Time to rebalance, not dismantle

China's third policy paper on Latin America and the Caribbean, issued on Dec 10, represents a significant upgrade in China's approach toward the region, building on earlier policy papers released in 2008 and 2016. Issued amid accelerating global power shifts and renewed emphasis on the Global South, the document frames China-LAC relations as a mature, multidimensional partnership anchored in the concept of a "China-LAC community with a shared future".

Compared with earlier iterations, the 2025 policy paper places stronger emphasis on institutionalization and programmatic cooperation, explicitly linking China-LAC relations to China's four global initiatives — development, security, civilization and governance — while operationalizing cooperation through the five structured programs of solidarity, development, civilization, peace and people-to-people connectivity. Economically, the document underscores trade diversification, high-quality Belt and Road cooperation, financial integration and supply-chain connectivity, while opposing unilateralism, protectionism and "decoupling".

Trade and investment cooperation occupies a central place, as China commits to expanding imports from LAC countries, supporting their participation in major Chinese trade fairs, encouraging Chinese enterprises to invest locally, and strengthening cooperation in infrastructure, manufacturing, agriculture, energy and digital trade. Importantly, the paper stresses market-based, business-led cooperation and highlights mechanisms such as the China-CELAC(the Community of Latin American and Caribbean States) Forum as the primary institutional platform for collective engagement. In doing so, the policy paper moves beyond bilateralism toward a more systematized and region-wide framework for economic relations.

Concrete outcomes in recent years illustrate how this policy framework has been translated into practice. One prominent example is China's role as a leading trading partner for South America — particularly Brazil, Chile and Peru. China has remained Brazil's largest trading partner for over a decade, with bilateral trade consistently exceeding $150 billion annually and reaching over $188 billion in 2024.Chinese demand for Brazilian soybeans, iron ore and meat products has provided stable export revenues, while Chinese companies have invested heavily in logistics, energy transmission and port infrastructure that supports Brazil's export capacity.

Another well-documented case is Peru, which has leveraged its free trade agreement with China and Chinese investment to consolidate its position as a key supplier of minerals and agricultural products. Chinese companies have played a major role in Peru's mining sector, particularly copper, while also investing in ports and logistics infrastructures that enhance Peru's integration into Asia-Pacific supply chains. These projects align closely with the 2025 policy paper's emphasis on infrastructure connectivity, industrial upgrading and long-term supply relationships.

In the Caribbean, Chinese engagement in renewable energy and resilient infrastructure has become increasingly visible in recent years. A notable example is Cuba, where China has supported the development of large-scale solar power parks aimed at alleviating chronic electricity shortages and reducing the country's heavy dependence on imported fossil fuels. Under bilateral agreements reached in the mid-2020s, dozens of Chinese-backed solar facilities are being constructed across the island, with the first projects entering operation in 2025 and additional capacity planned through 2028.

Broadly speaking, solar and wind power projects financed and built by Chinese companies across the Caribbean have contributed to energy diversification, enhanced grid resilience and improved energy security for small island economies. Taken together, these initiatives exemplify China's stated commitment to green development and climate cooperation with small island developing states.

Within the broader China-LAC framework, Mexico occupies a distinctive position due to its deep integration into North American supply chains and its complex trade relationship with both China and the United States. Despite the absence of a bilateral free trade agreement, China has become Mexico's second-largest trading partner and its second-largest source of imports.

One notable area of recent cooperation is manufacturing investment, particularly in the automotive and transport equipment sectors. Chinese companies such as Noah Itech, which invested roughly $100 million in an automation plant in Nuevo León, and heavy-vehicle manufacturers such as FOTON and Shacman, which have announced or expanded vehicle assembly operations in Mexico, illustrate this trend. Concentrated mainly in northern and central Mexico, these investments are driven by proximity to the US market and Mexico's established industrial base. They have generated employment, strengthened local supplier networks and facilitated technology transfer, aligning with China's stated objective of matching its production capacity with host-country development needs.

Another important area of cooperation is logistics and e-commerce, where Chinese technology and logistics companies have partnered with Mexican companies to strengthen warehousing, cross-border shipping and last-mile delivery capabilities. A concrete example is Cainiao, Alibaba's logistics arm, which has developed integrated logistics services linking China and Mexico and streamlining the delivery process from origin to destination. Such initiatives have facilitated the participation of Mexican small and medium-sized enterprises in cross-border e-commerce platforms and reflect the 2025 policy paper's emphasis on digital trade, trade facilitation and cooperation between business associations and trade promotion agencies.

Against this backdrop, the recent approval by the Mexican Senate of higher tariffs on certain imported goods — many of them originating from China — stands in contrast to prevailing global trends toward economic interdependence and deeper supply-chain integration. While Mexican authorities have framed the decision as a measure to protect domestic industry, it runs counter to the principles of openness, trade facilitation and opposition to unilateral protectionist measures.

Globally, major economies are seeking to rebalance — not dismantle — globalization by enhancing resilience while preserving trade flows. Mexico's tariff move risks increasing costs for domestic manufacturers that rely on imported inputs, potentially undermining competitiveness and consumer welfare. From a China-Mexico perspective, such measures may also weaken trust and complicate efforts to expand mutually beneficial cooperation in manufacturing, logistics and the digital trade. In a context where nearshoring and supply-chain reconfiguration already create uncertainty, additional trade barriers may prove counterproductive.

The sustained development of China-LAC economic and trade relations carries broader significance for the Global South. As emphasized throughout the 2025 policy paper, China frames its engagement with Latin America and the Caribbean as South-South cooperation based on equality, mutual benefit, and respect for national development paths. For many LAC countries, China provides not only a major export market but also an alternative source of financing, technology and infrastructure investment.

At a systemic level, China-LAC cooperation contributes to diversifying global economic governance and amplifying the voice of developing countries in multilateral economic and commercial institutions, as well as in multilateral development banks. By strengthening connectivity, industrial capacity and trade resilience, this relationship supports a more inclusive form of globalization. In this sense, the evolution of China-LAC relations is emblematic of broader transformations reshaping the political economy of the Global South in the contemporary era.

The author is a professor of international relations at the Metropolitan Autonomous University and a senior fellow on China at the Mexican Council on Foreign Affairs. The author contributed this article to China Watch, a think tank powered by China Daily.

The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn.