The Belt and Road Initiative: The Key to growing Chinese influence in South America

Jose Urzua, University of Chicago

After the collapse of the Soviet Union in 1991, Francis Fukuyama famously hailed it as the end of history. The victory of the democratic West over the communist East was seen as the beginning of a peaceful and stable future, with American hegemony in both economic and political spheres. Yet in 2025, this promised peace has given way to the rise of a new aspiring superpower. Since the economic reforms initiated by Deng Xiaoping, the People's Republic of China has emerged as a manufacturing titan, accounting for 16% of the world's exports and earning it the title of the world's manufacturing hub. While the United States maintains its economic dominance, the PRC is today the second-largest economy in the world, and both are competing for global influence. The primary battle for this influence is being fought, as in the past Cold War, in the realm of economics. 

To understand the success of the Chinese strategy in this economic competition, it is essential to examine Soviet strategies and failings in the previous one. During the Cold War, the Soviet Union engaged in an ideological battle with the United States, challenging its influence mainly through economic and military assistance to ideological partners. The main facet of the Soviet bloc was ideological unity, seeing itself as the bastion of Marxism-Leninism against American capitalism. This focus on ideology is absent in the Chinese model, which has prioritized a more indiscriminate economic approach. With ideology no longer a limiting factor,  China has been able to establish economic links with nations that the Soviets would have never been able to influence. Today, China is engaged in development projects in Western Europe, South America, Africa, and almost every other topographic region on the planet. Through development, it increases its influence wherever its money touches, threatening America’s influence in its traditional bastions. One particularly prominent example of this strategy is the Belt and Road Initiative, which has become one of the most consequential factors in China’s economic influence.

Established in October 2013, the Belt and Road Initiative represents one of the most ambitious development projects in the world. Between 2013 and December 2021, the BRI spent around 860 billion dollars in development projects around the globe, with 146 countries and 32 international organizations agreeing to cooperate in the program. The primary aim of the BRI is to establish unimpeded trade with Chinese markets, integrate the financial sectors of members with Chinese financiers, and develop strategic resources within the countries involved. This is done through massive infrastructure development projects and the expansion of trade capabilities. The BRI blends both private and public sources of funding, a structure that has afforded it a far greater amount of flexibility and resources. Notably, the same approach of utilizing private investment was a key factor in US dominance over the USSR's own development bank, the Storybank, as the soviets were unable to use or develop private capital in their own projects. The Chinese system, as a result of Premier Deng Xiaoping's economic reforms, has allowed the formation of a vibrant private sector under state supervision. This system of a state-controlled private sector has allowed the government to efficiently mobilize significant capital and investment for its BRI development programs. China, by utilizing private investment and resources, has grown to challenge American investment and influence across the world. The effects of this can be seen in Uncle Sam's historic “backyard”, South America.

Although the US has always had a close relationship with the countries to its south, since the end of World War II, it has seen levels of cooperation unprecedented in the nation's history. The establishment of development banks in the mid-20th century, such as the IDB, and the nation's own investments through FDI (Foreign Direct Investment) have served as tools of influence and control over the region. By 1999, the United States was the number one trading partner for all countries in South America. Not only does it tie the region's economies to its will, an essential tool for exercising influence, but it also ties the governments to the nation through their reliance on American investment, private American companies, and the multinational organizations the US established. However, this privileged status enjoyed by the US came to an end starting in the 2010s, and today, US influence has been pushed back, with Colombia and Ecuador now the only remaining nations in which America remains the leading trading partner, and all other countries on the continent trading primarily with China. As the BRI continues to invest in infrastructure development and the facilitation of trade in the region, so too does Chinese influence continue to grow. The joint public and private funded development that achieved this can be seen expanding on the continent every day.

With this success, why has China succeeded when the Soviet Union failed? The Soviet Union utilized a similar development method but a very different development strategy that might explain this difference. The Stroybank and other development institutions in the Soviet Union, like China and the US today, issued low-interest loans to developing countries to build infrastructure and procure resources. These loans also came with “strings”, frequently requiring economic concessions, use of soviet equipment, a decrease in trade barriers, and the overall fostering of a closer relationship between the USSR and the nation it was developing. This development program proved unsuccessful in fostering complete Soviet dominance in South America due to two major factors: lack of Soviet funding for development in South America and the targets of the aid. The Soviet focus on ideology limited the scope of the nations it could develop, with the nation only fostering ties to Marxist or socialist organizations in South America. Attempts to develop Chile, Argentina, Venezuela, and other nations ultimately fell short of America's capability to do the same, as America's programs could mobilize greater resources than those of the Soviets. The Americans used private and multilateral programs to outcompete the Soviets, ultimately placing the region firmly within their sphere of influence until the end of the Cold War. China, on the other hand, has not only the funding structure required to challenge the Americans but also the strategic focus on economics rather than ideology to propel it ahead of any program undertaken by the Soviets.

One of the most significant Chinese victories in the BRI has been its ability to mobilize fast resources to develop and procure natural resources in South America. In 2025, the BRI saw the most substantial amount of Chinese investment in its history, with $ 66.5 billion spent in the first half of the year alone. A significant source of investment is in the energy and resource markets that run adjacent to it. Lithium has rapidly become one of the most critical factors in this resource market. Demand for the metal has grown worldwide, increasing by 30% in 2024 alone. Chile, a long, thin country bordering the Pacific Ocean, is the world's second-largest producer and exporter of lithium. As of 2024, only two companies are allowed to mine lithium in Chile: the American-run Albemarle and the local miner SQM. However, in the same year, private Chinese investors acquired 22% of SQMs' shares, granting China significant influence on the mining giant and the resources it mines. Earlier in the year, SQM signed a deal with Codelco, the Chilean copper giant, to venture into the previously unsurveyed Atacama Flats, a region rich in copper, another strategic resource vital in electronics.  Chinese investors not only broke into a previously restricted market but also enabled them to compete with American companies already in it, signaling a threat to the status America has enjoyed in the country. The entrance of a powerful competing investor on the continent signals the breach of a geopolitical wall by China that not even the USSR could breach on account of China's superior resources and its utilization of private entities to further its influence, something the USSR was unable to do.

The power and influence of Chinese companies in South America have also acted as a direct deterrent to US foreign policy in the region. In 1999, the Hong Kong-based company H.K. Hutchinson got a 90% stake in the Panama Ports Company. The company that holds the rights to operate and maintain the Panama Canal infrastructure is one of the most important strategic points in the Western Hemisphere. Last year, 12,000 ships crossed the canal from across 170 countries, and it is a vital waterway for the US Navy to transfer units across the oceans rapidly. When President Donald Trump was elected in 2024, one of his primary foreign policy goals was to reacquire the Panama Ports Company through a US company. In light of this foreign policy shift, Marco Rubio, the Secretary of State, and the US State Department engaged in efforts to pressure Panama towards a possible deal. Ultimately, this culminated in BlackRock approaching H.K. Hutchinson, which acquired 80% of the stake in the Panama Ports company, in the company's largest deal, totaling $ 14.21 billion. However, this was not without Chinese attempts to impede it; the Chinese government leveraged the control it has over its private corporations to open up investigations into the Chinese companies involved in the deal, successfully stalling it. Although the agreement was ultimately signed 145 days after negotiations started,  it was later struck down by the Panamanian government, citing constitutional illegality. The results of Chinese interventions in talks should not be overlooked; it successfully stalled the plan and not only acted as an example of the growing power of China in influencing Latin America but also China's growing ability to impede US foreign policy in its backyard.

Out of the ashes of the Soviet Union, a new competitor in China has arisen and successfully challenged the United States. The Chinese adoption of a broader, economic-focused private-sector development strategy has allowed it not only to match Soviet success but, in fact, to surpass it. Whereas the Soviets sought to win the Cold War through direct influence over governments and ideology, China has adopted a softer, more successful model that has allowed it to indirectly conquer South America economically. Although the United States still maintains significant influence in the region from its existing multinational infrastructure and development network, it must quickly find a way to counter Chinese influence in the area.

Notes

1. “About the Belt and Road Initiative (BRI).” Green Finance & Development Center. https://greenfdc.org/belt-and-road-initiative-about/.
2. “Chile Lithium Projects Garner Interest from over 50 Companies.” Reuters, June 18, 2024. https://www.reuters.com/markets/commodities/over-50-companies-express-interest-developing-chile-lithium-projects-2024-06-18/.
3. Congress.gov. “U.S.-Latin America Trade and Investment.” November 5, 2025. https://www.congress.gov/crs-product/IF12614.
4. Harvest, Lithium. “The Lithium Mining Market.” October 30, 2025. https://lithiumharvest.com/knowledge/lithium/the-lithium-mining-market/.
5. Jim, Clare, Rishav Chatterjee, and Davide Barbuscia. “CK Hutchison Will Not Sign Deal to Sell Strategic Panama Ports Next Week, Sources Say.” Reuters, March 28, 2025. https://www.reuters.com/business/ck-hutchison-not-sell-strategic-ports-panama-canal-next-week-scmp-reports-2025-03-28/.
6. Soltani. “China Becomes Central and South America’s Largest Trading Partner Since 2020.” Voronoi. https://www.voronoiapp.com/economy/-China-Becomes-Central-and-South-Americas-Largest-Trading-Partner-Since-2020-2722.
7. Valle, Sabrina, Suzanne McGee, and Michael Martina. “BlackRock to Buy Hong Kong Firm’s Panama Canal Port Stake amid Trump Pressure.” Reuters, March 5, 2025. https://www.reuters.com/markets/deals/ck-hutchison-sell-80-stake-hutchison-ports-group-1777-billion-deal-2025-03-04/.
8. Wang, Christoph Nedopil. China Belt and Road Initiative (BRI) Investment Report 2025 H1. Green Finance & Development Center, July 17, 2025. https://greenfdc.org/china-belt-and-road-initiative-bri-investment-report-2025-h1/.
9. “Construction Bank of the USSR.” Wikipedia. https://en.wikipedia.org/wiki/Construction_Bank_of_the_USSR.
10. “Soviet Union Foreign Policy.” Santa Clara University Digital Exhibits. https://dh.scu.edu/exhibits/exhibits/show/cold-war-global/proxy-wars/soviet-union-foreign-policy.