How the public opinion on China is reshaping South America’s energy sector

Quietly and without a fuss, China’s influence is cementing itself within the building blocks of South American politics. China’s global sway is no longer limited to trade and investment; it is actively shaping the economic policies of entire regions. Now South America’s largest trading partner, China’s financial footprint is driving a shift in the governance of electricity markets. Since the 2000s, countries such as Bolivia, Argentina, and Uruguay have been increasingly moving away from market liberalization and adopting state capitalism—bringing in government control of their electricity sectors. 

A recent study by Ariel A. Casarin (Universidad Adolfo Ibáñez) and the Esade Professor and Director of EsadeGeo Angel Saz-Carranza, published in Energy Research & Social Science, finds a strong correlation between favorable public opinion of China and increased state intervention in South America’s electricity markets. “Nationalization, the reversal of vertical integration, and the weakening of regulatory independence have become widespread practices,” states their research. “Over the past decade, Bolivia, Ecuador, and Venezuela have nationalized assets that were previously privatized, while Argentina has intervened in the energy sector by politicizing regulatory bodies."  

China’s growing legitimacy as an economic role model is shaping policy decisions

This dynamic was already visible between 2000 and 2015, even before the implementation of well-known current policies like the Belt and Road Initiative (BRI). Through the BRI, designed to enhance trade routes, China has developed significant infrastructure in the region. Projects include a mega port in Peru, railways in Brazil, roads and bridges in Venezuela, and more. 

Moreover, China’s 2016 Latin America Policy Paper underscores its commitment to energy cooperation in the region, highlighting investment in power grids and clean energy projects. But regardless of the impact that this direct investment may have, the Casarin and Saz-Carranza study identifies a more subtle influence: China’s growing legitimacy as an economic role model is shaping policy decisions. This trend can be summed up in the words of the former Vice President of Argentina, Cristina Fernandez, who in a 2022 speech declared: “The most efficient capitalist system—in terms of job creation—is China's”. 

China vs. the US: A battle of economic playbooks

Two competing economic governance models define global energy policy: regulatory capitalism, associated with the US, and state capitalism, exemplified by China. 

• Neoliberal electricity reforms, inspired by the US model, favor privatization and market competition. Private companies generate and distribute electricity, with prices set by supply and demand. The goal is that competition improves services, lowers costs, and attracts foreign investment.  
• China’s approach, in contrast, is state-led. The government plays an active role, often owning major power companies, setting electricity prices, and controlling market entry. This model prioritizes stability and affordability but can also lead to inefficiencies, reduced competition, and a lack of innovation. 

Over the past two decades, South America’s electricity sector has oscillated between these two approaches, blending elements of both state control and market liberalization. While many countries have introduced reforms like unbundling and privatization, governments still hold a firm grip on key areas such as power generation and transmission. Since the mid-2000s, progress toward breaking up energy monopolies has largely stalled, with few nations embracing wholesale competition and none opting for retail competition—a stark contrast to the US and Europe. 

What’s particularly striking is how often policies have reversed course. During the studied period, just as some governments have moved toward free-market principles (Chile and Perú), many have backtracked (Argentina, Ecuador, Venezuela, and Brazil), reinforcing state influence instead. Rather than a steady march toward deregulation, South America's energy market has been more of a political tug-of-war, where liberalization efforts are frequently undone or tempered by renewed state intervention. 

Public opinion of China

Many studies concur that public opinion of China in South America is largely positive. The Casarin and Saz-Carranza paper finds that public sentiment toward China significantly influences economic reforms, even if citizens are not explicitly calling for changes in electricity policy. The researchers analyzed public opinion data from Latinobarómetro and other independent surveys along with country-level data from 2000 to 2015, using reports from the Inter-American Development Bank to develop an index measuring electricity market liberalization. Also, GDELT data of news sentiment about China in each country was used. This revealed a clear pattern: the more favorably a country’s population views China relative to the US, the more likely its government is to adopt state-led electricity policies.  

The real debate is not about public vs. private control but about balancing sustainability, accessibility, and economic viability

This trend is visible in Bolivia’s 2012 nationalization of its primary electricity transmission company, previously controlled by a Spanish firm. The move was framed as a step toward energy sovereignty but raised concerns about investment security. “It’s crazy to invest in Bolivia, and this is a perfect example why,” said Eric Farnsworth, vice president of the Council of the Americas, in an interview with NACLA. "[The president is] taking actions that guarantee that investment will dry up further.” 

State-run industries in Bolivia often suffer from inefficiency and mismanagement. The government may lack the necessary resources and expertise to ensure a reliable and sustainable energy supply, potentially hindering long-term development in the sector. 

Argentina followed a similar path. After privatizing its electricity sector in the 1990s, the government reversed course in the 2000s, culminating in the 2012 renationalization of YPF, its largest oil company. While aimed at securing domestic energy resources, the move shook investor confidence, leading to capital flight and legal disputes. 

Uruguay, by contrast, never fully embraced privatization. Its state-owned utility, UTE, has maintained control of the electricity sector for over a century. This long-term strategy has allowed Uruguay to invest heavily in renewable energy, positioning it as a global leader in sustainable power. Today, over 90% of Uruguay’s electricity comes from renewable sources, demonstrating that state ownership, when managed effectively, can yield positive outcomes. 

Pros and cons of China’s influence

Reneging neoliberal energy policies may carry important consequences for countries. As seen in Bolivia and Argentina, increasing state control is a dispiriting sign for foreign investment, and it can reduce efficiency. The politicization of regulatory bodies undermines market confidence, potentially destabilizing economies that rely on energy exports and foreign capital. 

However, state intervention also allows governments to prioritize long-term energy security and sustainability. Countries like Uruguay have successfully used state control to drive renewable energy adoption. If China’s economic model continues to gain favor, similar shifts could emerge in other strategic sectors such as infrastructure, telecommunications, and natural resources. 

Does the public care about these policy shifts? Most citizens prioritize affordable, reliable energy over the ideological question of state versus private control. State-run utilities can focus on long-term stability and equitable access, while private companies often emphasize efficiency and cost reduction. The real debate is not simply about public vs. private control but about balancing sustainability, accessibility, and economic viability. 

Whether increasing state control leads to long-term stability or stagnation remains to be seen, but one thing is clear—China’s economic model is profoundly reshaping South America’s energy landscape.