The pending development of a $3 billion seaport in Peru will grant China direct access to the South American trade market and will be the first China-controlled port in South America.

This and other proposed port development projects illustrate Beijing’s ambitions to strengthen its footprint and influence in diverse regions around the world. The U. S. must increase economic engagement in Latin America to offer the region competitive alternatives for its development.

For several decades, policymakers in Washington have paid minimal attention to Latin America.

Underinvestment in the region by the U.S. has created an opportunity for the People’s Republic of China, which has stepped in with offers of significant commercial and financial investment for Latin American countries, though not necessarily without strings attached.

Trade between China and Latin America has increased from $12 billion to $315 billion between 2000 and 2020. The World Economic Forum estimates that trade value could more than double to $700 billion by 2035.

Similarly, since 2005, Chinese investments in Latin American and Caribbean countries exceeded $155 billion and targeted several vital economic sectors, including banking and energy, according to the American Enterprise Institute’s China Global Investment Tracker. Currently, 22 countries in Latin America and the Caribbean have signed a Memorandum of Understanding with Beijing that ratifies their participation in China’s Belt and Road Initiative.

Central to Beijing’s economic offensive are state-owned and state-linked private companies and financial institutions that act as the glue between China and the region. Contracts signed between Chinese and governments in Latin America are often completed without external oversight and with obligations not to disclose any details through confidentiality clauses.

With such agreements in place, Beijing’s authoritarian political values, which accompany its economic engagement, allow it to exert its influence throughout the region unchecked.

Geostrategic corruption, which China uses to gain influence in the region’s political, economic, and societal arenas, has also become increasingly problematic. The strategy behind the form of corruption allows Beijing to sway public policies in its favor outside of diplomatic channels and gain a competitive advantage.

Similarly, overexposure to China economically becomes an exploitable tool for Beijing. The Chinese Communist Party counters any criticism of how it operates with real and perceived threats to pull financing. Such promises allow Beijing to exercise economic coercion with no repercussions.

Meanwhile, Latin American countries are eager to attract investment to develop infrastructure, which faces a gap of around $150 billion annually.

The U.S. has the opportunity to contribute to more sustainable economic growth in the region and at home. Furthermore, with the appropriate policies from Washington, Latin America can begin to develop a more open and competitive private sector.

Earlier this year, the Biden administration announced that through the Partnership for Central America, private sector companies have committed over $5 billion in development finance in the region. The U.S. should prioritize similar public-private partnerships to strengthen private sector engagement in Latin America.

By utilizing the Department of Commerce and Development Finance Corporation, the U.S. can build on existing initiatives to mobilize the private sector throughout the Americas with international partners across several developing sectors.

This can be bolstered by building on existing free trade agreements, such as the USMCA and CAFTA-DR, that incentivize greater ties between the U.S. private sector and Latin American countries. One possible enhancement is reviving a partnership similar to the Free Trade Area of the Americas with democratic countries in Latin America to remove or lower trade barriers.

Furthermore, partnerships and U.S. engagement with Latin America should establish mechanisms to strengthen regulatory weak points and increase transparency and fair-market competition.

Advancing such values creates the opportunity to bolster economic conditions and confidence, enhancing the region’s economy. Lastly, the U.S. should work with governments in the region to establish strategies to limit economic coercion.

Most importantly, by strengthening market economy practices and development financing in Latin America, the U.S. can lead the way to a more stable and democratic hemisphere.

Albert Torres is program manager of Global Policy at the George W. Bush Institute.