Brazilwhere it sold 113,000 cars last year, more than in any other market outside of China, with a plant with the capacity to reach 600,000 vehicles annually. As Bloomberg tells it, from there, it will export 50,000 units to Mexico and another 50,000 to Argentina, taking advantage of trade agreements that eliminate tariffs between these countries. The factory in Brazil will be the one that supplies vehicles to the rest of Latin America.

It is not the only front. Manufacturers like Changan have been perfecting for years in Mexico a model reuse strategy (the same vehicle with different brands and prices over time) that allows them to maintain a constant presence with a minimum investment in development. On the other hand, Yutong, one of the largest bus manufacturers in the world, has just delivered the first 180 of the 600 buses planned for modernize public transportation in Nicaragua within the framework of an agreement with the country’s Government.

Concern in Washington. Donald Trump’s administration has classified the case of the port of Chancay as an example of how “cheap Chinese money” can erode national control over critical infrastructure. His warning also points to something more serious: that China uses displaced labor from its country instead of local ones, something that does not catch us by surprise in Europe, and that ends up generating economic dependencies that are difficult to reverse.

Ellis counted to the BBC that “with Chancay, Peru will become more dependent on China,” and recalled that in other relations between Latin America and Asia “China used predatory techniques and ended up taking natural resources.”

Peru illustrates the tension well: it has China as its main trading partner and the United States as a strategic ally and military partner. Washington negotiates the construction of a naval base a few kilometers from the port that Beijing operates. The same enclave, two powers, and an uncomfortable decision.

A paradise for Chinese technology. Latin America is not a homogeneous market, but it has several common features that make it attractive to China: aging transportation infrastructures, growing middle classes, low penetration of electric vehicles and tariffs that, in many cases, have not yet adjusted to the pace of China’s entry. Brazil, Mexico and Argentina concentrate the bulk of attention by market size, but the agreements with Nicaragua or the projects in Chile, Colombia and Peru show that the strategy is much broader.

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