Welcome to the third installment of my “Tracking China in the Americas” series, in which I cover some underreported stories on China’s footprint in the Western Hemisphere. Last week, I said I was going to do it every Tuesday, so I apologize for the delay, but this week, Tuesday was Election Day, and I fell a bit behind. Better late than never, right? That said, I’m going to simplify this one a bit to keep it short and get it out this week, but you’ll get the big picture.
I live in a somewhat rural, wooded area, and when the weather gets bad, there’s a decent chance that my power will go out. Because of this, I rarely have anything good to say about Georgia Power, but I have finally found something: At least it’s a United States-owned company. If I lived in Lima, the capital of Peru, I could not say the same thing.
China controls 100% of the power distribution in Lima. That means that at least 10 million people rely on two Chinese state-owned enterprises (SOE), China Southern Power Grid International (CSGI) and China Three Gorges Corporation, to keep their lights on.
This didn’t happen overnight. It started as a series of normal-looking business deals. In 2019, China Three Gorges purchased a hydroelectric dam. In 2020, a subsidiary of that company bought Luz del Sur, a privately owned electricity distribution system. In 2024, CSGI came along and bought Enel Distribución Perú, which was previously owned by an Italian company.
In the meantime, several groups expressed concern with the transactions, including the National Society of Industries (SNI), a prominent business association. After an in-depth review, Peruvian regulators — the National Institute for the Defense of Competition and the Protection of Intellectual Property (INDECOPI) — allowed this series of transactions, but they were conditional. Ongoing stipulations included that the Chinese SOEs couldn’t get electricity from their own companies without a public bidding process, and they couldn’t raise prices without Peruvian approval. However, those rules do or can expire eventually, depending on the source, and the Chinese government could or will have free rein to do what it wants.
The thing is that it’s not just happening in Peru. China controls a significant portion of the distribution in Chile (about two-thirds of the entire country) and has some control in Argentina, and it’s currently buying up energy projects in Brazil. Boston University’s Global Development Center reports that between 2017 and 2021, around 71% of all acquisitions by Chinese firms in Latin America were in the power sector.
So, what’s the big deal? Well, having a foreign country controlling that much of your infrastructure is troubling in itself. It’s vulnerability. It puts these countries’ hospitals, ports, business centers, data centers, etc., at China’s mercy, which has implications for the entire region, including the United States.
It gives China a lot more economic and political leverage and influence over the region. These South American countries are a hotbed for minerals like copper and lithium, which are essential for defense and tech. Should tensions arise, it could disrupt our supply chain and put China at an advantage in those sectors. What’s to stop the Chinese government from cutting the light switch if it doesn’t like how Peru does business with the U.S.?
Several officials have voiced concerns about spying, as well. We all know how the Chinese love to do that. These firms that come in and take over the infrastructure make upgrades that seem like a good thing, but the reality is that they enable data collection. This could be used to influence policy in Peru and elsewhere in the Hemisphere that could influence U.S. alliances.
It also makes the U.S. look weak economically. If countries like Peru are willing to hand over their power grids to foreign businesses, why haven’t U.S. companies stepped up and invested? Doing so now seems like the only way to counter these actions.
“Tens of millions of individuals in Latin America suffer from insufficient access to energy and electricity, which has been exacerbated by Beijing’s mishandling of COVID-19…” according to the Atlantic Council. “…economic partnership with China is a fact of life for Latin America. U.S. policymakers should therefore continue to develop frameworks to stimulate investment in Latin America in areas such as ‘nearshoring’ for manufacturing, support financing alternatives that compete with Chinese energy investment, and continue to work with regional and out-of-region allies and like-minded partners. These steps will not only benefit the region but also U.S. interests more broadly.”
As I said, I’m simplifying this topic due to time constraints — one could probably write a novella on it — but the point is that many people fear the Chinese building military bases in our backyard. They don’t have to if they control the infrastructure. We must become more competitive in this area.
Here are the previous weeks’ columns if you missed them:
1. China Is Making a Big Move in Our Own Backyard — but No One Is Talking About It — Just how much land does China control in Nicaragua?
2. Tracking China in the Americas: A New Column on Underreported Influence in Our Hemisphere — China is heavily invested in Bolivia, but the new Bolivian president-elect is 100% pro-U.S.
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