China and Russia in Central & South America - January 2026

International

Jan 5

China and Russia in Latin America: Strategic Analysis

Executive Summary

This analysis examines the strategic engagement of China and Russia in Central and South America through the lenses of investment, trade, debt relationships, and geopolitical alignment. The landscape has shifted dramatically following the Trump administration's reassertion of the Monroe Doctrine through the "Trump Corollary" and the January 2026 military action in Venezuela that resulted in the capture of President Nicolás Maduro.

Chinese Investment: China has deployed over $138 billion in loans to Latin America since 2005, with Venezuela ($60B), Brazil ($30B), and Ecuador ($18B) as primary recipients. However, new BRI investment has declined sharply since 2020.
Russian Footprint: Russia's economic presence is minimal (less than 2% of regional trade), but maintains strategic military and political ties with Venezuela, Cuba, and Nicaragua through approximately $34 billion in military and energy loans.
Critical Minerals: Latin America holds 60% of global lithium reserves, 40% of copper reserves, and significant rare earth deposits, making it a critical battleground for US-China competition.
Donroe Doctrine: The January 2026 US operation capturing Venezuelan President Maduro represents a decisive assertion of the "Trump Corollary," with profound implications for Chinese and Russian debt recovery throughout the region.

Part I: Chinese Engagement in Latin America

1.1 Belt and Road Initiative Overview

As of 2025, 21 Latin American countries have signed Belt and Road Initiative memoranda of understanding with China. However, the region's share of BRI investment has declined dramatically:

H1 2025: Only 1.14% of global BRI construction engagement and 0.4% of investment went to Latin America
Peak vs. Current: Peak lending (2010) was $34.5 billion annually; 2019-2023 averaged just $1.3 billion annually
Panama Exit: Panama became the first Latin American country to exit the BRI (February 2025) under US pressure
Colombia Entry: Colombia joined the BRI in May 2025; Brazil continues to waver on formal membership

China's strategy has shifted from massive infrastructure loans to targeted investments in critical minerals, green technology, and strategic ports like the $3.4 billion Chancay megaport in Peru.

Chinese BRI Engagement in Latin America (2010-2025)

1.2 Chinese Loans by Country

Total Chinese development finance institution (DFI) loans to Latin America (2005-2024): approximately $138 billion distributed primarily through China Development Bank and Export-Import Bank of China.

Country	Total Loans	% of GDP	Primary Sectors	Status
Venezuela	$60B+	~100% (pre-crisis)	Oil, infrastructure	INSOLVENT
Brazil	$30B	~1.5%	Oil (Petrobras), power	STABLE
Ecuador	$18B	~20%	Oil, hydropower	STRAINED
Argentina	$17B	~10%	Dams, rail, nuclear	STRESSED
Bolivia	$3.5B	~10%	Lithium, roads	STRAINED
Peru	$2.5B	~1%	Mining, Chancay port	STRONG
Jamaica	$2.1B	~18%	Roads, ports	MODERATE
Cuba	$10B+	N/A	Energy, infrastructure	CRITICAL

Note: Venezuela, Ecuador, and Brazil account for 85% of the Chinese policy bank loan portfolio in Latin America.

Chinese Loans Distribution by Country

1.3 Critical Minerals and Resource Trade

Latin America's strategic importance lies in its mineral wealth critical for the energy transition and high-tech manufacturing:

Lithium Triangle

Argentina, Bolivia, and Chile hold 49.6% of global lithium reserves. China has secured partnerships with all three countries, though Bolivia's 2025 election may open the sector to Western investment.

Copper Dominance

Chile and Peru produce 35% of global copper. Chinese companies like Chinalco and MMG dominate Peru's mining sector. China absorbs 65% of Chilean mineral exports.

Trade Volume

China-LAC trade reached $518 billion in 2024, making China the region's second-largest trading partner overall and largest for South America specifically. China holds over 40% of global smelting and refining capacity for copper, lithium, rare earths, and cobalt.

Part II: Russian Engagement in Latin America

2.1 Overview of Russian Presence

Russia's Latin American footprint is fundamentally different from China's—primarily political and military rather than economic. Russian trade with the region represents less than 2% of its global trade, compared to China's substantial commercial presence.

Core Allies: Cuba, Nicaragua, and Venezuela form the axis of Russian strategic partnership, receiving over half of Russia's 43 high-level diplomatic visits since 2000.
Arms Sales: 73% of Russian arms exports to Latin America have gone to Venezuela, including Su-30MK2 fighters, Mi-35 helicopters, and T-72 tanks.
Energy Sector: Rosneft invested approximately $10 billion in Venezuelan oil through prepayment arrangements, taking 49% stake in Citgo as collateral.

2.2 Russian Financial Exposure

Country	Est. Exposure	Type	Risk Status
Venezuela	$17-34B	Military + Oil	CRITICAL RISK
Cuba	$3-5B	Military + Energy	HIGH RISK
Nicaragua	<$500M	Military	ELEVATED RISK
Brazil	<$100M FDI	Oil + Fertilizer	STABLE

Russia-Venezuela bilateral trade reached approximately $270 million in 2024 (70% increase year-over-year), though this remains far below Russia's trade with Brazil ($4B), Mexico, or Chile. The 2025 Strategic Partnership Initiative extended oil cooperation through 2041.

China vs Russia: LAC Loan Exposure Comparison

Part III: Country-by-Country Debt and Solvency Analysis

3.1 External Debt Overview and Solvency Indicators

Country	Debt/GDP	China Debt	Russia Debt	Solvency	Balance
Venezuela	150-200%	$60B+	$17-34B	INSOLVENT	Unbalanced
Argentina	85%	$17B	Minimal	STRESSED	Rebalancing
Brazil	72%	$30B	<$100M	STABLE	Mutual
Ecuador	60%	$5B	Negligible	STRAINED	Unbalanced
Colombia	58%	$2B	Negligible	STABLE	Mixed
Peru	35%	$2.5B	$15M	STRONG	Mutual
Chile	40%	<$1B	Negligible	STRONG	Mutual
Bolivia	80%	$3.5B	<$100M	STRAINED	Mixed
Cuba	N/A	$10B+	$3-5B	CRITICAL	Dependent
Nicaragua	55%	$500M	<$500M	MODERATE	Dependent

Debt-to-GDP Ratio by Country

Part IV: Balanced vs. Unbalanced Relationships

4.1 Mutually Beneficial Relationships

🇧🇷 Brazil

Despite $30B in Chinese loans, Brazil maintains a balanced relationship. Petrobras prepaid its CDB debt in 2019, terminating preferential supply obligations. Brazil accounts for half of LAC FDI inflows and maintains diversified creditor relationships with Western institutions. The relationship is primarily commercial, with China as Brazil's largest trading partner but without political dependence.

🇵🇪 Peru

China dominates mining sector investment (MMG, Chinalco, Zijin Mining) and the $3.4B Chancay port will cut shipping times to Asia by two weeks. However, Peru maintains open-market regulations, diverse creditor relationships, and recently pursued naval modernization with South Korea's Hyundai rather than China, easing US concerns.

🇨🇱 Chile

As the world's largest copper producer and second-largest lithium producer, Chile leverages its resources to maintain balanced relationships. Chinese companies absorb 65% of mineral exports, but Chile has partnered with US firm Albemarle on lithium and pursued both "ChileWeek China" and "Chilean Call" US investment initiatives. Low debt/GDP (40%) provides negotiating strength.

4.2 Unbalanced/Dependent Relationships

🇻🇪 Venezuela — CRITICAL

The most extreme case of debt dependency. With $60B+ to China and $17-34B to Russia, Venezuela committed 1,325 million barrels of oil to China at heavily discounted prices. The country defaulted on international bonds in 2017 and remains fundamentally insolvent. Neither China nor Russia has issued new loans since 2016, focusing instead on restructuring existing debt.

🇪🇨 Ecuador — STRAINED

Chinese debt equals approximately 11% of external debt, with 42% expected to be repaid in oil by 2024 at prices significantly below market. Petroecuador reported losing money on each barrel exported to China. The 2024 energy crisis highlighted problems with Chinese-built hydroelectric plants that underperformed.

🇨🇺 Cuba — CRITICAL

Entirely dependent on Chinese and Russian support, with no reliable GDP data available. Venezuela's collapse has cut Cuban oil supplies, while US sanctions eliminate Western alternatives. Both China and Russia provide essential energy, food, and equipment subsidies with no realistic repayment capacity.

4.3 Transitional/Mixed Relationships

🇦🇷 Argentina — REBALANCING

Under President Milei, Argentina is actively rebalancing away from Chinese dependence while maintaining provincial-level Chinese lithium investments. Milei refused to sign a $500M dam loan addendum and pursues US/allied alignment. However, the IMF and China swap line remain critical to avoiding default.

🇧🇴 Bolivia — IN TRANSITION

The August 2025 election ended MAS's 20-year rule. The incoming government is expected to open lithium sector to Western investment beyond current Chinese/Russian partnerships. Transition period creates uncertainty for existing Chinese projects.

Part V: Venezuela Case Study and the "Donroe Doctrine"

5.1 The Trump Corollary and Operation Absolute Resolve

On January 3, 2026, the United States launched "Operation Absolute Resolve," capturing Venezuelan President Nicolás Maduro hours after he met with Chinese President Xi's special envoy. This operation represents the first implementation of the "Trump Corollary" to the Monroe Doctrine as articulated in the December 2025 National Security Strategy.

The NSS explicitly states the US will "reassert and enforce the Monroe Doctrine to restore American preeminence in the Western Hemisphere" and "deny non-hemispheric competitors" military or economic footholds. Trump has referred to this as the "Donroe Document," claiming it supersedes the original Monroe Doctrine.

Key Policy Elements of the Trump Corollary

Condition US aid on unwinding Chinese-backed infrastructure projects
"Push out" foreign companies from strategic sectors (ports, telecommunications, critical minerals)
Link debt restructuring to market reforms and geopolitical alignment
Use military force to address perceived national security threats

5.2 What Happens to Chinese Debt in Venezuela

China's $60-105 billion exposure in Venezuela faces an unprecedented test. Several scenarios are possible:

Scenario 1: Debt Subordination

A US-backed transition government would likely prioritize Western creditor claims (ConocoPhillips, ExxonMobil arbitration awards totaling ~$10B) and multilateral institutions over Chinese bilateral debt. Legal claims against PDV Holding already exceed $19 billion and would take precedence in US courts.

Scenario 2: Renegotiation Under Pressure

China may be forced to accept significant haircuts (40-50 cents on dollar is best-case) or convert debt to equity stakes in oil assets, subject to US sanction compliance.

Scenario 3: Asset Nationalization

A new government could repudiate "odious debt" incurred by the Maduro/Chavez regimes, arguing it did not benefit the Venezuelan people—a tactic Ecuador previously employed in 2008.

Scenario 4: Parallel Claims Competition

China and Russia would compete with US oil majors, bondholders, and arbitration winners for limited Venezuelan assets, with US courts and political leverage favoring Western claimants.

5.3 Russian Debt Implications

Russia's $17-34 billion exposure (primarily military sales and Rosneft oil prepayments) faces even greater risk:

The 49% Citgo stake held as collateral is now effectively frozen by US sanctions and legal competing claims
Military equipment contracts would be terminated and remaining inventory potentially seized or mothballed
The 2025 Strategic Partnership Initiative extending oil cooperation to 2041 would be voided
Russian personnel and military advisors in Venezuela face extraction or detention

5.4 Regional Implications: Domino Effects

Countries Likely to See Pressure to Renegotiate Chinese Debt

Cuba: Most immediate target. Financial arrangements with Venezuela disrupted; dependent on both Chinese and Russian support. US sanctions may intensify further.
Nicaragua: Small economy with limited debt but strong political alignment with Maduro. Potential for similar pressure campaign.
Ecuador: Already engaged in debt renegotiation; may receive US support to further reduce Chinese obligations.
Bolivia: New government may seek Western alternatives to Chinese lithium partnerships.

Countries Likely Protected by Economic Scale

Brazil: Too large and diversified for similar treatment; maintains balanced relationships.
Mexico: Critical US economic partner; Chinese investment remains modest.
Argentina: Under Milei, already aligning with US; Chinese debt likely restructured through market mechanisms rather than coercion.

Part VI: Conclusions and Outlook

6.1 Strategic Assessment

The January 2026 Venezuela intervention marks a fundamental inflection point in Chinese and Russian engagement with Latin America. The "Donroe Doctrine" establishes that the US will use military force, sanctions, and economic coercion to assert hemispheric dominance and counter extra-regional influence.

For China

The $138 billion BRI investment in Latin America now faces structural political risk that cannot be mitigated through traditional debt restructuring. Beijing's strategy has already shifted from large loans to targeted critical mineral investments, but even these face potential US intervention. China's response will likely focus on protecting existing assets rather than expanding commitments, while using Venezuela as a rallying point for "multipolar" narratives globally.

For Russia

With limited economic leverage and its primary regional ally neutralized, Russia's Latin American strategy is severely damaged. Military cooperation agreements are effectively void, and the demonstration effect may deter other countries from deepening ties with Moscow. Russia's response will be rhetorical and symbolic rather than substantive.

For Latin American Countries

The calculus of engaging with China and Russia has fundamentally changed. Countries must now weigh economic benefits against potential US intervention, with Venezuela serving as a stark warning. This will likely accelerate a bifurcation between countries choosing clear alignment (Argentina, Ecuador toward US; Cuba, Nicaragua remaining defiant) and those attempting strategic ambiguity (Brazil, Colombia, Peru).

6.2 Debt Recovery Outlook

Creditor Type	Venezuela Recovery	Other LAC Outlook	Primary Risk Factor
Chinese State Banks	30-50% recovery	Case-by-case	Political alignment
Russian State	Near-total loss	Cuba: High risk	Sanctions cascade
Western/IFIs	Priority claims	Standard terms	Low

Final Assessment

The era of Chinese and Russian debt diplomacy in Latin America has entered a new, constrained phase. While economic engagement will continue, the political risk premium for lending to countries potentially subject to US pressure has increased dramatically. This represents a strategic setback for Beijing's and Moscow's global influence ambitions, but also creates potential instability as debt negotiations become geopoliticized.

The long-term outcome depends on whether the US can offer viable alternatives to Chinese investment in critical minerals and infrastructure, or whether the "Donroe Doctrine" simply creates a vacuum that damages regional development without providing substitute capital.

Projected Debt Recovery Rates by Creditor Type

References and Sources

Report prepared for: Lodi411.com
Analysis Date: January 5, 2026
Contact: info@lodi411.com

Latin AmericaEnergyEconomy

Don Bradford