The COVID-19 pandemic will leave the Latin American region as the worst hit in the world, in terms of the number of infected and deceased (the human cost), and in terms of its dismal economic performance (economic cost). Thus, the region will need all the help possible to be able to get out of a situation that would probably leave it plunged into another lost decade for the region (such as the 1980s or the one that has just ended, 2010). In this context, China is emerging as the only country that could help the region in terms of offering a market for its products, in terms of financing, and even in terms of helping to combat the pandemic. In this article, in first place, we will see the social and economic situation in which Latin America is facing post-pandemic; second, the region's trade situation with China; third, the situation regarding investment and financing with China; fourth, the aid to combat the pandemic; and fifth, the prospects for the region's future relationship with China.

1. China'srelationswith Latin America and Peru post-pandemic
CarlosAquino*
The COVID-19 pandemicwill leave the LatinAmericanregionasthe worsthitinthe world,in
termsof the numberof infectedanddeceased(thehumancost),andintermsof its dismal
economicperformance (economiccost).Thus,the regionwill needall the helppossible tobe
able to getout of a situationthatwouldprobablyleave itplungedintoanotherlostdecade for
the region(suchas the 1980s or the one that has justended,2010).
In thiscontext,Chinaisemergingasthe onlycountrythatcouldhelp the regionintermsof
offeringamarketforits products,intermsof financing,andevenintermsof helpingto
combat the pandemic.
In thisarticle,infirstplace,we will see the social andeconomicsituationinwhichLatin
Americaisfacingpost-pandemic;second,the region'strade situationwithChina;third,the
situationregardinginvestmentandfinancingwithChina;fourth, the aidtocombatthe
pandemic;andfifth,the prospectsforthe region'sfuture relationshipwithChina.
1. Social and economicsituationof the post-pandemicregion
Talkingaboutthe social and economicsituationof the post-pandemicregionisactuallystill
premature,because the regionhasnotyetcome out of it,we are not yetina post-pandemic
situation(andthe worldin general isnot).The situationmaybecome more critical becausein
Latin America,unlikeregionssuchasEast Asiaand WesternEurope forexample,whichhave
managedto control the pandemic(althoughthere isnow are-outbreakinseveral of them),in
the regionthe figure of deadand infectedinmostcountriescontinuestoincrease.
Evenso, at the time of writingthisarticle,August6,2020, itcan be saidthat the Latin
Americanregionisthe hardesthitinthe world.For example,innumberof deaths,of the 42
mostaffectedcountriesinthe world,11 are from the region(andof the 13 mostaffected
countriesinthe world,5 are fromthe region).
In numberof infectedpermillioninhabitants,3countriesinthe regionare amongthe first4.
Firstis the US, followedbyChile,Peru,andBrazil.Mexicoshouldbe amongthe top5, it isnot
because itdoesnotdo enoughtests.Forexample,Mexicohasperformedlessthanhalf the
numberof teststhat Peruhas done,despite havingapopulation4timeslarger.See Table 1.
Table 1: Number of deathsand infectedbyCOVID-19 in the world

2. Source:data for August 6, 2020, 1pm https://www.realclearpolitics.com/coronavirus/
Regardingthe economicsituation,accordingtothe latestprojectionsof the International
MonetaryFund,IMF, of June 2020, the regionwill alsobe the hardesthitinthe world.The
worldwill experience adropinitseconomyof 4.9% in2020, advancedeconomiesadropof
8.0%, emergingmarketsanddevelopingeconomieswoulddrop3.0%,butLatin Americawould
fall 9.4%.
Table 2: Latest growth projectionsfrom the World Economic Outlook

3. Source:IMF:"Reopening fromthe Great Lockdown:Unevenand Uncertainrecovery" June 24, 2020
That will mean thatthe regioncouldhave verylow growthinthe decade that isbeginning
because the pandemic,notyetcontrolled,willaffecttrade,investment,tourismand
remittancesflowsforseveral years,factorsonwhichLatinAmericaincreasinglydepends.Thus,
it isestimatedthatthe regioncould have anotherdecade of low growth,justafterhaving
experiencedanotherinthe decade thathasjust ended,anaverage annual growthof lessthan
0.5%. See Graph 1.
Graph 1: GDPper capita, average annual change in%

4. Source:The Economist, July2, 2020:"A Latin America economic tragedy"
Latin Americaexperiencedthe lowestgrowthinthe worldinthe 2010s, andit islikelythatthe
same will happeninthe decade thatisbeginning.If so,of the last5 decadesstartingfrom1980
to 2020, the regionwouldhave hadtwodecadesof low economicgrowth(2010 and2020),
and one of negative growth(1980).
The reasonswhythe regionispayingahighhuman andeconomiccost are several,butitcould
be summarizedasfollows:Inappropriatenessof manygovernments response topandemics,
the clearestcasesbeingBrazil,MexicoandPeru;poorpublichealthservices;highincome
inequality;andgreatinformalityinthe economy1
.
2. The region'strade situation vis-à-visChina
Chinasince the beginningof thiscenturyhas become the engineof the worldeconomy,
contributingalmostathirdof global growth.Thiswill be more evidentthisyearwhenthe vast
majorityof countriesenteraneconomicrecession,andChinawill be one of the few economies
to grow.See Table 2 above.
The importance of Chinais more evidentforLatinAmerica,since the regiondependsmore and
more on that country,for itsexportsandimports,butalsoas a source of capital (investments
and loans).
On the trade side,since the beginningof thiscenturythe importance of Chinahasincreased
dramaticallyforthe region.Inthe followingGraphyoucan see,forexample,the evolution
from2002 to 2019 of Latin America'strade ingoodswiththe UnitedStatesandChina,itstwo
maintradingpartners.In 2019, the regionexported455 billiondollarstothe US, 43% of the
total,while toChinaitwas 128 billiondollars,12% of the total.Onthe importside,the region
bought344 billiondollarsfromthe USthat same yearor 32% of the total it boughtfromthe
world,andfrom Chinaitbought194 billiondollars,18% of the total.Andthe regionhada
trade deficitwithChina(andasurpluswiththe US).
Graph 2: Trade in goods from Latin America withthe US and China, from 2002 to 2019, in
billionsofdollars
1 Para un análisis de porque Latinoamérica es las mas afectada por la pandemia, y China junto a la región
del Asia Oriental es la menos afectada, ver Carlos Aquino: “Perú y Latinoamérica frente a la
pandemia del COVID-19: ¿Que se puede aprender de la experiencia china?”
https://asiapacifico-carlosaquino.blogspot.com/2020/07/peru-y-latinoamerica-frente-la-pandemia.html

5. Source:Preparedbythe author basedonWITSdata fromthe WorldBank, andTrademapfor 2019 data
From 2002 to 2019, the participationof the UnitedStatesinthe region'strade hasdecreased,
since ithas gone fromrepresentingthe destinationof 57% of exportsto43% inthat period,
and on the importside,itsparticipationfell from46% to 32%. Exportsfromthe regionto China
have increasedsince 2002 when the regionsoldonly2% of itstotal exports,andin2019
China´sshare rose to 12%, andon the importside,China'sshare inthe purchasesof the region
wentfromalmost4% to 18% inthe same period.The USis the largesttradingpartnerin the
region,Chinaisthe second.
But thisGraph and the figuresmentionedhidethe growingimportance thatChinahasforthe
region.If Mexicoisexcludedfromthe region'sforeigntrade statistics, asthiscountrytradesa
lotwiththe US (79% of LatinAmericanexportstothe US are done byMexico,and 59% of Latin
America'simportsfromthe US is done by Mexico),itwill be seenthatChinaisalreadyalmost
as importantas a commercial partnerof LatinAmerica as isthe UnitedStates.Excluding
Mexico,in2019 the regionexportedonly$96 billiontothe US,comparedto the $ 121 billion
that itsoldto China.WithoutMexico,the regionbought137 billiondollarsfromthe USthat
same year,comparedto 110 billionthatitboughtfromChina.WithoutMexico,the regionhad
a trade surpluswithChina(andhada deficitwiththe US).
WithoutMexico,from2002 to 2019 the amountof exportsfromthe regiontothe US
increasedby70%, and importstripled;whiletoChinaexportsmultipliedby20 times,and
importsfromthat countrymultipliedby18 timesinthe same period.Whyisthisthe case?
On the exportside,the region(excludingMexico) mostlyexportsprimaryresources(minerals,
energy -oil andnatural gas-,andagriculture) anddoesnothave a competitive manufacturing
sector.Andgiventhe greatdemandof Chinafor these resources,thiscountrybecomesthe
largestdestinationforthese products,while the USnolongerbuysas manyraw materialsas
before,andinfact inenergyproductsithas become anexporterof these.Andonthe import
side,Chinaisthe world'sfactoryand lowest-costproducer(still)of manyproducts.

6. Thissituationwill be accentuatedthisyear2020, whenthe US will sufferadropinits economy
of 8% while Chinawouldgrow1%,accordingtothe IMF. AccordingtoIDB-INTALfigures,last
May LatinAmericanexportstothe US fell by 50.4% while toChinatheyonlyfellby15.5%2
.
3. The investmentandfinancingsituation of Latin America withChina
On the investmentside,Chinaisone of the largestplayersinthe region,notonlyinthe natural
resourcessector,butincreasinglyinthe infrastructure sector(somethingthatthe region
urgentlyrequires).WithitsBeltandRoadInitiative,which 19countriesinthe regionhave
alreadysignedamemorandumof understanding,Chinese investmentswouldincrease.China
alsohas at its disposal financial institutionsthatithas createdforthispurpose,suchas the
AsianInvestmentandInfrastructure Bankorthe SilkRoadFund,or itsdevelopmentbanks,
whichhave fundstolend.
It isestimatedthatChinahasinvestedinSouthAmericafrom2005 to 2019 an amountof 175
billiondollars,andthatPeruisone of the countriesthathas receivedthe mostof thatamount
inthe region,about28.2 billiondollars.SeeGraph3.
Graph 3: Chinese investmentandconstructionfrom 2005 to 2019, in billionsofdollars
Source:AEI:“China´s Global Investment in2019:GoingOut Going Small”, January2020 https://www.aei.org/wp-
content/uploads/2020/01/Chinas-global-investment-in-2019 -1.pdf
Chinahas become the largestlenderinthe worldandinthe region.Itissaid,for example,that
Chinahas lentmore moneytothe 73 most indebtedcountriesinthe worldthatrequire
financial relief,anamountgreaterthanthat providedbymembersof the ParisClub,which
includesthe US,Japanand the UnitedKingdom3
.Inthe case of the Latin Americanregion,itis
estimatedthatChinalentalarge amountof money,especiallytocountriesthatdidnothave
2 BID-INTAL: “Impacto del COVID-19 en el comercio exterior, las inversiones,y la integración en América
Latina y el Caribe”23 de julio del 2020
http://conexionintal.iadb.org/descargas/index.php?file=Newsletter%20INTAL%20Comercio%2
0y%20COVID-19%20Num7&origen=conexion_INTAL
3 The Economist, 2 de julio del 2020:“The poorest countries may owe less to China than firstthough”
https://www.economist.com/finance-and-economics/2020/07/04/the-poorest-countries-may-
owe-less-to-china-than-first-thought

7. access to financingfromcommercial banksandinternationalfinancial organizations.To
Venezuela,forexample, ithave lentsome 62.2 billiondollars.SeeGraph4.
Graph 4: Loans from China to Latin America from 2005 to 2019
Source:Gallagher, KevinP. andMargaret Myers (2020) "China-LatinAmerica Finance Database," Washington:Inter-
American Dialogue https://www.thedialogue.org/map_list/
The reasonwhy Chinahasbecome the largestlenderof manycountriesisthatitis notas
demanding,forexample,inrequirementsforfiscal discipline.AndChinaloansusuallycarrya
higherinterestrate.Forexample,onaverage medium-termdebtbalancesitchargesan
average rate of 3.5%, while the WorldBankcharges1% and the IMF 0.6%4
.
4. Helpto combat the pandemicin the region
The regionisseriouslyaffectedbythe pandemicasmentioned.The lack,forexample,of
medical protectionequipment,still affectsmanyLatinAmericancountries.Chinahassentthis
material andaidas masks to manycountriesinthe regionandevenmedical personnel.Thisis
alsopart of whatsome call "mask diplomacy,"anattemptbyChinato winoverthe regionat a
verydifficulttime forit5
.
Chinahas alsosaidthat it will make the vaccine apublicgoodof universal access,andthatit
will evenlend1billiondollarstoLatinAmericasothat countriescan have accessto it6
. Thisis
especiallyincontrasttowhat some considertobe the attitude of the UnitedStatesand
PresidentDonaldTrump,whobegana campaignto ensure thatthe UnitedStatesisthe first
4 Nikkei Asia Review, 6 de Agosto del 2020: “China doubles loans to 68 nations,further tightening grip”:
https://asia.nikkei.com/Politics/International-relations/China-doubles-loans-to-68-nations-
further-tightening-grip?fbclid=IwAR2km8fDhj39UXwmsxm-ZOk7pI1JLF-5qZobzV61wlPWXfdU-
ibd-eINes0
5 Agenda Publica,29 de junio del 2020:“China, América Latina,y la ´diplomacia delas mascarillas´ ”
http://agendapublica.elpais.com/china-america-latina-y-la-diplomacia-de-las-mascarillas/
6 El Comercio, 23 de julio del 2020:“Vacuna contra el COVID-19 desarrolladapor China será un bien
universal;la nación ofrecepréstamo de USD 1,000 millones a Latinoamérica para su acceso”
https://www.elcomercio.com/actualidad/china-prestamo-vacunas-covid19-latinoamerica.html

8. countryto get the vaccine overothercountries.Andeventhe USwentintodisputeswith
countriesovermedical supplies7
.
5. Prospectsfor the future relationshipof the regionwith China
In summary, the role of Chinawill increase inthe region,especiallydue toLatinAmerica's
needsformarketsforits exportsof primaryproductsandfinancingforitsdevelopment.The
US, the traditional largestpartnerinthe region,nolongeroffersalargermarketforthe
region'sprimaryexports.Alsointermsof financing,the USlaunchedaninitiative called
"AmericaCrece"(Growthinthe Americas),whichissaidtocompete withthe Chineseinitiative
of the BeltandRoad, butdoesnot have the fundsthat the Chinese initiative has,anditdoes
not yethave the adherentsthatintended.
Thus,the regionwill increasinglylooktoChinaasa marketfor itsproductsand as a source of
financing,andwhatsome call itsdependenceonChinawill increase.Butthere is apointthat
shouldbe takenintoaccountand that is the growingcompetitionandrivalrybetweenthe US
and China,a rivalrythatcan put the regioninthe middle andforce itto take sidesforone of
them.Thishas beenseenforexampleinthe discussion of,forexample, fromwhichcompany
should countries adopt5G technology.
It isknownthat the Chinese companyHuawei isthe largestplayerinthe worldinthisfield,but
the US iscampaigningforcountriesnotto adoptChinese technologyorChineseHuawei
equipment.Countriessuchasthe UnitedKingdom, Australia,Japan,forexample, have
excludedHuaweifromtheir5Gtechnologyinstallation,due topressure fromthe US,and that
thispressure isspreadingtothe restof the world,andapparentlyithas alreadyreachedLatin
America.
Chile,forexample,decidedatthe endof lastJulyto adoptthe Japanese alternative,inthe
layingof a fiberopticcable that wouldconnectSouthAmericawithAsia,overthe alternative
proposedbyChina.The Chinese initiativecontemplatedtakingthe cable fromChile to
Shanghai inChina.See Graph5. The Chileanelectionissaidtohave takenUS concernsinto
account8
.
Graph 5: Japan'scable route plan prevailed
7 CNN, 2 de julio del 2020:“EEUU seasegura casi todo el suministro mundial deremdesivir,
medicamento clavepara el COVID-19” https://cnnespanol.cnn.com/2020/07/02/estados-unidos-
se-asegura-casi-todo-el-suministro-mundial-de-remdesivir-medicamento-clave-para-el-covid-
19/
8 Nikkei Asia Review, 29 de julio del 2020:“China doubles loans to 68 nations,further tightening grip”:
https://asia.nikkei.com/Business/Telecommunication/Chile-picks-Japan-s-trans-Pacific-cable-
route-in-snub-to-China

9. Source:https: //asia.nikkei.com/Business/Telecommunication/Chile-picks-Japan-s-trans-Pacific-cable-route-in-snub-
to-China
Alsoonthat same date,the US AmbassadortoBrazil warnedthat there will be "consequences"
for that countryif it adoptsHuawei'sproposal forits 5G technology9
.The USaccusesthat
Chinese companythatitcouldspyon the worldif countries allowed ittobe presentinits
infrastructure.Itissaidthat the strong rhetoricof the US againstChinacoulddiminishafter
the Novemberelections,if Trumploses.Althoughthe competitionforeconomicand
technological dominance will continue betweenthese twopowers.
In conclusion,LatinAmerica'srelationshipwithChinawillbe greater,due tothe region'sneed
to findmarketsforitsprimaryproducts,due to its financingneeds,andalsobecause there is
no othercountrythat can offerthat.The US, whichwasan alternative,isnolongerone.But
the regioncouldand shouldtake advantage of the Chinese markettoexportproductswith
more addedvalue,especiallywiththe modernizationof itsphysical infrastructure thatwould
be possible withChinesefinancing. Itneedstoproduce precisely goodswithmore addedvalue
to stopits dependence onprimaryproducts.
In anycase, the crisiscausedbythe pandemic,which isbadlyhittingeconomically the region,
will needhelpthatapparentlywouldonlybe available fromChina.Itisthe taskof the regionto
use it inthe bestpossible way.
August6, 2020
*CarlosAquinois Coordinatorof the CenterforAsianStudies, SanMarcos National University.
He isan specialistin Asianeconomicsandpolitics.
9 Diario Gestión,29 de febrero: “EEUU advierte que habrá ´consecuencias´ paraBrasil si opta por Huawei
en la 5G” https://gestion.pe/mundo/eeuu/eeuu-advierte-que-habra-consecuencias-para-
brasil-si-opta-por-huawei-en-la-5g-noticia/