South America has sat within the U.S. sphere of interest since the Monroe Doctrine was enunciated in 1823. Now that may be changing, thanks to the inroads that Chinese telecom companies such as Huawei are making in the region's economies. The advent of 5G networks is showcasing Beijing's growing ability to rival Washington in South America.
That rivalry isn’t discussed too much in the region itself. Governments in Latin America mostly take a pragmatic approach, waiting for the lowest bidder while trying to remain as friendly as possible with each side. These tendencies hold true for most facets of U.S.-China competition in Latin America, but especially in South America, which is home to several major economies that are more politically and economically independent from the United States than closer neighbors such as Mexico.
China has greatly expanded its economic presence in Latin America over the last two decades. It has now overtaken the U.S. as the top non-regional trading partner for all South American countries except Paraguay, Ecuador, and Colombia. Above all, China’s investment in the region’s commodities has skyrocketed during that time; for example, it is the largest recipient of lithium from Chile and iron ore from Brazil.
However, moments where the choice needs to be made between one side or the other inevitably arise, and neither the U.S. nor China is making it easy.
In anticipation of new international 5G contracts, Washington has started to take a hardline approach. On Nov. 11th, U.S. President Joe Biden signed legislation that effectively iced Huawei and ZTE Corp out of the U.S. market. The new law requires the FCC to reject any authorization applications for software that may pose a threat to national security.
Washington has also set up the Clean Network, a coalition to exclude Huawei from communications networks that now includes more than 50 countries. It is notable that only one Latin American country, Ecuador, has committed to the group, and that the circumstances surrounding Quito’s accession are somewhat controversial: In exchange for Ecuador pre-emptively excluding Huawei, the United States offered to help the country pay off billions of dollars of its debt to China.
There are legitimate security concerns with having Chinese tele-networks proliferating in the Western Hemisphere. First is the inherent risk in adopting telecommunications from a country with an inconsistent history of adherence to international law and norms. For example, Beijing has been criticized by the World Trade Organization for illegally subsidizing its industries, and tech is no exception.
Since the 2000s, Huawei has also been criticized for its closeness to the Chinese military and intelligence community. That relationship raises the likelihood that users’ data is not secure enough. Beijing could easily gain access to it and thus be able to monitor individuals even if they are not Chinese citizens. TikTok is a recent example of a Chinese platform that found its way to the center of public debate in the U.S. due to fears that the CCP would have easy access to user data.
Washington has been pressuring its neighbors to rule out Huawei as they construct domestic 5G frameworks. Having strong Chinese economic influence in many of the largest economies in the region as a result of Huawei’s 5G networks would be a geopolitical blow to Washington.
None of these concerns is unfounded. Huawei founder Ren Zhengfei told Brazilian news outlet Valor Econômico, in no uncertain terms, that “the United States treats Latin America as its backyard. Our goal is to help Latin America get out of this trap and maintain the sovereignty of each country.”
China also looks to be chipping away at the United States’ political advantage in the region in another important way. It has not-so-secretly begun a campaign to get countries in the region to cease recognizing Taiwan and to recognize the Beijing government instead.
Latin America may be a region of focus because most of the last holdouts against the recognition of Beijing are located there, presumably due to the legacy of U.S. influence during the Cold War. It is telling that there are only a handful left in the region: Belize, Guatemala, Haiti, Honduras, Nicaragua, Paraguay, Saint Kitts and Nevis, Saint Lucia, and Saint Vincent and the Grenadines. Since 2017, the Dominican Republic, El Salvador, and Panama have all ceased to recognize Taiwan.
However, pressure from Washington does not seem to have produced the desired result in the region, even among some of the strongest U.S. allies. Iván Duque, the president of Colombia, a country with whom the United States has had a decades-long tight-knit security relationship, has already declined to pre-emptively exclude Huawei from providing the country with 5G.
Likewise, a diplomatic snafu took place after Brazilian President Jair Bolsonaro was persuaded by the Trump administration to join the Clean Network. Bolsonaro later reversed his position on excluding Huawei when it became clear that China might respond by withholding deliveries of its coronavirus vaccines.
And when then-Secretary of State Mike Pompeo warned Chilean president Sebastian Piñera about Huawei prior to the latter’s official visit to Beijing in 2019, Piñera was undeterred from meeting with senior Huawei officials.
These incidents speak to a trend of South America increasingly gravitating toward China for the long term. Along with its trade dominance in most of South America, China has established free trade agreements with Chile and Peru, and Ecuador and Uruguay are openly interested in similar deals.
Chile in particular is a case of a country that the U.S. might have expected to take a firmer stance against Huawei. However, Piñera, a billionaire on Chile’s political right, has become one of the most vocal leaders to embrace Beijing, and has stated his ambition to “transform Chile into a business center for Chinese companies.” While on an official visit to Uruguay in September, he offered Uruguayan president Luis Lacalle Pou the chance to commit to Chile’s “Asia-South America Digital Door” project, which aspires to construct networks of underwater fiberoptic cables to connect South American and East Asian countries.
E-commerce may be the next frontier in Latin America’s U.S.-China tech wars. Less prominent in the news is the potential for competition between Amazon and Chinese e-commerce site Alibaba, which has been a more established brand in the Southern Hemisphere.
While choosing Huawei or a U.S. provider of 5G will not constitute a sea change, it is a significant shift that points toward a split in future trends, with one part of Latin America pulled toward the U.S. and the other part to China. Regardless of what happens, Chinese involvement in the region will only continue to grow, and that is enough to put Washington and U.S. industry on alert.
Sarah White, M.A., is Senior Research Analyst and Editor at the Lexington Institute. The views expressed are the author's own.