Chinese state-to-state finance in Latin America dipped to a five-year low in 2017, with just $9 billion in loans from Chinese policy banks—the China Development Bank (CDB) and China Eximbank—to Latin American governments and state-owned enterprises. In general, the same year, Chinese overseas investment also slowed, largely due to new capital controls on overseas investments put in place by the Chinese government to maintain financial stability.
On top of these broader trends, Latin America and the Caribbean saw a significant drop due to a decision by the two banks to refrain from issuing new loans to an increasingly volatile Venezuela. Though a top recipient of CDB and China Eximbank loans in the past, Venezuela received no finance from Chinese banks in 2017, after receiving a comparatively small loan of only $2.2 billion in 2016 aimed at improving the country’s oil production capacity.
Although China continues to engage Venezuela diplomatically, and to promote cooperation with Caracas, Chinese officials are increasingly wary of conditions on the ground in the oil-rich nation. In a September 2017 meeting with his Venezuelan counterpart, Chinese Foreign Minister Wang Yi noted that China has always been committed to “enhancing the friendly and mutual trust between the two countries and firmly advancing mutually beneficial cooperation,” but added that China is increasingly concerned about the safety of Chinese people and property in Venezuela.
With no clear resolution in sight to Venezuela’s political and economic woes, Chinese lenders may very well refrain from funding Caracas in the coming years, leading to lower levels of total policy bank finance to the region.