In view of growing foreign direct investments (FDI) made by Chinese firms in Latin America in the energy sector, and more specifically in lithium and now also electric vehicles, the present research has the main purposes of understanding the nature of these investments, the strategic perspective of the firms involved and the impacts on the political economy of the countries in the region. The research has selected three countries for its analysis: Argentina, Brazil, and Chile. These countries are the biggest economies in South America, have growing ties with China in trade and investments and present differing strategies/positions vis-à-vis their engagement with the PRC.
Chinese engagement with the region has only grown stronger in the last twenty years, with increasing foreign direct investments (FDI), diplomatic efforts, and greater trade complementarity. Chinese FDI initially aimed at assuring food and energy security, mainly through mergers and acquisitions with local and foreign companies in the agricultural, oil and gas sectors. The period between 2002-2012 encompassed the launching of the first White Paper outlining Beijing’s vision for the engagement with the region in 2008, while its firms were still acquiring knowledge as well as assessing strategic objectives and learning to navigate the political economy, regulatory and institutional environment in different countries (Xu, 2017).
While Chile and Argentina have received large investment in mining and lithium, Brazil has received substantial investments in the generation and distribution of electricity and more recently in automotive and electric vehicles firms. These countries are significant exporters of commodities to China and receive substantial amounts of Chinese investments (Wise, 2020; Meyers and Melguizo, 2024). In Argentina, mining and energy concentrate almost 90% of total Chinese investment flows, while in Chile these sectors represent circa 60% and that figure reaches 73% in Brazil (AEI, 2024). Chile has strong capabilities in mining and a national strategy for industrializing its lithium sector, while in Argentina provinces control the minerals resources, which makes it harder to articulate a national strategy for the sector.
Brazil holds particular strengths in hydropower generation and energy distribution, areas that have attracted the attention of Chinese state-owned firms in the last decade. Since Covid-19, Chinese firms working on renewable energy and electric vehicles have been arriving in Brazil. The country has released in 2023 two industrial policy programs for the 2024-2027 period to entice foreign investments and to develop technology related to decarbonization, namely “Mover 2030” and the “New Brazilian Industry Program”, amounting to US$ 60 billion. Partnering with Chinese firms is essential in these processes. Up to this moment, Brazil has attracted a wave of more than US$ 30 billion in FDI from various countries, which is related to the launching of these industrial policies.
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