The Southern Reach

Expansion in geopolitical terms is not simply domestic production or military growth; it is a network of allies or colonies, historically. It is the establishment of power that fuels a superpower beyond its competition. Colonies, however, are outdated, and, given the globalized nature of the modern world, trade often creates the international exchange once demanded by the empire; the modern power, it follows, is leverage. China's sponsorship of infrastructure in Latin America falls precisely into this category. China establishes developmental aid, which then crystallizes into dependency architecture, reflected primarily in port access, financing terms, and state-owned enterprise ownership structures. This pattern is consistent across the region: Chancay reflects the mechanism at work at a single port; the Hutchison controversy in Panama displays the compounded effect of this strategy over two decades. Recognition switches within Panama, the Dominican Republic, El Salvador, and Nicaragua display the end goal of this influence through infrastructure. It is the human view, however, on day-to-day life, that tells the same story from an inverse perspective, a reflecting pool of great-power competition in which Chinese infrastructure is simply invisible. This is because dependency architecture is built for national leverage, not for life in rural communities. Washington has, in contrast, a credible countermodel in the Lobito Corridor, although it has not yet scaled it. The gap is not money, therefore. It is execution and political will.

Figure 1. Dependency architecture across Latin America, keyed to the mechanisms discussed in the text: port/SOE ownership (Chancay, Panama), debt-for-resource collateral (Ecuador, Venezuela), and Taiwan-to-Beijing recognition switches (Panama, the Dominican Republic, El Salvador, Nicaragua), with the Lobito Corridor shown as a comparative U.S./allied countermodel. Schematic; not to scale. Sources as cited throughout the text.

The Pattern

Chinese infrastructure investment in Latin America runs almost exclusively through state-owned enterprises: COSCO in ports, State Grid in energy, Huawei in telecommunications, and CRRC in rail. The ownership structure is not a matter of convenience or coincidence so much as strategy. SOEs carry implicit state backing, giving them the ability to absorb longer return horizons than private capital tolerates, as well as to retain operational leverage long after construction is complete. That combination is what distinguishes Chinese infrastructure finance from conventional development aid: research on Chinese-financed port projects finds1 that centrally administered SOEs pursue strategic objectives that diverge from the profit-maximizing logic governing sub-national or private Chinese investment. The AEI China Global Investment Tracker records2 more than $2.5 trillion in cumulative Chinese overseas investment and construction, with Latin America's share growing; parallel lending data compiled by AidData3 and Boston University's Global Development Policy Center4 show the same trajectory. The sectoral logic compounds: as ports move goods and energy grids power economies, each piece of infrastructure becomes a chokepoint that generates more dependency the longer it operates, rather than a one-time transaction.

Chancay is the clearest single illustration of the model at work. COSCO Shipping holds a 60 percent controlling stake in the $3.5 billion deepwater port on Peru's Pacific coast, a project that broke ground in 2019–2021 and moved into operation in November 2024. Peer-reviewed accounts of the project treat it as a chokepoint acquisition as much as a commercial one: a geography-journal study of the port's construction traces5 how Chinese capital is reshaping not just shipping routes but the city growing up around the port, while a peer-reviewed policy essay on the port's implications for U.S.-China rivalry identifies6 the absence of a credible Western financing alternative as the vulnerability the deal exposed. Peru did not accept these terms because they were favorable. It accepted them because no equivalent Western financing offer existed at the negotiating table. That is the pattern in miniature: the dependency was not imposed on Peru from outside. It was constructed through a series of individually rational decisions made by a government that had no alternative source of capital for a project at this scale. Multiply that decision across a continent and the aggregate picture is not sixty separate infrastructure deals. It is one recurring transaction, repeated wherever Western capital did not show up first.

The connection of east and west through the Panama Canal is a clear point of contention between Eastern and Western powers vying for influence. The 2025–2026 controversy over Hutchison Whampoa's port concessions7 at the ends of the canal had been a long time coming. Hutchison had held these concessions since 1997; when the Trump administration raised objections in 2025, a sale process began, and Panama's Supreme Court ultimately voided the 1997 concession outright, showing that it took a diplomatic crisis to unwind a chokepoint position built over nearly three decades. Panama switched diplomatic recognition from Taiwan to Beijing in 2017, following a period of intensified Chinese economic engagement, a sequence that peer-reviewed research on the region's diplomatic switching 8 and a companion study of Taiwan's recognition history9 both describe as a pattern in which Chinese economic engagement consistently precedes, rather than follows, recognition changes. The infrastructure position and the recognition switch were not coincidental; rather, they were part of the same relationship architecture, built years apart but reinforcing each other. That is why the leverage proved so durable: it was never a single transaction, but a flow of sediments building up until it had constructed a delta. The accumulation of power is what leveraged a chokepoint.

The U.S. International Development Finance Corporation was primed to compete, capitalized at $60 billion under the 2018 BUILD Act and raised10 to $205 billion under the 2025 DFC Modernization and Reauthorization Act. It then deployed in Latin America, albeit unevenly, and the projects that mattered most for countering Chinese positioning sat within higher-risk environments, where DFC's mandate created structural hesitation. Chinese SOEs fill that gap by default, not because their terms are advantageous, but because they are simply everywhere their opposition is not. Investment thereby precedes alignment, and alignment is strung on the leash of dependency. This dependency is watched from Washington and Beijing alike, from satellites and trade records, but not, traditionally, through the eyes of individuals in those nations. Much the way one cannot stand in America and view both the Pacific and Atlantic Oceans, the geopolitical landscape is impossible to see from the ground. This is particularly true in the remote villages of Nicaragua.

The Ground Level

I am Liam Albert, and, unlike the rest of this piece, what follows is not an external analysis of the geopolitical landscape. It is a story of the local landscape, of humid heat and sweat-stained shirts, of volunteers and workers. It is the micro that Chinese influence does not touch, and the macro that Nicaraguan locals do not see. This is the story on the ground.

I worked with EPICS and the Worldwide Child Relief Foundation in La Calle Real, a rural Nicaraguan community, to build a center for that community. The project is the true inverse of what I have researched regarding Chinese infrastructure investment in the region. Ownership of the community center was entirely local, administered through the WCRF; no external entities retain any stake or control once the building is finished. The labor was a joint effort of teams including WCRF volunteers, college students, engineering scholars through EPICS, and community members, all working side by side. It took about fifty workers and volunteers to erect the building, divided into different tasks for efficient construction; there was rarely a quiet moment; someone was always hammering something into place. Materials were sourced locally rather than imported; wood and tools were purchased from a hardware store across the street from the build site. Like all engineering projects, this required funding; this financing was entirely the result of charitable donations and fundraising. No loan instrument was attached to any part of the project, no conditions, and quite simply, no strings attached. Long-term maintenance is therefore the community's responsibility, to take care of what you need and want, so that it takes care of you. Our job was to put it up; theirs is now to keep it standing, but of course, that's in their best self-interest anyway. No government agency and no institution is involved in the maintenance or oversight; it was a matter of people helping people, rather than organizational or geopolitical influence. The project shutters when volunteers go home; what is left behind belongs, completely, to the people who will use it.

Chinese infrastructure was nowhere to be found in the rural areas where I worked, although it was present, in a limited way, in major cities. Once outside these population bubbles, however, it appeared to be absent entirely. On the ground, one does not see the strings held above them; local opinion, when it came up at all, was sparse and largely disconnected from international politics; people were focused on the day in front of them. What surprised me was the sentiment toward Americans specifically: locals seemed to view the volunteers who came through as something closer to visiting economic activity than as representatives of a foreign power. Nobody brought up the United States' Cold War-era interventions in Nicaragua as a live grievance. Leverage, I saw, was not built into the rural communities, in much the same way a farmer in Kansas has little concern for how his soybeans are sold internationally, even though such trade deals make the news. Lives are lived in the micro; world politics are played in the macro. I knew Chinese influence was prevalent in investments, projects, and national systems that played to a more strategic position, but in La Calle Real, neither the returns nor the kind of leverage that investment is built to capture exists, so it simply isn't there.

This divide between micro and macro stayed with me, particularly through the juxtaposition between La Calle Real and Managua. Nicaragua switched its diplomatic recognition from Taiwan to the People's Republic of China in December 2021, the most recent in a sequence that scholars of the region's diplomatic competition have linked11 to preceding waves of Chinese economic engagement; that decision was made in the capital, by people with no visible connection to the community I was working and living in. The families who will use the WCRF center were never consulted on the Taiwan recognition switch, and they have no meaningful way to influence it regardless. That, I think, is how alignment drift actually works: it doesn't require popular support or public awareness, only that the people who control recognition votes and bilateral contracts have been brought into a dependency relationship. Our team was specifically advised, prior to the trip, not to discuss the Ortega government or domestic politics with anyone we met, including Chinese infrastructure. Before the trip, sitting in that stale conference room to review the do's and don'ts, it seemed like a simple precaution, nothing more. In hindsight, the instruction itself is a data point; it marks the line between what can be said out loud at street level and what the government-level alignment structure actually looks like from the inside. Nobody in La Calle Real voted on the transition from Taiwan to China; no one was going to be asked, regardless.

The Alignment Consequence

There was a time when Latin America was the largest base of formal diplomatic support and recognition for Taiwan anywhere in the world. That base has eroded in tandem with intensified Chinese economic engagement across the Central American region. The sequence of events is clearly documented: infrastructure financing and trade relationships came first, and the diplomatic recognition switches followed: first Panama in 2017, then the Dominican Republic and El Salvador in 2018, and most recently Nicaragua in 2021. Political-science research on the pattern finds12 that Chinese economic engagement measurably intensifies before recognition switches occur, rather than after, a finding echoed13 in a cross-national study of Taiwan's diplomatic recognition history. Nicaragua's case is the most obvious: the internationally isolated Ortega government found that Chinese capital and diplomatic cover were worth more than seven decades of relationship with Taipei. These four nations switched because the alternative, alignment with Taiwan, carried a cost that dependency had made unthinkable. The infrastructure that these nations depend on is owned, operated, and initiated by China, tethering them inextricably to it; straying leads to the loss of the capacity the nation has come to depend on. Come 2021, the mechanism had run its course four times in five years.

Countries that absorbed Chinese infrastructure investment show a pattern at the United Nations as well: abstention or opposition on votes where China has a vested and direct interest, from Taiwan-related resolutions to Xinjiang Human Rights Council votes to sanctions discussions involving Chinese-aligned states. Peer-reviewed research on Chinese foreign aid finds that recipients of commercially oriented Chinese financing measurably14 realign their UN General Assembly voting toward China's positions over time, a finding consistent with the broader lending-and-alignment literature15 compiled by Boston University's Global Development Policy Center, and Latin America fits the broader pattern. None of this requires an explicit conditionality clause in a loan contract, it simply requires that the government of a Latin American nation, or any other, take the infrastructure on offer and accept the relationship that comes with it. Dependence on Chinese financing continually comes not at a financial cost but a diplomatic one: consistent alignment with Chinese interests.

Ecuador is Latin America's clearest case of debt converting into constrained sovereignty. After Western capital markets closed to Ecuador following its 2008 default, the government committed future oil revenues as collateral for Chinese infrastructure loans, an arrangement that energy-policy researchers describe16 as a structural response to a closed financing environment rather than a one-off transaction. The resulting offtake agreements persisted across multiple changes of government; commitments made by one administration binding the next, regardless of who Ecuadorian voters chose. Venezuela's dependency runs deeper and has proven more durable still, because it is mutual rather than one-directional: Venezuela needs capital and diplomatic cover to survive an economic collapse, and China needs oil and a reliable regional partner, a relationship that scholars of Latin American political economy have characterized17 as a rearticulation of the dependency long documented in the region's resource-export economies, so Chinese lending has continued through a crisis that would have ended most other creditor relationships. Neither case has produced the outcome most often invoked as the global reference precedent: Hambantota, where Sri Lanka leased its debt-financed port to a Chinese state-owned operator for 99 years after debt service faltered. The peer-reviewed literature on that case is considerably18 more contested than the popular "debt-trap" framing suggests; researchers who have traced the negotiating history in detail find the lease followed a broader debt crisis rooted mainly in Sri Lanka's borrowing from Western capital markets, not a Chinese plan to seize the port. No Latin American government has handed over sovereign infrastructure on anything resembling Hambantota's terms, contested or not. But the precedent does not need to repeat itself to matter; it sets the risk calculus for every government currently weighing Chinese financing on terms it cannot easily unwind. Dependency is not an inevitable consequence of accepting Chinese capital. It is a structural possibility built into the terms from the start, whether or not it is ever exercised.

What Washington Has and Hasn't Done

The Partnership for Global Infrastructure and Investment (PGII) committed19 to mobilizing up to $600 billion in global infrastructure investment by 2027, announced at the 2022 G7 summit. This investment pool was explicitly and deliberately framed as a Western alternative to the Belt and Road Initiative created by China. The delivery, however, has been unbalanced; PGII's architecture depends on mobilizing private capital through de-risking mechanisms, rather than direct public investment. A comparative academic assessment of PGII against China's overseas infrastructure model concludes20 that reliance on public-private partnerships, the underperformance of G7 construction firms, and a persistent fund-raising gap make the partnership structurally less likely to match China's pace. It is slow-moving, therefore, in the most volatile regions, which, correspondingly, is where it is needed most, because in such environments Chinese SOEs enter without hesitation, confident in their ability to absorb risk.The DFC has capitalization to compete with Chinese SOE financing; what it lacks is institutional risk tolerance. The projects that matter most for regaining international leverage by displacing Chinese positioning naturally sit in higher-risk political environments, which naturally score poorly against the DFC's conventional risk metrics. Chinese SOEs, operating on strategic rather than commercial return horizons and backed by the state, are not constrained by such risks. They are built to absorb risk that the DFC's mandate is constructed to avoid, leaving the DFC portfolio concentrated at the margins of the strategic competition rather than at its center. This was the case in Afghanistan, at the Mes Aynak copper mine, where a Chinese state-owned consortium secured21 a $3 billion, 30-year lease in 2007 while no comparable Western financing entered the field. A similar pattern has played out in the Democratic Republic of the Congo's cobalt and copper sector, where research on the DRC's resource-for-infrastructure agreements documents22

Chinese state-linked financing as a persistent presence alongside a smaller set of profit-driven private investments and joint ventures with Western firms. In 2022, the Americas Partnership for Economic Prosperity announced23 a regional economic framework without attaching concrete financial commitments to it. It has, as a result, gained little operational traction since. This is a lesson to learn from, not an outcome to expect to later materialize: announcements without a delivery mechanism are just words. It is the delivery mechanism that must be built to compete with an SOE that opens with a signed contract and a construction crew. It is an opportunity to take a page from the Chinese geostrategy playbook and turn words into actions.

From the humid air of Liam Albert's perspective in Nicaragua, to the dry heat of Sub-Saharan Africa, geopolitics and leverage find themselves entangled in a grapple for chokepoints wrapping the world. The Lobito Corridor is a rail rehabilitation linking24 Angola, Zambia, and the Democratic Republic of the Congo. It is an evident example of Western infrastructure investment used as a strategically coherent, concretely executed, and visible form of economic engagement. The US, EU, and African Development Bank have committed25 real capital to a project with strategic rationale, running critical minerals through a corridor that matters to all three parties involved. It exists, it functions efficiently, and more than anything it proves that Western governments and institutions can still deliver physical infrastructure when they choose to; it is also the exception that proves the rule; one corridor does not constitute a scaled strategy. The EPICS project in La Calle Real shows what ground-level engagement looks like when it works. Lobito shows what strategic-level engagement looks like when it works. It is therefore not a matter of money but of deliberate scaling. It is a gap of practical execution and political will. Therefore, it is a gap that can be filled.

Notes & References