While China has been embroiled in a trade dispute with the United States, its presence in the energy sector in Latin America has continued to grow, impacting the shape and direction of the region’s energy markets.

According to the report, “China Stakes its Claim in Latin American Energy,” released by think tank Institute of the Americas, China committed almost $60 billion to Latin America’s energy sector between 2000 and 2019.

Of the total, 83% went to projects in oil and natural gas, 12.8% to hydroelectric power and 2.2% to solar.

“Chinese investments and loans to Latin American countries are likely to continue growing, regardless of greater cooperation by countries in the region with the United States,” the report’s authors said. “Even before the 2020 economic downturn, countries’ budgetary needs were too great to obviate Chinese fiscal underwriting.”

The world’s largest energy consumer, and no. 1 crude importer, China traditionally has invested in Latin American energy “to enhance energy security and diversification of supplies and sources.”

This includes multibillion dollar investments by Chinese state-owned oil companies in Brazil’s pre-salt formation, along with oil and gas pipeline and other infrastructure, and recently in highly prospective oil and gas blocks offshore Guyana. China has also poured billions of dollars worth of loans into Venezuela in exchange for future oil cargoes.

Brazil is the leading Latin American supplier of crude to China, shipping 803,000 b/d to the Asian nation in 2019. Colombia was next at 262,000 b/d and Venezuela third at 228,000 b/d, according to the U.S. Energy Information Administration.

But the nature of China’s involvement in Latin America is changing, according to the report’s authors.

China has been able to take on an increasing presence in the region partly due to former U.S. President Trump’s isolationist politics. This created “new opportunities for China in Latin American countries.”

While the former U.S. administration imposed import duties on Chinese goods as part of its trade war with Beijing, China doubled down “on the pace of its strategic investments in Latin American countries, seeking new infrastructure, telecommunications, mining and energy projects – particularly in renewables – across the region.”

Trade between China and Latin America grew 19% year/year in 2019, to $307.4 billion, according to Fitch Solutions.

Over the past three years, and as part of its global infrastructure development strategy known as the Belt and Road Initiative (BRI), China has begun acquiring strategic energy assets in the region. Between 2017 and 2019, 56% of BRI energy project outlays went to oil and gas, and 39% to renewables.

The Asian superpower expanded its presence in Latin American “energy, mining, trade and other sectors by supplying abundant soft loans, investments and other types of financing from government banks, the massive BRI initiative, state owned companies and private Chinese firms.”

Latin American merger and acquisition deals in energy were worth $7.7 billion in 2020, or 25% of total Chinese deals worldwide, according to the report.

These deals were principally in Brazil, Chile and Mexico, and included China’s State Grid Corporation’s bid to pay $3 billion to take control of Chilean power distributor Compañía General de Electricidad SA (CGE). The deal is still pending regulatory approval.

Another deal was a first foray into Mexico, when a subsidiary of China’s State Power Investment Corp. acquired renewable energy firm Zuma Energía for an undisclosed amount.

China made this commitment in Mexico despite the government’s “move to slow down new private and foreign investments in renewables and strengthen the role of the Comisión Federal de Electricidad (CFE),” the state-owned electric utility.

Chinese energy investments in Latin America fell between 2017-2020, except in renewables, electric power transmission, and lithium mining, signifying that “China is searching more carefully for sound investment projects, and deciding on which countries are uncomfortable with major Chinese investments in sensitive sectors, as well as with its poor record on environmental and labor issues.”

The other big shift is China’s role in pushing the region’s energy transition.

While in the case of oil and gas, China is a price taker, in renewable energy, “it is poised to play a leading role with the help of government-supported innovation.”

Chinese solar panels and wind turbines have flooded the Latin American market at highly competitive prices, and Chinese companies have invested billions of dollars in Latin American lithium mining ventures in Argentina, Brazil, Chile and Bolivia as it corners the lithium-ion battery market.

The report concludes by saying that with an overall economic contraction of 8.1% in 2020, Latin America “will require China, the United States and the European Union to deepen their trade, investment and economic activities to boost regional recovery.”