At a Crossroads: Chinese Development Finance to Latin America and the Caribbean, 2022

Again this year, China's development finance institutions (DFIs)—China Development Bank (CDB) and the Export-Import Bank of China (Eximbank)—issued relatively limited amounts of finance to Latin American and Caribbean (LAC) governments or state-run companies, according to findings from the Inter-American Dialogue's Asia and Latin America Program and the Boston University Global Development Policy Center (GDP).

At the same time, the US$813 million issued by China's DFIs in 2022 amounts to an uptick in activity, and a possible indication of renewed interest in financial engagement on certain types of projects. Our newly-published report, At a Crossroads: Chinese Finance to Latin America and the Caribbean, 2022, examines China's newest DFI lending to the region, individual country debt scenarios, and the growing importance of other-than-DFI sources of Chinese finance in LAC.

See the newly-updated Chinese Loans to Latin America and the Caribbean Database for information on China's sovereign lending to LAC since 2005.

Main findings:

• As noted in previous Inter-American Dialogue and Boston University Global Development Policy Center briefs on Chinese development finance in LAC, China's DFIs—China Development Bank (CDB) and China Export-Import Bank (Eximbank)—are no longer issuing the sorts of multi-billion-dollar, oil-backed loans that once characterized Chinese financial engagement with the region.
• However, CDB and Eximbank remain active in the region, and are likely to continue to lend—though still in relatively small amounts—to LAC governments and SOEs in 2023. The possibility of Chinese DFI support to further expand Argentina's Cauchari Solar Park—a project initially funded by Eximbank in 2017—is still on the table. Likewise, Bolivia is anticipating a US$422 million loan from Eximbank in the coming months for the construction of two zinc refineries. Also, having recently signaled interest in cutting ties with Taiwan, Honduras is reportedly negotiating a credit line with China for the development of the Patuca II hydroelectric dam.
• The Caribbean remains a region of focus of China's DFIs—especially Eximbank. The Caribbean has been a top recipient of the DFIs’ most recent loans to LAC, including two in 2022.

• China’s DFIs have spent considerable time in recent years renegotiating the terms of existing agreements with the region. There are indications that China’s banks will be engaged in even more negotiations on the terms of public and publicly guaranteed debt in the coming months and years.

• Total combined Chinese finance to the region is unlikely to ever approximate the previous peaks of policy bank lending. However, the combined effect of Chinese policy bank activity, co-financing initiatives, commercial bank finance, private equity investment, and other forms of engagement will ensure a sizable Chinese financial presence in the region for years to come.

DOWNLOAD THE REPORT HERE: