Democratic institutions are meant to provide stability, protect rights and support long-term economic growth. But across Latin America, these foundations are being tested as China’s influence expands, bringing economic opportunity but also political risk. As governments navigate the trade-offs between financial dependence and national sovereignty, Julio Guzman, visiting clinical professor at the School of Public Policy and a well-known figure in Latin American politics, is pushing for strategic reforms to strengthen institutions, safeguard democratic values and ensure lasting economic stability across the region.
With more than two decades of experience in politics, trade and governance, Guzman describes China’s growing influence in Latin America as a complex challenge where economic gains often come with political strings attached. China’s approach of blending financial investments with diplomatic pressure has already influenced national policies, from pushing governments to cut ties with Taiwan to easing regulations for Chinese businesses.
“China has the necessary economic and strategic leverage to pursue this agenda through a mix of hard, sharp and soft power,” Guzman explains. “China's leadership has learned that economic convergence often precedes political convergence.”
To counterbalance China’s growing influence, Guzman believes that Latin American nations should strengthen partnerships with allies that share their commitment to democracy, transparency and fair economic policies—particularly the U.S. and the European Union. However, he cautions that simply trying to match China’s financial investments or political maneuvering is not the answer. Instead, Western democracies should focus on rebuilding trust, ensuring transparency in trade and governance and investing in Latin America’s next generation of leaders.
“While China invests in mines, the West should invest in minds,” he says, highlighting the importance of education and leadership development in shaping the region’s future.
Guzman’s perspectives on governance and economic reform are shaped by experience in public service. As Peru’s vice minister of industry and later as president of the Cabinet of Vice Ministers, he promoted policies that prioritized innovation and industrial growth, even when they faced political pushback. He emphasizes that shifting the conversation was just as critical as crafting strong policies. By building alliances with business leaders, academics and reform-minded officials, he helped turn industrial policy from a controversial issue into a viable economic strategy.
