China is one of the 21st century's most consequential nations. It has never been more important to understand how the country is governed and what its leaders and its people actually want and believe. Welcome to Pekingology, the podcast that unpacks China's evolving political system and the trajectory of China's domestic and foreign policy. I'm your host, Henrietta Levin, Senior Fellow with the Freeman Chair in China Studies at CSIS. This is Pekingology. I am very pleased to be joined today by Francisco Ortiz, an Associate Professor at the Pontifical Catholic University of Chile and author of the new book, Economic Displacement, China and the end of U.S. primacy in Latin America. Francisco is a top expert on Chinese influence in Latin America and the Caribbean at a time when China and the United States are both intensifying their focus on this part of the world and intensifying their competition with each other in this geography. So I'm so glad to have a chance to hear Francisco's perspectives. We will get to Venezuela, but we're going to start with a slightly bigger picture conversation on Francisco's book, his perspective on Chinese strategy and influence in Latin America broadly. And then we'll get to the latest news towards the end. So hopefully that's as good an incentive as any to listen through to the end of the show. Francisco, thank you so much for coming on. Thank you, Henrietta. It's nice to see you again. And I listened to the podcast, so I'm very happy to be here with you today. We're thrilled to have you. And then, as you will know, as a listener, we like to start all of these conversations with a question about how our guest developed their China expertise. So how did you become the guy who writes books about China's displacement of the U.S. and Latin America? So I came to China's studies somewhat indirectly. My PhD was a joint degree between the University of Sao Paulo in Brazil and King's College London in international relations. I am originally from Argentina. And during my PhD, I focused on international political economy and great power competition. Living in Brazil during the 2000s, it was fascinating to see the commodity boom, and it was impossible to ignore China's growing presence. Suddenly, China was everywhere, buying soybeans, investing in infrastructure, becoming Brazil's top trading partner. So China became my independent variable, as I usually say. I have a very poor Mandarin. I never lived in China, unfortunately. And my skill set was based on getting to understand data, big data on economic trends and political patterns to understand them together. So when I moved to Chile and joined the Catholic University, I joined the Center for Ovation Studies and later created ICLAQ, this Millennium Nucleus, which sounds awful in English, but it's a grant by the Ministry of Science. And together with other 15 people, we are studying China's impacts in Chile and the rest of the region. So these centers have forced me to develop a systematic expertise, build databases on Chinese investments, conducting surveys on public opinion towards China, coordinating research across multiple cancers. So I'm used to deal with data on how China is affecting the region. And then I spent a year at the Wilson Center and other experiences that have helped me to translate academic research into policy-relevant analysis. So here I am. This is a combination of perhaps being in the right place at the right time, Latin America during China's rise and then building the institutional infrastructure around it to study this rigorously. I think your work has been especially valuable because it has really centered the countries of Latin America in these questions of China-Latin America relations and kind of restored data-driven agency to the region itself and how we understand China's ambitions and relations in the region. So in that vein, let's start a little broad. To what degree do you see Latin American governments setting the terms of their own engagement with Beijing? Like who is in the driver's seat? Does it vary issue by issue? How does that look to you? That's a great question. I think this is one of the most misunderstood aspects of China, Latin American relations. And in the book, I emphasize a lot on Latin American agency. I think It's important to remember these aren't passive recipients of Chinese influence, but they are strategic actors pursuing their own interests. And one can mention how Ecuador leveraged Chinese loans to strengthen its negotiating position with the IMF. And recently, Argentina played China against the U.S. on the use of currency swaps to extract better terms. And Chile has maintained its free trade agreement with China while preserving strong U.S. security ties. There's lots of examples, and I think that the driver's seat is shared, and it varies by issue area. So on commodities, Latin American exporters have significant leverage. China needs Brazilian soybeans, the Chilean copper, Peruvian minerals. On financing, especially for countries locked out of Western capital markets like Venezuela was, China has more leverage. But again, there are negotiated relationships, and I think that's important to remember. Both sides are trying to maximize their interests. And certainly there's an enormous degree of economic dependence lately from Latin America towards China. And with the U.S.-China rivalry, an increasing sense of being trapped between these two big powers. So perhaps agency will be reduced in the following years. But the last 20 years were years in which there was a lot of agency from Latin America on how to deal with China overall. And from Beijing's perspective, you do see a re-energized strategic focus on Latin America. China released its third policy paper on Latin America and the Caribbean in December of last year. So what can this paper tell us about China's priorities in the Western Hemisphere? And I'd be particularly interested in your views because you've looked so deeply at what China's actually doing, like how China is experienced on the ground in Latin America, like how the priorities that China has set out for itself correspond to what's actually happening on the ground. Yeah, over time, I learned to be very attentive to these documents, although they usually, as you say, tell us what Beijing prefers or what's the preferred narrative, not necessarily always the operational strategy. But this is China's third policy paper after 2008 and 2016. And what strikes me is, well, the consistency across all three, emphasis on development, cooperation, infrastructure, trade, diversification and South-South solidarity, which is very important because China always frames its relation with Latin America's relationship between equals, between peers. So the basic formula hasn't changed. But what's new in the latest document is I think it's the emphasis on the global south framing and perhaps a more assertive positioning on China's and alternative development model. Because the paper does frame the importance of Latin America primarily in the context of it being part of the global south, which was striking to me as well. Yeah, I think it's very interesting. I think there's emphasis on more language on multipolarity and reforming global governance. So I think China is less scared of portraying itself as inassertive and expressing dissatisfaction with the current order. But again, as you said, I tend to look at the data and I came to learn that these documents are usually very much followed by China. When I started doing academia on China 10, 12 years ago, I tended to disregard these documents and eventually found out that Chinese policymakers followed them closely. But Chinese policy, again, on the other hand, is made through bilateral negotiations, commercial decisions by state-owned enterprises and sometimes reactive responses to opportunities. So it's a good mix. But certainly a very interesting change, the emphasis on the global south. I think we both agree on that. You mentioned, you know, there's a regional strategy, but also a highly differentiated approach on a country by country basis. basis. But does China ultimately engage with Latin America as a single strategic theater, or does it have more of a sub-regional perspective? And to what degree do you think China would measure its success in Latin America as a whole, as a region, in comparison to particular bilateral relationships or sub-regional geographies? My understanding is that China absolutely does not treat Latin America as a single theater because Beijing is highly pragmatic and differentiates sharply by country and function. And the resource-rich countries like Brazil, Chile, and Peru get heavy investment attention and focus on commodities. But then you see geopolitically useful partners like Venezuela and Nicaragua getting political support and loans. The one-China policy plays a role in the region, as you know, because there's still countries recognizing Taiwan. And then strategically located countries like Argentina with the Patagonian Space Station and some port projects used to get some infrastructure investment. I usually say to my students that China measures its relation with the region bilaterally and sector by sector. Although, of course, there's a Latin American policy overall. There's this select China fora. But to me, it's a good example of how China works in the fora in which all presidents gather on a single meeting with Chinese officials. What matters is the bilateral meeting that Chinese officials have with each country. And there's competition among Latin American countries on which gets the better deal with the Chinese. There's not any sort of strategy, regional strategy from Latin America to deal with China to exchange information to cooperate this is a problem we Latin Americans have as a whole the old problem of regional integration and it translates into how we deal with China and how China deals with us. And actually, this is something interesting that you're asking, because in the book, In Economic Displacement, I argued that Latin America is looking more and more like two regions rather than one in terms of China's economic presence. It's very useful for me to think of South America versus the rest, which is Central America and Mexico. And sometimes gathering 33 countries, huge countries, some very far from each other into one single region doesn't help very much. So I usually tend to focus more on the bilateral or sub-regional dynamics. Diving a little deeper into the analysis in your book, you paint a picture of tremendous economic influence and engagement from China on a really fast growth curve. But you highlight that in many cases, China expanded its influence in Latin America by playing by the existing rules, for example, by engaging the Inter-American Development Bank. Can you talk about that and maybe the degree to which you see China as a status quo versus a revisionist player in the hemisphere? Yeah, this is a key point. And I argue several times in the book that China was welcomed by the U.S. in the region. So there's a very interesting finding that challenges China as a rule breaker, which is the IADB, the Inter-American Development Bank. China made a relatively small buy into the bank in 2009. And I show with data that since then, Chinese companies won around $2 billion in IDB finance contracts, which is far more than what American companies did at the same time. So China joined this U.S.-created, U.S.-dominated institution, followed all the procurement rules, competed fairly in bidding processes, and extracted significant commercial benefit. So it's the opposite of a revisionist power, at least in this regard, is kind of working the system more effectively than anyone expected. And I think this example is just an example, but it shows how China expanded its economic presence in Latin America at times by being welcomed by the U.S. and using the same rules and the same institutions that the region used to have during the Cold War and in the 90s. So it's kind of an example of China benefiting from the existing order and eroding it from the inside because I discuss in the book what effects this have on the political realm. But certainly China used to its own good the infrastructure that it had, the institutional and their normative infrastructure that there was in play. You also argue in the book that Chinese companies are basically following the same playbook that American multinationals used in Latin America in the first half of the 1900s and seeing very significant political dividends as a result. What does that mean? Thanks for noticing that. I think American companies in that era, the United Fruit in Central America, Standard Oil in Venezuela and Mexico, mining companies across the region created deep economic dependencies that translated into political influence. They built infrastructure that asserted their extraction needs, cultivated relationships with local political and economic elites, and they gradually converted economic presence into political leverage. So they were seen as the newcomers compared to the British and German capitals. And there is a great book that I cite, Exploring Capitalism by Ethan Kapstein. Seems like the U.S. at some time loosened the link between politics and business and enterprises didn't follow the flag anymore. But Chinese state-owned enterprises today are doing something structurally similar to what we observed with American enterprises a hundred years ago. They are building ports, they're building roads, railways and power plants that facilitate commodity extraction and they are developing relationships with local partners and political figures and they are creating economic dependencies that generate political goodwill. So the U.S. did it and now we are seeing it in the Chinese. And I think that the material basis for hegemony, it's very important that the way you engage economically with countries, it's very important to then build a political relationship. And I think, again, Chinese companies in some regard are replicating what American companies did in the earlier 20th century when they were the factory of the world as well. As much as countries in Latin America then and now sought investment opportunities for economic growth, you would know much better than me. But my sense is that the dependencies that U.S. companies and U.S. policy fostered in Latin America in that earlier period of time created significant resentment over time, at least in some political corners. Are you seeing similar resentment starting to build as China embraces these similar practices, or are they being received in a more welcoming fashion? So for the last 20 years, there was a lot of welcoming and happiness about Chinese offering alternative goods. In surveys that we have done, people used to welcome Chinese investments during the pandemic. The same occurred with the vaccines. But gradually, and by gradually, I mean perhaps since 2017 onwards, signs of backlash and concern started to arise as well. concerns over extreme dependence, concerns over Chinese controlling strategic sectors, minerals, electric transmission, some stereotypes that the Chinese still suffer, such as producing extremely low-quality goods. That hasn't changed very much, although in Santiago, where I live, we now see lots of hybrid cars and computers and so on. Soft-powered-wise, China hasn't capitalized very much its economic presence. And as you said, for the U.S., the extreme high political presence that it created in this 50s, 60s, 70s backlash very much. But also the U.S. created this massive source of soft power and admiration that Latin Americans still feel towards the U.S., which is actually one of its main assets. So, yeah, I think in that regard, China is decades behind. I mean, degrees of suspicion towards the Chinese in general are high among Latin Americans, sometimes higher among elites than general public, large degrees of ignorance as well. And simply people seeing China as this far away provider of goods that we buy and the buyers of the goods that we sell. So it's mostly seen through the economic lens, China, not very much from the political and even less so cultural lens. Well, to go in a slightly more political direction, you mentioned briefly the buildup in space infrastructure that China has delivered in Latin America. China now has more space infrastructure in this region than anywhere else in the world outside of China. And of course, many of these space capabilities would appear to have military or at least dual use applications. And in the book, you unpack the debate in Argentina about whether China should be allowed to build a deep space observatory in Patagonia. So why is this space build out so important to Beijing? And in what ways was it important to Argentinian decision makers? Yeah, I was born not far from that station, actually. It's auspicious. Yeah, it's in the middle of the desert. It's dry Patagonia, the Espacio Lejano Deep Station in Neuquén. It was a perfect case study for me to see the dynamics I describe in the book, because on the one hand, for Beijing, why it matters. The deep space tracking is essential for China's lunar and Mars missions, and they need to track spacecrafts as the Earth rotates. And southern hemisphere locations like Argentina's Patagonia is ideal. Chile's as well is very important. The Chinese have similar facilities in Namibia and Pakistan. But then there's the dual use question and whether this could theoretically track satellites, support military space operations, serve intelligence functions. So the agreement had provisions that were controversial and it was voted in Congress. So each legislator had to express itself state why it was against or in favor of the project. And I could match that with their party and their ideology. And I could count also how many times they linked their vote to the U.S.'s role in the region. A lot of legislators justified the way they voted on how the project would be seen or perceived by the Americans. And this was a very important project on its own because Argentina agreed that its options were constrained. And economic displacement was in action in those years. So the Kirchner's government was locked out of Western capital markets after Argentina's sovereign debt default. And the IMF relationship was highly controversial and they needed investment and international partnerships. So China offered this space station as part of a broader package that included financing without IMF-style conditionality and infrastructure investment. I discussed a case study of the dams in Patagonia. So for a government with a few external options, this was attractive. But from the first day, politicians in both sides, for and against the project, they knew this was going to be a very controversial one and that it would have geopolitical implications. And it still has today 10 years since it was inaugurated. I think today is even more sensitive than what it used to be 10 years ago, to the point that it's used as an example of why other countries shouldn't have similar projects. Last year in Chile, a project between China and a university, Universidad Católica del Norte, Pentarrones, it was blocked for U.S.'s pressures for the same concern. How much, as you said, Chinese space tracking stations have grown outside China. I think this is a main concern for US's policy making on how China is proceeding the region nowadays. I think as Latin Americans we don realize how sensitive this is for the Americans and for the US rivalry on its own We tend to be caught in surprise when these sensitive projects become security And they are becoming more and more security Space projects, 5G projects, ports. And for us, now we are getting it better. And when I say we, I mean politicians and policymakers. But it took a time to understand why these projects were so sensitive. When it comes to the security dimension of some of these Chinese projects that, you know, China would present as economic or scientific, whether, you know, it's the fact that this space infrastructure would be very relevant for China's military capability, potentially in a Taiwan contingency, or the fact that Chinese ICT providers in a 5G rollout could set the ground for espionage, targeting sensitive information or sensitive engagements in a given country. I mean, you mentioned there's more friction now than there would have been even 10 years ago to China kind of being able to roll out projects along those lines with a potential dual use element or a potential security risk. Is that because the governments or the publics in Latin America are worried about the threat to some degree and the kind of weighing that against the economic opportunity? Or are they just worried about Washington seeing it as a threat and coming to yell at them? Like, how's the dynamic between them? Yeah, there's a bit of both. But certainly the U.S.'s comeback, so to speak, to the region through mostly the use of sticks have proven very effective. There's a lot of concern and self-censorship on the side of Latin American politicians in taking care of how the U.S. will think of this. And we are moving towards a scenario where economic displacement, which is a kind of a structural static reality, will create some securitized dynamics in these industries that you mentioned. and countries in Latin America will feel trapped and sometimes feel pressured either to take a stance which is more pro-China or more pro-U.S. But it will certainly be very hard to be in good terms with both as we did for the last 25 years. And the region, I would argue, benefited very much from having good terms with both the U.S. and China. And again, I think this was hard to get At first, we were slow in understanding the changing tides in the geopolitical dimension. A lot of countries, again, thought that they would be able to benefit infinitely from having good terms with both China and the U.S. And now, for now at least, the U.S. has made very clear that it's eager to come back to its so-called backyard and there's no room for two big players in the same garden. So I don't know how this is going to evolve because, as I said, economic displacement is structural, it's very hard to reverse in one or two years. This will create certainly many tensions, but now we are entering a new phase for sure in which this is not only about economy, but everything is getting a security dimension, a geopolitical dimension that it didn't have for the last 20 years. You argue that, you know, when you talk about economic displacement by China of the U.S. in Latin America, that since 2000, China has increased its influence in Latin America, not just in absolute terms, but more than in any other region, which is kind of at least a moderately provocative claim. So can you unpack that conclusion? Yeah, this is a comparative claim. So between 2000 and 2020, China's share of Latin American trade went from roughly 2% to about 50%. And in South America specifically, China's displaced the U.S. as the top trading partner for Brazil, Chile, Peru, Uruguay, and more recently Argentina. And that's an extraordinary shift in just two decades on its own. But then you need to add the role of investments and finance. In Africa, China's trade presence also grew dramatically, but from a smaller base and with more competition from European former colonial powers. And in Southeast Asia, China was already significant due to geographic proximity. So Latin America is unique because it was the region most firmly in the U.S.'s sphere of influence at the start of the period. So that's why I claim this is a hard test for my theory. It's the backyard, so to speak, for Washington. And it's the region where that influence has eroded most dramatically, especially because I show how China's economic weight grew 15-fold while the U.S. has shrunk to a half. So in that sense, there's a dynamic of China's filling gaps, filling voids, economically speaking. It's a sticky reality. It's a structural reality, that of economic displacement. But by no means I'm claiming this is irreversible. Indeed, the $20 billion or so that Argentina got from Fed this year in the data of the book would cause Argentina to fall back strongly towards the U.S. because those shifts through big sums of money can shape how countries go closer to China or the U.S. But in overall terms, if the U.S. wants the region to get closer economically to the U.S. and further from China, it will take time because this is a process that evolved through 20 years and several variables. It's not only trade, but investment and credits. So it's an entanglement, a web of Chinese actors that have created this reality that we see nowadays. day. I'm glad you mentioned the Argentina situation where a prior government that was more leftist was very comfortable expanding cooperation with China. The current administration being a little more right wing, close to Trump, showing at least some indications of moving more slowly in its relationship with China, even though we're very far from a clean break, there seems to be at least a little more friction in the bilateral with China and Argentina now. So to what degree is China's inroads in this region contingent on ideological alignment. Like, does China do more with leftists or does it not matter at all? Is this a purely pragmatic economic set of relationships? How does that look to you? So in the book, I claim that ideology is not that important, although based on what we have seen in Argentina and Venezuela in the last few months, one could say that my argument is not that solid. What I wanted to show is that China grew in the region indistinctively of who was in power. And indeed, some right-wing governments, pro-business, were extremely close to China and saw China a big market, a big opportunity. So my main intention was to make very clear that China's success was not based on left-wing, pink tide ideology. And And perhaps what we see in these formal documents in buying the South-South rhetoric and the we are all equal, I don't think that's the case. I think this grew through tons of little economic bonds that were created gradually and sustained through the swipes and changes in ideology. However, there are two instances in which it seems that China's closeness or distance, ideologically speaking to countries does play a role. And that has to do with finance, in particular with the role of policy banks. In Venezuela, the Chinese Development Bank lended some say $40 billion, some say $60 billion. The thing is, China lended a very large sum of money to the oil sector that was eventually used for other reasons. And I would argue that that was very much backed on ideological reasons because economically speaking, it did no sense. Indeed, it was a very big mistake, I would say, on the eyes of the bank. Now they need to get paid back and I don't know if they will. And on the other hand, you see Argentina, Argentina funding all these infrastructure projects with money from policy banks, the Patagonia dams, renewal of trains. They are all connected through cross-default clauses and the infrastructure needs to be completed. but now Millet is aligning extremely strongly with the U.S. and a tacit condition, not an explicit one, is that Argentina needs to loosen its links with China. In the past, others like Bolsonaro have tried to do it with not a lot of success because one thing is what the president wants to do and the other is the reality of the economy. Actually, Argentina had China as the main trade partner for the first time in a few years, a few months ago. So China still is a very important economic actor, but Millet will certainly block what's most critical for the U.S., which is the currency swap. So I think the U.S. has identified a few red lines in which it wants to contain China. I think it understands that in trade and broader investment, it's very hard to do. It's kind of a structural phenomenon, but then you have the currency that's important to avoid China exploring projects in which Renminbi is going to be used, projects that export technological standards on sensitive issues like 5G, security, face screening, cameras, and so on, and then dual-use infrastructure that includes ports and the space station that we mentioned before. This is not explicit, and it's also very hard to say where is the red line, but I think that that's what's happening now. I think the U.S. wants to contain China on some key issues and then let the country still maintain their broader economic relation with China. The part that is not too sensitive security-wise will remain, and there is a portion that will try to be contained. When it comes to China's relative influence vis-a-vis the United States, I mean, a lot of this conversation we've had has focused on South America. And I think that's because in the book, what you find is that it's South America that is effectively already in China's camp. If we were to draw a line across the region and the United States has Mexico, Central America and the Caribbean, where there's still a preponderance of influence or economic engagement. Wherever you draw the line though most of these countries I assume would prefer to engage deeply with both China and the United States rather than choosing a single patron But you kind of said that that not going to be an option Why do you think that is And what advice would you give to American policymakers hoping to win back those South American partners? Thank you. So I thought a lot on the policy dimension of the book, especially when I was at the Wilson Center and in Washington speaking with policymakers. And there's a big debate in Latin America on, you know, every Latin American country would like to maintain strong relationships with both great powers and avoid choosing. And some pick Chile as a good example of having managed this balancing or hedging pretty well. And there's a discussion on whether active non-alignment is possible. This is a concept by former diplomat Jorge Heine. And I am on the more pessimistic side, not because normatively speaking, I would like hedging to be possible. I think that's the best scenario for Latin American countries. I think there are some forces, some changes that are making engagement with both harder. First, economic pressure from especially from the U.S. U.S. sanctions and, you know, French shoring policies create binary choices. The Millets and the Maduros. If you use Huawei, you might lose access to American tech. If you join BRI, you might face financing restrictions. So the U.S. is increasingly making economic engagement a loyalty test, especially on these red lines that I was mentioning to you. I think in Washington, there's a discussion on what goes in this side of the red line, what goes on the other side of the red line. But pretty much there's a discussion on engaging through a loyalty test. Secondly, there's a supply chain reorganization. Since post-COVID, some countries are being forced to choose production networks and you're either in the U.S. line, let's say semiconductor chain, or you are not. In Latin America, especially in South America, that affects, for example, lithium extraction, which is pretty clear, critical, copper extraction. So Latin America is not a big player in the upper side of the chain. We are not important in manufacturing, but we do provide rare earths and minerals that are important for this supply chain, certainly. And then third, I would say the security conditionality, because there are security partnerships which are becoming more important and come with economic and technological conditions attached. And I'm thinking here on ports, for example, and the U.S. still remain the sole superpower in security in the hemisphere by far. And that's a big asset for the U.S. So it's strengthening the security dimension, I think, more and more. So frankly, when forced to choose South American countries, I think they are discovering that their economic interests aligned more with their top trading economic partner with maybe China and South America. But then you have these political pressures from the most important power in the world and your security partner. So that creates a reduction in agency for sure. What advice would I offer to American policymakers, being very humble, of course, because I think this is a discussion that needs to be made, especially by Americans in Washington. But I would say first, show up with the investment. I think the America's Partnership for Economic Prosperity, for example, or the Build Back a Better World was a start, but needs real resources. I think you can't counter Chinese infrastructure investment and trade with warnings only. I think the region needs ports, power plants, roads, digital infrastructure, you name it. So I think a good sign is offering competitive financing, deploying the DFC more aggressively, for example. I think it's going in that line, which wasn't very active three, four years ago, and find ways to mobilize private capital to offer the huge American private sector incentives to invest in the region. And then perhaps second, stop treating Latin America as a China competition arena because it creates a backlash among governments or resentment to be treated as pawns. response. I think sometimes it's not understood that the Latin American governments engaged with China for economic reasons and being very pragmatic. So at times, this has to do with the first point that I raised, but being forced to choose without offering alternatives creates resentment. And I would say third, and very important, the stresses of power. I think it's important to reconsider the extremely important role of universities in the U.S., science in general, and how important it is to promote tangible and intangible opportunities in the economic sector and society overall. In the surveys that we were speaking of, we find that the U.S. still remains admired, especially because of its innovation, its science, and that should be considered as an asset and an opportunity. And I'm saying this because, as you know, in the last few months, there's been hardship from our students to get into American universities. And I think that harms the potential role of how policymakers could engage more with Latin America in general. We have to talk about Venezuela. We're recording here January 28th, 2026. So earlier this month, the U.S. military renditioned Nicolas Maduro out of Caracas to Brooklyn. And so in light of those events. Would love for your help in understanding how the China-Venezuela relationship fits into China's broader ambitions and goals for Latin America and the Caribbean. Is this military operation a setback for Beijing or in some way an opportunity? That's a great question. And I think Venezuela, it's a fascinating case because it's the exception of the rule about Chinese pragmatism that we were discussing. I think the Chinese invested heavily under Chavez and they used the China Development Bank lending around 60 billion US dollars for ideological reasons. And it's the largest Chinese financial commitment anywhere in Latin America, one of the largest in the world. And China got burned because Venezuela's economic collapse and the drop in oil prices and the catastrophic governance failures, corruption in Venezuela never paid back. So I think the money will never be repaid, mostly. And Venezuela is a cautionary tale that China's lending practices were not always thought of. I think after Venezuela, the Chinese policy banks became more cautious, more commercially oriented, more demanding of warranties. So how it fits the broader strategy, China has a problem with that debt. Venezuela was an experiment in using the oil-backed loans for political alignment with an ideologically friendly government. And it worked for a while and then collapsed. And I think the lesson that China draws from here is that ideological affinity isn't enough. I think you need competent partners and sound economic fundamentals. And that's what you see now from the smaller is beautiful and the more cautious positioning by Chinese banks. I think they are looking at the economic fundamentals more. And we are in a very uncertain terrain. I mean, it's hard to predict how China will play out. This is not about security like it's the case with Russia. I think China's presence in Venezuela was mostly economic. China's loans were tied to the previous regime. That creates legal and political complications. So a transitional or a new government might seek to renegotiate or even repudiate Chinese deals. It would be very interesting to see China and the China Development Bank playing the role that historically played the IMF, for example. You know, countries defaulting on Chinese debt. That's never happened. But I think they will have a very hard time getting repaid. Overall, it's a lesson for China on putting a lot of eggs in the same basket. I think that didn't pay off. But is it fair? I mean, from what you're saying, it sounds like China sort of made the bet, realized it wasn't paying off, and tried to reorient their strategy to be less ideological, more economic, much less, as well, focused kind of a long time ago. So maybe in that telling of the story, you would see the latest developments and the potential risks for the China-Venezuela relationship as relatively ancillary to the broader story of China's growing engagement in Latin America. Is that fair or do you see it a different way? That's very fair. Indeed, what we are focusing nowadays in terms of research for the last eight, nine years, the dynamic on big loans from policy banks weighing down and we are looking at smaller markets like how Chinese investments in solar energy are playing in Chile or in Costa Rica. So we are looking at the increasing role of Chinese investments in renewable energies, in smaller infrastructure projects, in lending from commercial banks to IT projects, in a more diversified market going to smaller countries, to newer regions within big countries like Brazil. And Venezuela, to me, again, as you say, it was an exception. And I don't think it portrays very well the whole situation in Latin America. Well, we'll have to wrap there. Francisco, thank you so much for coming on the show. Thank you. It was a pleasure and I hope to see you soon. To learn more about China's ambitions and influence in Latin America, you can read Francisco's new book, Economic Displacement, China and the End of U.S. Primacy in Latin America. And as always, we would love to hear what you thought of today's conversation and what issues and topics you'd like to see Pekingology unpack in future episodes. You can send your ideas to Pekingology at CSIS.org. If you're new here, we hope you will subscribe and rate the show and we will be back in your feed in two weeks. If you enjoyed this podcast, check out our larger suite of CSIS podcasts. You can listen to them all on major streaming platforms like Apple Podcasts and Spotify. Visit csis.org slash podcasts to see our full catalog.
