Issues

China and Japan, despite having distinct natural resource endowments, are among the top importers of energy commodities. Conversely, the United States is a major energy producer, exporter, and importer, but heavily relies on imports for at least 20 critical or strategic minerals. This has led China and Japan to launch resource diplomacy efforts and "go-out" policies to secure energy and mineral resources from other parts of the world, including Latin America and the Caribbean (LAC). The global energy transition towards sustainable and cleaner energy sources has further shaped China's engagement with Latin America, which possesses immense renewable energy potential, including vast reserves of critical metals and wind, solar, and hydroelectric power. 

As the world's largest greenhouse gas emitter, China has been actively diversifying its energy sources and reducing reliance on fossil fuels. Accordingly, besides developing domestic-related projects, Chinese companies have been making substantial investments in Latin America's renewable energy sector, whether through the Belt and Road Initiative or not, providing capital, technology, and expertise to support the development of clean energy projects across the region. Even before 2019, in South America's Lithium Triangle, Chinese companies' heavy investments and joint ventures became a strategic source for China's global dominance of the lithium supply chain, from commodity refining to batteries and electric vehicles (EVs). 

However, the plans of the ABC countries (Argentina, Bolivia, and Chile) to use the lithium supply chain to implement industrialization policies have faced challenges ranging from lack of good governance to environmental issues such as water usage and battery waste and recycling. Another essential piece of China's strategy in the region and globally has been its relationship with Brazil, both being members of the BRICS countries. As the largest oil-producing country among LAC nations and one of the top four agricultural producers in the world, Brazil has become relevant for China, particularly in the energy and food sectors. Within LAC, Brazil remains China's top trade partner by a wide margin. Chinese cars, particularly electric or hybrid ones, are the second most imported in Brazil after Korean automobiles.
Furthermore, Chinese EV companies such as Chery, BYD, and GWM have already established plants in Brazil, having set up joint ventures with local companies, intending to use the country as an exporting platform to other LAC countries. Beyond that, various renewable- and digital-based new economy value chains have been launched, with considerable economic and environmental impacts on Brazil and the region. This article analyzes the political economy of those transforming political, economic, and trade relations involving energy value chains in the context of the engagement between China, other advanced economies, and LAC countries.