China has officially become an observer state of the Andean Community, a South American trade bloc. This move is expected to strengthen China's presence in the region and boost its artificial intelligence (AI) and electric vehicle (EV) industries, according to analysts. The Andean Community includes Bolivia, Colombia, Ecuador, and Peru.
Key Takeaways
- China gains observer status in the Andean Community, a South American trade bloc.
- Analysts believe this will deepen China's strategic presence in the Global South.
- The move is expected to benefit China's AI and EV sectors by securing mineral resources.
- It may help member countries counter the impact of US tariffs by providing alternative markets.
- China has engaged with the Andean Community since 1999, but formal observer status is new.
Deepening Economic Ties in South America
China's formal acceptance as an observer state occurred last week. The Xinhua news agency confirmed the development. This decision was made during a meeting of foreign ministers from the member states held in Colombia.
This engagement is not entirely new. China and the Andean Community first established consultative mechanisms in 1999. However, the official observer status marks a significant step forward in their relationship.
Member states stated that China has "always played an important role in the international community and global governance." They also noted that its admission as an observer state was "of great historical significance."
The report from Xinhua indicated that member states hope this new status will promote bilateral cooperation. They also aim to advance regional economic integration and sustainable development. This cooperation is expected to better safeguard the common interests of developing countries.
Strategic Presence in the Global South
China has increased its efforts to engage with Latin American economies in recent years. A primary platform for this engagement is the China-Community of Latin American and Caribbean States Forum.
At this year's forum, held in Beijing in May, China emphasized its role as a "good friend and partner." It pledged to work with regional economies to boost development. China also committed to standing up to "bullying" and unilateralism, terms often used by Beijing in reference to the United States.
Fact: China's Growing Influence
- China has been the largest trading partner for many South American countries for over a decade.
- Chinese direct investment in Latin America has exceeded $150 billion since 2005.
- Trade between China and Latin America reached a record $450 billion in 2021.
Jiang Tianjiao, associate director of the Centre for Brics Studies at Fudan University, described this development as a "new phase" in China-Latin America relations. He believes China's observer status will allow for deeper economic and investment ties with the region.
Jiang added that China's formal admission to the Andean Community is a "key step in deepening its strategic presence in the Global South." This move signifies a stronger cooperation with Latin America. It also strengthens the voice of developing countries through institutionalized participation in regional affairs.
Countering Trade Tariffs and Seeking New Markets
Beijing consistently portrays itself as a leader of the developing world. Top officials have pledged to defend the global order. This stance comes at a time when former US President Donald Trump has imposed significant tariffs on various countries.
Jiang suggested that China's entry into the South American bloc could help countries "counterbalance" the impact of these tariffs. Economies are increasingly looking for alternative markets due to rising trade barriers. "As an observer state, China can provide more stable export channels for Latin America through a regional cooperation mechanism," Jiang explained.
Background: US-China Trade Dynamics
The US-China trade relationship has been strained by various tariff policies. These policies, initiated during the Trump administration, aimed to reduce trade deficits and pressure China on intellectual property issues. This has led many countries to re-evaluate their trade partnerships and seek diversification.
Leland Lazarus, founder of Lazarus Consulting, which advises on China-Latin America relations, sees this as another example of China's expanding influence. He stated that it gives Beijing "another avenue to push" its frameworks. This includes its recently launched Global Governance Initiative.
Chinese President Xi Jinping introduced the Global Governance Initiative last month. This occurred at the Shanghai Cooperation Organisation summit. He stated that the framework could improve global governance amid rapid global changes and turbulence.
Securing Critical Minerals for Advanced Industries
All four Andean Community members are rich in valuable minerals. These include gold, copper, and lithium. China will need these resources to power its growing industries, such as artificial intelligence and electric vehicles, for decades to come.
Rare earths and other critical minerals have become a key area of competition between Beijing and Washington. Jiang highlighted that Bolivia's lithium and Peru's copper are "highly aligned" with the demands of China's new energy industries.
Lazarus noted that China is "definitely taking advantage of the Trump administration’s aggressive tariff policies." He explained that at the very time Latin American countries want to export more products, the US administration is increasing trade barriers.
Recent American policies, including tariffs, align with China's narrative. This narrative suggests China is a more reliable and stable partner. It implies that the US does not have other countries' best interests at heart. "In other words, China’s message is, ‘while the US is closing shop, we’re still open for business,’" Lazarus concluded.
This strategic move by China further enhances its network of influence across Latin America and the Global South. It provides institutional support for China's emerging status as a global power.