China's role as a primary trading partner will continue to grow and, in some cases, may even overtake that of the United States, according to a new report from the Washington DC-based Atlantic Council.

Trade relations between China and the countries of Latin America and the Caribbean have grown significantly over the last two decades, with China rising to become the region's second most important trade partner.

Considering goods trade only displaced the US to become Brazil's top trading partner in 2009 - a position it continues to hold. While Brazil remains Argentina's main trade, China nearly took the lead briefly last year. Additionally, China was the top source of imports for Brazil, Chile and Peru in 2019, and ranked second for 11 other countries in the region.

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Speaking at an event marking the launch of the Atlantic Council's report, former Chilean Minister of Finance Felipe Larraín noted that Chile "is the most exposed" country in Latin America, making it crucial to diversify its trade relationship with the Asian giant.

"It will probably slow down, but it will be a natural thing to happen, not a disruptive pattern," he said. "We are heavily into metal exports, particularly copper. We have been making an effort to diversify away from copper, and we're filling [that gap] with fruits and cherries."

Larraín added that many countries in Latin America are perhaps too heavily dependent on China.

"We need to look into diversification as an option. We cannot do away with the Chinese market, but when you have 40% of exports in one market, it's a cause for a bit of concern.", he said.

Among the other speakers at the event was José Luis Bernal, currently serving as Mexico's ambassador to Beijing.

Bernal, for his part, said that while Mexican trade with China continues to grow, it is unlikely to ever overtake that of its neighbor, the US.

"The US represents 82% of our total foreign trade. China for the first time has reached the level of 10%," he said. "Not even in a long future do we see that the US and China will be at equal levels."

The US represents 82% of our total foreign trade. China for the first time has reached the level of 10%. Not even in a long future do we see that the US and China will be at equal levels.

Bernal, however, added that Chinese investment is increasing in Mexico, and that the Covid-19 pandemic has created new opportunities for the two countries to strengthen ties.

"In the last two years, we have seen more than 900 new companies incorporated in Mexico with Chinese capital," he said. "This is a very important trend."

"Last, year, contacts between Mexico and China became even closer," Bernal added. "We were depending a lot on China's supply of protective equipment, medicines, and two vaccines produced in China. This is a very important sector."

A third speaker, former Brazilian Secretary of Foreign Trade Dr. Tatiana Prazeres, said that while trade ties between her country and China are vital, it has become a problematic political issue.

"From a political perspective, there has been a great deal of noise. But trade is going well. Around 85% of vaccines administered in Brazil were from Sinovac," she said.

Domestically, Brazil's ties with China have been controversial in some sectors. The Brazilian manufacturing sector, for example, has since 2019 faced strong competition from Chinese products, and has only limited access to the Chinese market.

On the other hand, Brazil's agriculture sector has broadly been in favor of strong ties with China, which remains a key market for its products.

"Brazil's relations with China have become part of internal politics," Prazeres said. "That can be very tricky."

In the report, the Atlantic Council outlined four potential scenarios for China's trade relationship with Latin America and the Caribbean.

In the first scenario, Chinese trade with Latin America continues to rise, doubling by 2035 and reaching $700 billion, although the United States would remain Latin America's most prominent trading partner. In this scenario, Latin America also continues to face challenges and add value to its exports to China, reflecting long-standing problems related to competitiveness and productivity in the region.

In the second - and more optimistic - scenario, China would become Latin America's main goods trade partner, overtaking the United States.

A third scenario foresees agricultural exports from Latin America rising by around 15 percent between 2021 and 2035, partly overcoming competition from Chinese domestic producers and other international players.

This scenario, according to the Atlantic Council, highlights the importance of diversifying Latin America exports to China.

In the final scenario, China and Latin America would reach unprecedented levels of mutual trade dependence', primarily driven by Latin American and Caribbean imports from China. In this scenario, more Latin American countries would have China - rather than the US - as their top trading partner for both goods and services.