For the fourth consecutive year, China\u2019s two main banks tasked with financing overseas development have rolled back loans to Latin America, according to new research from Boston University and think-tank the Inter-American Dialogue.<\/p>\n
China Development Bank (CBD) and the Import-Export Bank of China (China Exim) lent US$1.1 billion to the region in 2019, down from $2.1 billion the previous year and the lowest annual amount for a decade.<\/p>\n
Instead of lending directly to Latin American governments, Chinese banks are investing in energy and infrastructure projects through funds or financing Chinese state-owned companies bidding for projects, the report<\/a> said.<\/p>\n 45%<\/p>\n As the so-called \u201ccommodities super-cycle\u201d ended in 2015, the oil-for-loans agreements extended to countries such as Ecuador and Venezuela \u2013 the recipient of 45% of the total US$142 billion lent to the region since 2007 \u2013 also appear in demise.<\/p>\n \u201cChina is no longer acting as a financial lifeline for the region\u2019s more fragile economies,\u201d said the report.<\/p>\n The Dominican Republic (US$600 million), Suriname ($200 million) and Trinidad and Tobago ($104 million) each received one loan from a Chinese policy bank in 2019. Of top borrowers Venezuela, Brazil, Ecuador and Argentina, only the latter featured in the four deals struck last year \u2013 a $236 million loan to buy railway cars.<\/p>\n Though the latest figures suggest cooling Chinese state-backed lending to support development in the region, they more accurately reflect one way in which it has begun to change \u2013 even before the global spread of Covid-19<\/a> created a bleak economic outlook for 2020.<\/p>\n An increasingly wide range of other China-backed financial institutions and platforms are actively engaging the region<\/p><\/blockquote>\n Rather than relying on CDB and Exim to develop the hard infrastructure and conventional energy projects that have been the primary focus until now, new actors and investment vehicles are emerging.<\/p>\n \u201cAn increasingly wide range of other China-backed financial institutions and platforms are actively engaging the region,\u201d the report said.<\/p>\n These include co-financing initiatives with regional Latin American development banks and loans from China\u2019s major commercial banks, which Boston University and the Inter-American Dialogue\u2019s finance database have so far not tracked.<\/p>\n Commercial lenders include the Industrial and Commercial Bank of China (ICBC), which backs Argentina\u2019s controversial Santa Cruz dams<\/a>.<\/p>\n Regional funds the China-LAC Industrial Cooperation Investment (CLAI) Fund, China-LAC Cooperation (CLAC) Fund, and Special Loan Program for China-Latin America Infrastructure, have also emerged, focusing mainly on Brazil.<\/p>\n The downward trend in policy bank lending is accompanied by an upward tick in Chinese outward foreign direct investment (OFDI) \u2013 companies expanding into new countries with greenfield investments or mergers and acquisitions.<\/p>\n Last year, Chinese companies invested US$12.8 billion in Latin America, up 16.5% on 2018, according to new data<\/a> released by the China-Latin America Academic Network (Red ALC-China). China was the source of 7.5% of total FDI in Latin America in 2019.<\/p>\n This is despite a year typified by investor wariness globally, largely resulting from the uncertain consequences of China-US trade tensions<\/a>.<\/p>\n
\n45% of the US$142 billion Chinese policy bank loans to Latin America since 2007 have gone to Venezuela
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