{"id":50009380,"date":"2017-07-20T07:00:44","date_gmt":"2017-07-20T06:00:44","guid":{"rendered":"https:\/\/stage.dialogochino.net\/?p=9380"},"modified":"2023-01-25T12:03:03","modified_gmt":"2023-01-25T12:03:03","slug":"9380-chinese-investors-zero-in-on-latin-america","status":"publish","type":"post","link":"https:\/\/dialogue.earth\/en\/business\/9380-chinese-investors-zero-in-on-latin-america\/","title":{"rendered":"Chinese investors zero-in on Latin America"},"content":{"rendered":"

Chinese foreign direct investment in Latin America has now surpassed US$110 billion and continues to rise fast. In fact, Chinese FDI annual flows to countries like Brazil now rival those from the United States or Spain.<\/p>\n

In our new Atlantic Council \u2013 OECD Development Centre report, Chinese FDI in Latin America: New Trends with Global Implications<\/em><\/a>, we shine a light on this area previously clouded by unclear data. Annual investment flows by Chinese firms to the region have averaged over US$10 billion over the previous five years. This new reality completes an economic trifecta, establishing China as a major partner for trade, lending, and now, investment for Latin America.<\/p>\n

In a speech<\/a> to the leaders of the Community of Latin American and Caribbean States (CELAC) in Beijing in January 2015, Chinese President Xi Jinping said Chinese companies will invest US$250 billion by the year 2025. Our report shows they are almost halfway there. This is a direct result of several factors: China\u2019s \u201cgoing out\u201d strategy, where the government encourages Chinese firms to invest abroad; China\u2019s renewed focus on Latin America, as evidenced by China\u2019s 2016 policy paper<\/a>, launched in November 2016, which laid out its strategy for engaging with the region; and Chinese companies have awakened to the investment opportunities Latin America has to offer, and are more experienced in the region.<\/p>\n

Alongside the rapid rise in investment, our report shows the nature of Chinese investment in Latin America is changing as well, with the service sector receiving over half of all investment since 2013. In fact, industries like finance, electricity, renewable energy, and transport have all received more than US$4 billion in Chinese investment. This is an important shift as previously the sectors of oil and gas, as well as mining and metals \u2013 capital intensive but low employment areas of the economy \u2013 received a large majority of the share.<\/p>\n

<\/p>\n

\"\"
Annual Chinese FDI in Latin America (Source: Bureau van Dijk, fDi Markets)<\/figcaption><\/figure><\/p>\n

<\/div>\n

The sharp rise in Chinese investment in renewable energy is important. The sector has received over US$6 billion since 2013, with China\u2019s Three Gorges Corp leading the way. Wind and solar have also seen investments.<\/p>\n

Given Latin America\u2019s leadership on green energy, and China\u2019s growing attention and need for it, there is plenty of scope for further investment. From factories that assemble solar panels to the creation of wind farms and hydro dams, Latin America and China should form a \u201cgreen\u201d working group to collaborate on shaping the future of these industries.<\/p>\n

Elsewhere, Latin America\u2019s automotive industry has received over US$10 billion in investment, as Chinese firms race to capture market share in the Americas. However, these investments are concentrated in Brazil, Mexico, and Argentina. This is consistent with overall Chinese investment in Latin America, focused in a just few countries, including Brazil, Peru, Mexico, Argentina, and Bolivia. Also notable is that the vast majority of Chinese investment is from state-owned enterprises (SOEs), comprising over 80 percent, contrary to Chinese FDI in the US and EU, which come from mainly private Chinese firms.<\/p>\n

Governments across Latin America are welcoming Chinese investment. Mexico has facilitated this in the auto industry, as well as signing new oil and gas exploration contracts. Brazil has welcomed Chinese investment in the electricity industry, and has been duly rewarded with nearly US$9 billion, mainly from the State Grid Corp of China. This includes purchases of hydropower dams and transmission lines<\/a>.<\/p>\n

A growing portion of these investments are mergers and acquisitions, showing Chinese firms are finding partnerships with Latin American companies increasingly attractive. Chinese banks have been especially active, acquiring or investing in over 20 financial firms in Latin America, including: BTG Pactual, Banco BBM, BicBanco, and Standard Bank.<\/p>\n

Chinese investment in the extractive sector remains large, so governments in Latin America should strengthen their environmental laws and increase accountability for compliance, with stronger monitoring mechanisms. It\u2019s ultimately their responsibility to ensure investments are sustainable and environmentally friendly.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

President Xi plans to invest US$250 billion by 2025 but which sectors stand to win or lose? <\/p>\n","protected":false},"author":40000225,"featured_media":50024588,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[758],"tags":[510,544],"hashtags":[],"country":[50000020,50000021,20000110,50002597],"class_list":["post-50009380","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-china-in-the-world","tag-finance","country-argentina","country-brazil","country-china","country-mexico"],"acf":[],"yoast_head":"\nChinese investors zero-in on Latin America | Dialogue Earth<\/title>\n<meta name=\"description\" content=\"President Xi plans to invest US$250 billion by 2025 but which sectors stand to win or lose?\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link 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