Top US diplomat seeks to counter China's growing influence in Latin America

U.S. Secretary of State Marco Rubio's first overseas trip aims to send a clear signal. This week, Rubio will visit Panama, Guatemala, El Salvador, Costa Rica, and the Dominican Republic. His spokesperson, Tami Bruce, candidly admitted in an interview with Fox Business that "part of the purpose of this trip is to counter China."

This is an open admission, as such visits are typically couched in more diplomatic terms, such as "strengthening ties." However, the steady growth of China's economic influence in resource-rich Latin America over the past two decades has raised concerns for the new Trump administration. So, what exactly is China's influence in Latin America? And how does it compare to the situation in Australia and the Pacific region?

Tensions are rising around the Panama Canal. Panama, Rubio's first stop on this trip, has become a focal point since U.S. President Donald Trump falsely claimed that China was effectively running the Panama Canal. "We didn't give it to China, we gave it to Panama. We're taking it back," Trump said during his inauguration speech on January 20th. The canal, which connects the Atlantic and Pacific Oceans, was built and owned by the United States until a 1977 treaty allowed its transfer, with the Panamanian government taking control in 1999.

A Hong Kong-based company operates two of the five ports along the canal, but both the Panamanian government and the Chinese Foreign Ministry deny that China owns the waterway. However, Rubio, a long-time China hawk in his Senate career, stated, "They have to do what the (Chinese) government tells them to do." Rubio said on the eve of his visit, "If the Chinese government tells them to shut down the Panama Canal in a conflict, they would have to do it. In fact, I have no doubt they have contingency plans to do that. It is a direct threat." U.S. envoy to Latin America, Mauricio Claver-Carone, also expressed concern about the risks. "The increasing penetration of Chinese companies and actors throughout the canal zone, from ports and logistics to telecommunications infrastructure, is very worrying not only for the national security of the United States but also for the national security of Panama and the entire Western Hemisphere," he said.

Euclides Tapia, a professor of international relations at the University of Panama, said that Trump's real goal is "to get Panama to minimize its relationship with China." While Panama is a focal point, China's presence in the region extends far beyond that. Adrian Hearn, a professor at the University of Melbourne and author of "China Engages Latin America," said the relationship reflects "deepening economic, educational, and diplomatic ties." "In less than two decades, China has gone from being a minor player in the region to being the first or second-largest trading partner for most countries, as well as a major investor," he said. "Politicians in Washington D.C. hold a wide range of views on China's activities in Latin America, from strategic competitor to potential collaborator, but over the past decade, attitudes have shifted towards competition."

Panama broke ties with Taiwan in 2017 and established diplomatic relations with China, and the following year became the first Latin American country to sign onto the Belt and Road Initiative (BRI). The Dominican Republic and El Salvador also switched their diplomatic allegiance from Taipei to Beijing in 2018, followed by Nicaragua and Honduras in 2021 and 2023, respectively. Approximately 20 Latin American and Caribbean countries have signed onto the BRI. This massive investment and diplomatic shift prompted Taipei to call the process "dollar diplomacy."

According to the World Economic Forum, trade between China and Latin American countries grew 26-fold between 2000 and 2020, from $12 billion to $315 billion ($19.3 billion to $507.3 billion AUD), and there are projections that this figure could more than double by 2035. "Chinese companies and banks say they are ready to invest in projects that support manufacturers of cars, cell phones, clean energy infrastructure, and other value-added products in Latin America," Professor Hearn said. A recent example is the $3.5 billion mega-port in Peru, unveiled last year by Chinese President Xi Jinping, which is majority-owned by a Chinese state-owned company.

Professor Hearn pointed out that while China's economic presence in the region is significant, its military presence is not. "China's military cooperation with the region, in particular, lags far behind that of the United States," he said, adding that the U.S. has 76 military bases in Latin America and the Caribbean, "while China has no such facilities in the region."

Professor Hearn said that Chinese diplomats habitually refer to Latin America as the U.S.’s “backyard”—a term Latin Americans dislike. But he said the strategic intent is clear: "to send a signal to Washington that China recognizes America’s sphere of influence.” However, in recent years, observers have reflected that the U.S. has, to some extent, “taken for granted” that the region is its sphere of influence. “Latin America today looks more like China’s front yard than America’s backyard,” wrote former Peruvian presidential candidate Julio Armando Guzman in a 2023 article for Time magazine.

While the contexts are different, there are some similarities between Australia and its relationship with the Pacific region. Pacific leaders have also objected to the notion of being seen as “Australia’s backyard” and have accused Australia of taking for granted that the region is its sphere of influence. China's massive economic investment and security agreements in the Pacific have also raised concerns among some in Canberra. Similar to the Caribbean, several Pacific nations have also switched their allegiance from Taipei to Beijing in recent years, with the Solomon Islands and Kiribati doing so in 2019, and Nauru in 2024. "Latin America’s efforts to balance its relationships with the U.S. and China are similar to Australia’s efforts in this regard, and, similarly, to the efforts of Pacific Island nations to balance the influence of Australia and China," Professor Hearn said. "The political considerations of developing countries often come down to 'checkbook diplomacy,' that is, which combination of alliances will attract the most economic aid and the best trade arrangements."

Similar to Rubio, Penny Wong made a statement during her first solo visit to Fiji as Foreign Minister, saying that the 2022 visit showed "the importance we place on our relationship with Fiji and our engagement in the Pacific region." But unlike some of the rhetoric from the Trump administration, Senator Wong's tone was different. "Australia will listen to our partners in the Pacific, and work together to address our shared challenges and achieve our shared goals—including tackling climate change, post-pandemic recovery, economic development, and regional security," she said at the time.

Professor Hearn said that some of the rhetoric from Trump and his officials "is unlikely to build trust and may push Panama and its neighbors to work more closely with China." Panamanian President Jose Raul Mulino has ruled out discussing control of the Panama Canal with Rubio during his visit, and protesters in Panama City burned effigies of Rubio and Trump. "Trump’s comments about needing to somehow take back the canal really evoked old ghosts, the ghosts of American imperialism," said Leland Lazarus, an expert at Florida International University and the Atlantic Council.