Historically, China’s state-to-state finance, or loans issued by China Development Bank and China Ex-Im Bank to Latin American governments and state-owned enterprises, has been most evident in four Latin American countries: Argentina, Brazil, Ecuador, and Venezuela. Chinese policy bank finance to these and other countries in the region has decreased markedly in recent years, however, alongside shifting political and economic conditions in recipient countries, and as Chinese companies increasingly invest in the region through public-private partnerships and other mechanisms. Despite the decline in state-to-state finance, China’s policy banks continue to play an important role in facilitating Chinese engagement, including through loans to Chinese/international consortia involved in public tenders throughout the region.
Unlike that of international financial institutions (IFIs) such as the Inter-American Development Bank and The World Bank, Chinese policy bank finance to Latin America and the Caribbean has tended to focus extensively on infrastructure and energy sector development. Also unlike the traditional IFIs, China has offered oil-rich nations, such as Brazil, Ecuador, and Venezuela, “quasi-collateralized” loans, with an option to repay in oil. These loans are categorized as energy loans in our database even though some have been used to finance debt or to fund non-energy-related projects. China’s policy banks also offer loans for import or export credit and concessional loans as a form of overseas development assistance.
Much of China’s international finance has come from the China Development Bank (CDB) and China Export-Import Bank (Ex-Im Bank). Both were created as “policy banks” to support the Chinese government’s policy objectives. Chinese policy banks are occasionally the sole lender for major public works projects in the region, but often partner with international or domestic banks when lending to Latin American and Caribbean governments or companies. Although CDB and Ex-Im Bank are still active in the region, providing concessional loans, export credits, and other forms of financing, a wider range of Chinese financial institutions are now active in the region, including China’s commercial banks, such as ICBC and Bank of China, CITIC and other state-owned enterprises, co-financing facilities, and private equity funds, among others. Even if China’s policy banks continue to lend at relatively low levels, as they have since 2017, the combined effect of Chinese policy bank, commercial bank, and other forms of lending will ensure a sizable Chinese financial presence in the region for years to come, potentially in a wider variety of projects.
Chinese president Jiang Zemin first publicly championed the internationalization of Chinese investment and finance to better access large overseas markets and natural resources. Ever since, CDB and China Ex-Im Bank have supported these efforts by lending to Chinese and foreign companies overseas. Chinese banks reached new heights in international lending over the past decade. Chinese policy bank lending to Latin America reached a yearly high of $35.7 billion in 2010.