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Americans tend to see China's economic rise through the prism of the bilateral trade deficit and competition for manufacturing jobs. But the real story is that Chinese institutions are buying equity stakes and making loans to increase their influence in natural resources. And Latin America is the most important arena for China's investments.

Some observers portray this as a threat in the U.S. "backyard." The truth is that the developing trade between China and Latin American countries represents an opportunity—if the U.S. plays its cards right.

There are several reasons to be relatively sanguine about China's increasing involvement in Latin America. Most obviously, the Chinese interest in the region is pragmatic rather than ideological. The goal is to further...