As American investment is low, China and India quickly expand their presence through the main industries in Latin America.
With the contraction of the American investment in Latin America, China and India takes the opportunity to expand their economic arrival in the region.
The United States is still the largest foreign investor, but its share decreased by 10 % in 2023 alone, to 38 % of a total of 224.6 billion dollars, according to the United Nations Economic Committee for Latin America and the Caribbean. Meanwhile, China has built itself as a commercial partner in Brazil, which increased its foreign direct investment (FDI) to nearly $ 601 billion by 2023, while India gains land in sectors ranging from energy to medicines.
This increased impact indicates a wider geopolitan shift, as Asian giants reinforce relations with resources rich in Latin America.
Communicate with China
China’s trade with Latin America increased from $ 12 billion in 2000 to $ 450 billion in 2023, according to the International Monetary Fund, and is now as a regional and investor commercial partner.
“The increase in Chinese investment stocks in Latin America follows the logic of integration,” says Larissa and Shahluz, an older colleague at the Brazilian Center for International Relations (CEBRI.
Chinese foreign foreign investment stocks fell from $ 126.3 billion in 2015 to $ 600.8 billion in 2023, according to data from Statista. India, despite working on a smaller scale, has deepened its relations with Latin America; While its contribution to foreign direct investment reached its climax at $ 49 billion in 2014, it is still up to $ 16 billion in 2023.
The United States will quickly lose to China, which since 2009 has become the largest commercial partner for Brazil, according to the International Monetary Fund and the World Bank. As of 2023, China was a destination of 30.7 % of Brazilian exports (about 104 billion dollars) and was responsible for 23.7 % of Brazil’s imports ($ 64 billion), according to the Brazilian Brazilian Entrepreneurship Council (CEBC). The United States, which traditionally was a commercial partner in Brazil, was second and is now responsible for only 18.6 % of Brazil imports and 10.9 % of its exports.
Wachholz notes that many major Chinese companies were local in the years when China had expanded the power of infrastructure and its services. Although development is still growing locally, the second most populated country behind the world behind India has reached the level of comfort that allows local companies to search abroad.
“China has a great similarity with Brazil, which makes investments in energy and oil attractive here,” says Washhuls. “Both are vast countries that have important possibilities for electrical and renewable energy that require long transport lines to reach their population centers.”
Like Brazil, “China had to deal with the issue of having to transfer the energy resulting in remote corners through very high voltage lines. This made the Chinese very effective throughout the electricity cycle: generation, transportation and distribution, which is a major necessity in Brazil. It justifies the level of integration in this sector alone is increasingly appetite for Chinese investments in Brazil.”
Despite China’s renewable focus on energy in Brazil, the initial stages of the relationship dates back to the eighties, when the Chinese government network for the first time in the country achieved Mauricio Santoro, author of the Brazilian -Chinese relations book in the twenty -first century: making a strategic partnership (2022).
Túlio Cariello, CEBC content and research manager, says China’s investment in Latin America exceeds Brazilian energy projects.
“It is true that China has approximately $ 73 billion of investment shares in Brazil alone, which,” notes, “corresponds to a third of its total investments in Latin America. 75 % of this amount is invested in Brazil already in the energy and oil sectors. But China is diversifying its portfolio in Brazil and expanding in building plants to produce electric cars across both BYD and Great Wall Motors (GWM).
Cariello adds that the two companies focus mainly on the Brazilian market, but they realize that regional trade agreements such as Mercosur will eventually work as a platform for simplified export to neighboring countries.
The Latin American portfolio in China also includes revision and purchase of goods while Mexico is a base for consumer products factories that can be ease more easily to the United States and Canada. And Peru attracts about 20 % of the Chinese regional foreign direct investment, most of them mining: specifically, lithium and molybdenum.
“Peru has attracted a huge amount of investment through the Chinese COSCO, which builds the port of Chancay north of Lima,” says Wachholz. “The port will cut cruises between South America and Shanghai about a week and is necessary in the belt and road project in China.”
India investments
India increases its investments in Latin America, where Brazil was often the genetic platform, according to Leonardo Ananda, CEO of the Brazilian Chamber of Commerce India (BICC).
“Seventy percent of the Indian foreign direct investment in Latin America occurs in Brazil, with some intermittent investments in Argentina, Uruguay or Mexico,” as noted.
“India’s investments are more paid in the market and are pushed by natural growth and capabilities of institutions in the country. It is a little different from what we see in the case of China, as there is a strategic boost since Deng Xiaoping to expand its capabilities to reach other angles in the world,” says Wachholz.
India’s investments gained traction after Brazil opened itself to the world in the 1990s, says Ananda, and tends to focus on information technology, pharmaceutical preparations, oil, gas, energy and cars, with a special focus on motorcycles.
Ananda says: “The fact that India, along with many Latin countries, is part of the BRICS, IBAS and G20 groups also facilitates investment flow,” says Ananda. “Investments in Brazil are so important that some Indian companies are already obtaining approximately 50 % of their share of revenues in the Latin Brazilian market instead of within India itself.”
UPL, a Mumbai -based agricultural chemical, has invested one billion dollars in the state of Sao Paulo, according to Ananda, where it has almost equivalent operations for the house, while the sterilizer in Vidida has invested 7 billion dollars ($ 1.25 billion) in acquisitions and operations through Brazil now.
Tata, one of the largest Indian groups, has gained her first foothold in Latin America through a joint venture with a Brazilian Information Technology Group, but has since obtained the entire process and now provides advisory services focusing on technology, and the use of external sources in Brazil but also in Uruguay, Argentina, Chile and Mexico.
Tata acquired the global operations of Jaguar-Land Rover in 2008, and now produces Land Rover vehicles in Rio de Janeiro. Other Indian manufacturers follow. Royal-enfield now produces its famous motorcycles in northern Brazil, a few kilometers from the opponent Bajaj Motors. At the same time, Mahindra sought to produce its tractors and distribute it to all Brazil, taking into account the export of vehicles to other Mercosur countries.
“We expect Indian investments in the region will increase significantly,” says Ananda. “The number of bilateral delegations that visit each country has grown greatly since the epidemic. India and Mercosur currently have a preferential agreement covering about 400 products under review since last year and we hope that this will be completed soon to allow more trade and pure investment between South America and India in the very near future.”
