In 2023, a visitor to the Panama Canal might think they were in China. Ports at both ends of the Canal are managed by companies from the People’s Republic of China (PRC), while Huawei dominates the country’s telecoms system.
Panama joined Beijing’s Belt and Road Initiative in 2018, just one year after severing diplomatic relations with Taiwan, becoming the first nation in the Western Hemisphere to embrace Beijing’s massive infrastructure development strategy. Margarita Island, off the Atlantic mouth of the canal, is leased to the Landbridge Group for the development of a free trade port outside of local control. Landbridge has close ties to the Chinese Communist Party (CCP), and its chairman has served on the Chinese People’s Political Consultative Conference, a key United Front organization.
Panama illustrates the relentless advance of CCP influence across the Western Hemisphere. Between 2000 and 2010, the PRC’s share of Latin American exports quintupled, then tripled again between 2010 and 2021, from $180 billion to $450 billion. PRC-linked companies have secured control of more than 40 ports across the region. Twenty additional Latin American nations have followed Panama into the PRC’s Belt and Road Initiative.
With the single-minded focus of a military campaign, the CCP directly coordinates ostensibly “private” companies and PRC officials in pursuit of the party’s agenda. Unlike normal multinational companies which seek profits, financial returns are only a secondary concern for the CCP. The real prize is control—not only control of strategic points such as the Panama Canal and ports but of natural resources, telecommunications, and ultimately governments. Between 2005 and 2021, China extended more than $130 billion in loans to Latin American countries for infrastructure projects, often with provisions that contracts go to PRC-associated firms.
These infrastructure projects are purpose-built to deepen economic ties with China. At Chancay, less than an hour north of Lima, Peru, a $3 billion deepwater port is under construction, which will push exports to Chinese markets. New roads are being built to tie critical mineral mines directly to the port, with shipping lanes along the West coast of South America being rerouted through this huge PRC-owned facility. Projects like Chancay go hand-in-hand with Chinese firms’ takeover of local construction, shipping, and telecommunications.
Latin America is central to the CCP’s global campaign to monopolize strategic natural resources. Lithium, for example, is critical for the manufacture of batteries, and China is the world’s largest battery producer. CATL, a CCP-aligned company, recently secured extensive rights to develop Bolivia’s currently untapped lithium resources. China, Chile, and Argentina already combine for 95 percent of global lithium production outside of Australia; in the event of a conflict that interdicted trade, the CCP could enjoy a global monopoly over this critical resource.
The CCP is ruthless in pursuit of dominance in Latin America. Huawei secured a foothold in the Brazilian telecom market by offering free 5G kits to agribusinesses selling to the Chinese market. Bribery is not only tolerated but encouraged. According to the State Department, in 2019, the CCP bribed El Salvadoran officials to secure a contract for a deepwater port. Last fall, it was revealed they had also used bribes to secure road construction contacts in Bolivia. This March, the former President of Ecuador, Lenin Moreno, was charged with accepting bribes from a Chinese firm seeking to build a hydroelectric plant.
The CCP’s economic investment is already being leveraged for political control. This year, Honduras joined El Salvador, Nicaragua, Panama, and the Dominican Republic in terminating its diplomatic recognition of Taiwan. Brazil’s President Lula De Silva has both refrained from criticizing Putin on Ukraine and called for a new currency to replace the dollar, a long-term ambition of Beijing. Venezuela has purchased arms from the CCP and hosted PLAN warships, while the CCP has taken steps to secure a military base in Cuba, a development that has oddly faced none of the blowback from Washington the Soviets faced 60 years ago.
Greater CCP control always spells disaster for human rights. Huawei, ZTE, and other Chinese “smart city” systems are part of an authoritarianism starter kit, designed to protect leaders from their own populations. In 2016, Venezuela introduced “homeland” ID cards required to access government services, enabled by ZTE. In 2021, when protests erupted in Cuba, the regime had no trouble shutting down the Chinese-controlled internet.
Beijing relishes the replacement of functional democracies with authoritarian narco-regimes as it secures Beijing’s political and economic control, with the added benefit of worsening the crisis on our southern border.
The CCP seeks not prosperity but power. Authoritarian client states are the point.
Thirty years of neglecting our own neighborhood has created these problems. But the news isn’t all grim. Global manufacturers are racing to move supply chains out of China and it is no coincidence that Mexico just edged ahead of China as our largest trading partner. We have a once-in-a-century opportunity to steer investment towards deserving Latin American markets, building trust, institutions, and goodwill.
We have a duty both to our national security and the people of Latin America to show up in the region and bring solutions, not just lectures. If we continue our neglect, just as the creation of Panama heralded the dawn of the American century, China’s “Panama Model” could define the CCP’s century.
Rep. Mike Gallagher is a Republican Congressman representing Wisconsin. He is Chairman of the Select Committee on the Chinese Communist Party.
The views expressed in this article are the writer’s own.