As U.S.–China competition increasingly extends into the Western Hemisphere, Latin America has become a key—yet often misunderstood—arena of strategic change. In this interview, Francisco Urdinez, Associate Professor at the Institute of Political Science at the Pontifical Catholic University of Chile and Director of both the Center for Asian Studies and the Millennium Nucleus on China and Latin America (ICLAC), discusses how U.S. influence in the region has gradually eroded. Drawing on his book Economic Displacement: China and the End of US Primacy in Latin America (Cambridge University Press 2026), Urdinez argues that China’s expanding presence is not primarily the result of geopolitical confrontation, but of structural economic shifts created by Washington’s retreat from trade, investment, and development finance over the past two decades.
Urdinez explains how China’s growing economic role has reshaped Latin American governments’ policy choices, public opinion, and voting behavior in international institutions. He also warns that Washington’s increasingly security-driven response, particularly in cases such as Venezuela, may compensate for declining economic leverage in the short term while further weakening U.S. credibility in the region. Together, the interview offers a clear framework for understanding how economic displacement—rather than ideology alone—is redefining U.S.–China competition in Latin America and shaping the region’s future strategic choices.
Juan Zhang: The situation in Venezuela remains highly uncertain following the U.S. capture of its President Nicolás Maduro. What does this remarkable incident tell us about the direction of U.S. power projection in Latin America?
Francisco Urdinez: The U.S. intervention in Venezuela is a watershed moment that reveals a fundamental shift in how the United States projects power in Latin America, but it’s a shift born of weakness rather than strength. What this incident tells us is that the United States is increasingly resorting to coercive and military means to maintain influence in the region precisely because it has lost the economic capacity to compete effectively with China.
In my book Economic Displacement, I demonstrate that U.S. hegemony in Latin America was historically built on economic foundations: the provision of goods, services, credit, and market access. Throughout the 20th century, the U.S. monopoly in providing both private and public goods laid the foundation for its hegemonic legitimacy. However, between 2001 and 2020, the United States essentially delegated this role to China while focusing its attention and resources elsewhere, particularly on the Middle East and later on managing its domestic political challenges.
The Venezuela intervention represents an implicit acknowledgment that the United States cannot, or will not, reverse economic displacement through traditional economic competition. Reversing displacement would require sustained and massive provision of alternative economic goods at a scale comparable to China’s Belt and Road Initiative. American initiatives like Build Back Better World or the Americas Partnership have consistently failed to deliver financing and infrastructure investment at the necessary scale. The political will simply doesn’t exist in Washington to commit the resources required for a genuine economic re-engagement with Latin America.
What we’re witnessing, then, is the militarization of U.S. strategy in Latin America. When you can’t compete economically, you resort to the tools you still have: military power and coercive diplomacy. But this approach has severe limitations. Military intervention can isolate a country in the short term, but it doesn’t build infrastructure, doesn’t provide development financing, and doesn’t create the economic opportunities that Latin American countries desperately need and that China has been providing. The Venezuela case may successfully remove Maduro, but it doesn’t address the structural conditions that led Venezuela and much of South America to deepen economic ties with China in the first place.
This direction of U.S. power projection is ultimately unsustainable and counterproductive. It may produce short-term tactical victories, but it accelerates the very dynamics it aims to reverse by further eroding U.S. legitimacy and soft power in the region.
JZ: If the United States wants to “re-engage” effectively in Latin America, is it enough to offer security partnerships, or must it fundamentally change its economic offering to compete with the Belt and Road Initiative?
FU: Security partnerships alone are fundamentally insufficient for effective U.S. re-engagement in Latin America. My research demonstrates conclusively that influence in the region is built primarily on economic foundations, not security cooperation. The United States must fundamentally transform its economic offering to have any hope of reversing the displacement that has already occurred in ten of twelve South American countries.
The core finding of my book is that economic displacement occurs when the economic weight of one country (measured through trade, investment, credit, and aid relative to GDP) surpasses that of another. China’s success in Latin America wasn’t primarily about superior strategy or aggressive expansion, it was about filling economic voids left by U.S. retrenchment. Between 2001 and 2020, Chinese investments and financing addressed unmet developmental needs throughout the Global South. Latin American countries turned to Chinese goods as viable alternatives precisely because American options were lacking or absent.
What would genuine U.S. re-engagement require? First, it would need massive, sustained infrastructure investment comparable to what China has provided through the Belt and Road Initiative. We’re talking about hundreds of billions of dollars in roads, ports, railways, energy projects, and telecommunications infrastructure. Second, it would require competitive development financing through institutions like the Export-Import Bank at scales and terms competitive with Chinese policy banks. Third, it would need expanded market access and trade opportunities that recognize Latin America’s evolving economic structure, not just traditional commodity exports.
Critically, this can’t be a short-term, politically driven initiative that changes with each administration. One of China’s advantages has been consistency and patience. Chinese economic engagement has persisted across multiple U.S. presidential administrations, creating reliability that Latin American governments value. A credible U.S. re-engagement would need bipartisan support and institutional mechanisms that ensure continuity beyond electoral cycles.
The Venezuela intervention actually illustrates why the security-focused approach fails. Even if militarily successful, it doesn’t resolve the fundamental question: who will finance Venezuela’s reconstruction? Who will invest in its infrastructure? Who will provide the credit its economy needs to function? If the answer isn’t “the United States,” then the structural conditions favoring Chinese economic engagement will simply reassert themselves over time, regardless of who holds political power in Caracas.
Security partnerships have their place, particularly in areas like counter-narcotics cooperation or disaster response. But they cannot substitute for economic engagement as the foundation of influence. Latin American governments care most about delivering development, employment, and economic growth to their citizens. Whoever helps them accomplish those goals most effectively will have influence. Right now, that’s China, not the United States.
JZ: What led you to develop the concept of “economic displacement” in your book as a framework for analyzing U.S.-China rivalry in Latin America? How does this framework differ from other approaches to understanding geopolitical influence in the region?
FU: I developed the concept of economic displacement to address three fundamental limitations in existing literature on China-Latin America relations and great power competition more broadly.
First, the existing scholarship was overly focused on Chinese intentionality, trying to prove whether China’s economic engagement was a deliberate geopolitical strategy or merely commercial opportunism. This debate, while intellectually interesting, was both empirically difficult to resolve (given the opacity of Chinese decision-making) and ultimately less important than understanding the structural effects of China’s economic rise. My framework deliberately sidesteps the intentionality question by focusing on outcomes: regardless of whether China intended to displace U.S. influence, the measurable economic weight shifted, and that shift has political consequences.
Second, traditional approaches treated Latin American countries as passive recipients of great power competition, mere objects rather than subjects with their own agency. This was empirically inaccurate and analytically limiting. My research revealed that Latin American domestic actors, including political elites, subnational governments, and private enterprises, actively demanded Chinese economic goods to solve their own developmental challenges. The concept of economic displacement explicitly incorporates this agency by recognizing that displacement occurs when there is both supply (Chinese provision of goods) and demand (Latin American needs that aren’t being met by the United States).
Third, existing frameworks struggled to explain variation: why did China’s economic influence grow more in some countries than others? Why did some governments successfully leverage Chinese engagement while others became dependent? Economic displacement as a framework provides analytical clarity by breaking the phenomenon into measurable components: trade, investment, credit, and aid, all relative to each country’s GDP. This allows for precise, quantitative assessment of when and where displacement occurs.
The framework differs fundamentally from traditional realist approaches that focus on military capabilities or from liberal institutionalist approaches that emphasize international organizations and norms. Instead, it draws on Susan Strange’s concept of structural power, particularly in the production and financial structures. Economic weight, as I define it, reflects the power exerted by one country on another through economic interactions, but crucially, it’s positional and relational rather than absolute. China doesn’t need to be the world’s largest economy to economically displace the United States in specific countries; it just needs to have greater economic weight in those particular bilateral relationships.
This approach also differs from economic statecraft literature, which typically assumes that economic tools are wielded intentionally by states to achieve foreign policy objectives. My framework recognizes that structural economic power can create political effects even without intentional strategy. China’s growing economic weight constrains choices and shapes incentives for Latin American governments whether or not Beijing deliberately designed it that way.
JZ: Could you share one or two specific case studies from your book to illustrate how economic displacement plays out on the ground?
FU: Let me share two case studies that illustrate different dimensions of how economic displacement operates through local agency and subnational dynamics.
The first case involves the financing and construction of two major hydroelectric dams in Argentine Patagonia: Kirchner and Cepernic. This case exemplifies top-down agency, where the national government actively sought Chinese financing to deliver concrete development results to constituents. Argentina faced severe energy deficits that were causing regular blackouts and constraining economic growth. Traditional Western lenders weren’t offering financing at acceptable terms or speed. The Kirchner government turned to China, which provided approximately $4.7 billion in financing through China Development Bank and Eximbank, with Chinese state-owned enterprises (primarily Gezhouba Group) executing the construction.
What’s crucial here is that this wasn’t Chinese imposition; it was Argentine demand. Political elites needed to demonstrate their capacity to solve the energy crisis and deliver development to Patagonia, a historically neglected region. Chinese actors offered a package that Western alternatives couldn’t match: significant financing, relatively quick implementation, and willingness to work in remote, challenging locations. The Argentine government exercised agency by actively seeking out this partnership, negotiating terms, and using the project’s success politically. This illustrates how economic displacement is driven not just by Chinese supply but by Latin American demand for goods that address real developmental needs.
The second case is the Chancay Port project in Peru, which illustrates bottom-up dynamics and the role of subnational actors. This massive port development, financed and constructed primarily by Chinese company COSCO Shipping, emerged not from top-down national government planning but from local entrepreneurial initiative. Peruvian business groups and regional authorities identified the opportunity and actively courted Chinese investment. The national government played an orchestrating role, setting frameworks and providing approvals, but delegated substantial agency to local actors.
Chancay will become the largest port on South America’s Pacific coast, fundamentally reshaping regional trade logistics and creating a direct shipping route to Asia that bypasses traditional routes. The project demonstrates how subnational actors, businesses, governors, and local governments, can engage with China independently of traditional nation-state channels. These actors saw Chinese financing and expertise as the most viable path to regional development and enhanced global connectivity. They exercised agency by actively pursuing this partnership and building political coalitions to support it.
Both cases reveal several common patterns. First, the demand for Chinese goods arose from genuine developmental needs that weren’t being addressed by U.S. or other Western actors. Second, Latin American actors, whether national governments or subnational entities, actively exercised agency in seeking out and shaping these partnerships. Third, the projects had real economic benefits, infrastructure that works, energy that’s generated, connectivity that’s enhanced, which in turn generated political capital for the leaders who delivered them. Fourth, these weren’t primarily geopolitical choices, but pragmatic economic decisions driven by local needs and opportunities.
These cases also illustrate why economic displacement is so difficult to reverse. The infrastructure is already built, the financing relationships are established, the economic benefits are being realized, and the political capital has been earned. Simply pressuring Latin American governments to reduce Chinese engagement doesn’t address the underlying reality: these countries still need infrastructure, financing, and development opportunities, and if the U.S. isn’t offering competitive alternatives, the structural incentives favoring Chinese engagement remain intact.
JZ: You argue that U.S. primacy is ending in Latin America. Do you view this as a proactive “push” from China, or a “pull” created by U.S. neglect and changing regional needs?
FU: This is perhaps the most critical and counterintuitive finding of my research: the ending of U.S. primacy in Latin America is primarily a story of American retrenchment creating opportunities that Chinese actors filled, rather than a story of aggressive Chinese strategic expansion. It’s fundamentally more “pull” than “push,” though both dynamics are present.
My evidence shows that U.S. economic weight in Latin America contracted significantly between 2001 and 2020 across nearly all dimensions: trade, investment, credit, and aid. This wasn’t because Latin American economies were shrinking or because total foreign economic engagement was declining, it was because the United States was reducing its economic footprint while regional economies were growing and their developmental needs were expanding. The U.S. essentially delegated the provision of economic goods to China, whether intentionally or as an unintended consequence of prioritizing other regions and issues.
Several factors drove U.S. retrenchment. After 2001, American attention and resources shifted dramatically toward the Middle East and the wars in Iraq and Afghanistan. Latin America, no longer seen as a priority in the post-Cold War era and not viewed as a security threat, received declining attention and investment. The 2008 financial crisis further constrained U.S. capacity and willingness to provide development financing globally. Meanwhile, domestic political dysfunction in the United States made it increasingly difficult to sustain long-term foreign economic engagement that might not have immediate, visible domestic benefits.
This created enormous economic voids throughout Latin America. Countries needed infrastructure development, energy projects, transportation networks, and telecommunications systems. They needed credit and financing for large-scale projects that their own governments couldn’t fund. They needed export markets for commodities and manufactured goods as their economies evolved. These were genuine, pressing developmental needs that governments had to address to maintain political legitimacy and deliver for their citizens.
Chinese actors, hundreds of state-owned enterprises, policy banks, commercial banks, and provincial actors, moved into these spaces. Critically, they were responding to demand from Latin American actors who were actively seeking alternatives. My case studies of the Argentine dams and Peruvian port demonstrate this clearly: Latin American governments and businesses identified their needs, sought out Chinese partners, and negotiated these arrangements. This was local agency at work, not Chinese imposition.
That said, there are “push” elements from China as well. Chinese firms were encouraged by Beijing’s Going Global policy (launched in 2000) and later the Belt and Road Initiative (2013) to expand internationally. Chinese policy banks provided financing on terms and at scales that made projects viable. Chinese construction companies had expertise and capacity that they deployed globally. But even this “push” was more about creating supply to meet existing demand rather than forcing unwanted projects on reluctant recipients.
The evidence for this interpretation is strong. If Chinese displacement were primarily aggressive “push,” we would expect to see similar patterns globally regardless of U.S. engagement levels. Instead, we see that Chinese economic weight grew most where U.S. economic weight contracted most. We also see that displacement occurred under Latin American governments of all ideological orientations, left, right, and center, suggesting that it was driven by structural economic needs rather than ideological affinity with China. Furthermore, interviews with Latin American policymakers and business leaders consistently emphasize that they turned to China because other options were unavailable or inadequate, not because China was their first preference.
This distinction between “push” and “pull” has profound policy implications. If the problem were primarily aggressive Chinese expansion, the solution might be containment or pushback against China. But if the problem is fundamentally U.S. neglect and unmet Latin American developmental needs, the solution must be genuine American re-engagement with competitive economic offerings. You can’t solve a supply-side problem (lack of U.S. economic goods) with demand-side interventions (pressuring countries not to engage with China). The Venezuela intervention illustrates this perfectly: coercion without alternative economic provision doesn’t resolve the underlying structural conditions.
JZ: You argue that economic displacement affects public opinion and political elites in Latin America. In what ways has China’s influence changed Latin American voting patterns in multilateral organizations such as the UN?
FU: My research demonstrates that economic displacement has measurable, significant effects on how Latin American countries vote in multilateral organizations, though the mechanism is more about erosion of U.S. influence than positive gains for China. I examined voting patterns in three key forums: the United Nations General Assembly (UNGA), the UN Human Rights Council (UNHRC), and the Organization of American States (OAS).
The core finding is consistent across all three institutions: countries that have experienced economic displacement, where China’s economic weight surpasses that of the United States, show significantly decreased alignment with U.S. positions. This effect holds even when controlling for traditional factors like ideology of the government, historical voting patterns, bilateral aid, and regional dynamics.
In the UN General Assembly, I found that economic displacement is associated with approximately 8-12 percentage point decrease in voting alignment with the United States on issues where the U.S. takes a clear position. This might seem modest, but in an institution where majorities matter and coalitions are carefully constructed, this represents a substantial erosion of U.S. influence. Critically, this decreased alignment with the U.S. doesn’t always translate into increased alignment with China. Often, countries simply become more independent in their voting, more willing to break with U.S. preferences even when they don’t actively support Chinese positions.
The UN Human Rights Council provides particularly compelling evidence because human rights issues are where we might expect ideological and normative factors to dominate over economic considerations. Yet even here, economic displacement matters. Countries that have experienced displacement are significantly less likely to support U.S.-sponsored resolutions criticizing China’s human rights record, and more likely to support Chinese counter-resolutions emphasizing non-interference and sovereignty. This doesn’t necessarily mean these countries have changed their fundamental values about human rights, rather, it suggests they’re less willing to jeopardize economically important relationships by siding with the U.S. against China on sensitive issues.
The Organization of American States case is especially revealing because the OAS is traditionally considered part of the U.S. sphere of influence in the Western Hemisphere. Yet even here, I document declining U.S. influence in voting on key resolutions. Countries with higher Chinese economic weight are less likely to support U.S. positions on issues ranging from Venezuela to Cuba to institutional reforms. This represents a remarkable shift in an institution that was essentially created to advance U.S. interests in the region.
The mechanism through which economic displacement affects voting is what I call the erosion of political leverage. When the United States was the dominant economic partner, it could credibly use economic incentives (aid, trade preferences, investment) or potential sanctions to influence countries’ positions on international issues. Economic displacement dilutes this leverage because countries have an “outside option.” If the U.S. threatens economic consequences for voting against American interests, countries can credibly turn to China for alternative economic relationships. This fundamentally changes the bargaining dynamic.
Importantly, my research shows that this isn’t primarily about Chinese coercion or explicit quid pro quo demands linking economic benefits to voting support. The Chinese government rarely makes such linkages explicitly, at least not as frequently or openly as some Western governments do. Rather, it’s about structural power: countries become economically dependent on China for trade, investment, and financing, and this dependence creates implicit constraints on how far they can go in opposing Chinese interests, even without explicit threats.
I also found interesting variation in how economic displacement affects different types of votes. The effect is strongest on issues where China has clear, stated preferences (Taiwan recognition, South China Sea disputes, human rights criticisms of China). It’s weaker but still present on broader geopolitical issues where U.S. and Chinese interests diverge but neither has made the issue a top priority. This suggests that countries are making sophisticated calculations, protecting relationships with China on issues that really matter to Beijing, while maintaining some independence on less critical issues.
Public opinion data corroborates these institutional voting patterns. In countries that have experienced economic displacement, public perception of China as a beneficial economic partner has improved, while perception of the U.S. as a provider of solutions to regional problems has declined. Political elites, particularly legislators, show similar patterns. My analysis of over 2,500 legislators across 15 countries over ten years shows that economic displacement is associated with more favorable views of China’s role in the region and more critical views of U.S. engagement.
The Venezuela intervention will provide a crucial test of these dynamics. If economic displacement’s effects are primarily structural rather than based on active Chinese leverage, we should see a bifurcated response: countries may offer rhetorical support for the U.S. intervention out of fear of security consequences, but continue to vote with China on economic and institutional issues where their material interests lie. If we instead see wholesale realignment back toward the U.S. across all issue areas, it would suggest that security coercion can override economic structural power, at least in the short term.
JZ: Many analysts frame Latin America as a battlefield for a new Cold War. Based on your research, do Latin American leaders view their relationship with China as a substitute for the U.S., or are they successfully navigating a “non-aligned” third way? Do you believe Latin America will eventually be forced to choose between U.S. and Chinese technological ecosystems?
FU: Based on my research, I believe we are indeed headed toward a new Cold War dynamic in Latin America, though it’s arriving through a different pathway than the original Cold War. The Venezuela intervention may mark the decisive moment when what had been primarily economic competition transforms into militarized, security-focused rivalry that forces Latin American countries into binary choices they’ve been trying to avoid for two decades.
Historically, Latin American leaders have viewed their relationship with China as a complement to, not a substitute for, relations with the United States. They’ve actively tried to maintain strategic autonomy, compartmentalizing economic engagement with China from security and institutional ties with the United States. This approach worked relatively well between 2001 and 2020 because the competition remained primarily economic. Countries could trade with China, accept Chinese infrastructure investment, and participate in Belt and Road projects while still maintaining military cooperation with the U.S., participating in U.S.-led institutions, and preserving democratic governance models.
However, the space for this “third way” is collapsing, and we’re witnessing the emergence of Cold War dynamics through three critical shifts. First, economic relationships are being securitized. What were once treated as pragmatic development decisions, accepting Chinese financing for a port, deploying Huawei 5G infrastructure, partnering with Chinese firms in lithium extraction, are now interpreted by Washington as geopolitical alignment requiring potential punishment. The U.S. is no longer distinguishing between economic pragmatism and political allegiance.
Second, the U.S. response to economic displacement has shifted from economic competition to coercive intervention. The Venezuela case is paradigmatic: when the United States cannot compete economically to reverse displacement, it resorts to military force. This is fundamentally different from the economic competition of the past two decades and much more similar to Cold War interventionism. If this becomes the template for U.S. policy, where countries that deepen economic ties with China face potential military intervention or regime change operations, we’ve entered a qualitatively different and more dangerous phase.
Third, the technology dimension is creating unavoidable bifurcation. Unlike trade or infrastructure where countries could maintain relationships with both powers, technological ecosystems, particularly in 5G, artificial intelligence, digital payments, and quantum computing, increasingly require choosing sides because they may not be interoperable. The U.S. campaign against Huawei illustrates this: countries are being pressured to choose American or Chinese technology providers, and that choice has cascading implications for future technological development, data governance, and digital sovereignty.
Latin American countries are desperately trying to resist being forced into this new Cold War framework. There’s strong resistance across the political spectrum to returning to an era where the region’s autonomy is subordinated to great power competition. Countries are attempting hybrid approaches, deploying both U.S. and Chinese technologies in different sectors, maintaining economic ties with China while strengthening security cooperation with the U.S. But these hedging strategies are becoming increasingly untenable.
The critical difference from the original Cold War is that this competition lacks the clear ideological dimension. China doesn’t offer a competing political model it’s actively promoting in Latin America. It doesn’t provide military alliances or security guarantees. The competition is primarily about economic influence and technological standards rather than capitalism versus communism. But this may make the situation more unstable rather than less: without clear ideological camps, the boundaries of acceptable engagement are ambiguous, creating uncertainty and potential for miscalculation.
My research shows that economic displacement has already created structural constraints on Latin American autonomy. Countries that depend on China for commodity exports, infrastructure financing, and technology can’t easily pivot away, even under U.S. pressure, because the economic costs would be devastating and because the U.S. isn’t offering viable alternatives at scale. This creates a situation where countries may be forced to make political commitments to reduce Chinese engagement that they cannot actually fulfill economically. That gap between political rhetoric and economic reality is dangerous and unsustainable.
I believe Latin America will indeed be forced to make increasingly difficult choices about technological ecosystems, and these choices will have profound implications beyond just technology. Once you commit to one country’s 5G infrastructure, that shapes your digital economy, your data governance, your cybersecurity frameworks, and ultimately your integration into either a U.S.-led or China-led technological bloc. These aren’t easily reversible decisions, and they create path dependencies that constrain future choices.
The Venezuela intervention signals that we’re past the point where Latin American countries can successfully navigate a non-aligned third way without costs. Countries now face a stark calculation: deep economic integration with China may invite U.S. intervention or punishment, but rejecting Chinese economic engagement means forgoing desperately needed development resources that the U.S. isn’t providing. This is an impossible position that will likely lead to regional fragmentation, with some countries forced or choosing to align more closely with the U.S. (particularly smaller Central American and Caribbean nations) while others, especially larger South American countries where displacement is already structural, maintain or deepen Chinese ties despite U.S. pressure.
The tragedy is that this new Cold War serves neither Latin America’s interests nor, I would argue, genuine U.S. interests in the region. Latin America’s primary need is development, not geopolitical alignment. Forcing countries to choose sides diverts resources and attention from addressing poverty, inequality, infrastructure deficits, and climate challenges. It creates instability and resentment. But the logic of great power competition, once unleashed, tends to override local interests and agency. We may be entering an era where Latin American preferences matter less than Washington and Beijing’s competitive imperatives, and that’s a profoundly troubling prospect for the region’s future.
The views expressed in this article represent those of the author(s) and not those of The Carter Center.
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