Interpreting Chinese Finance to LAC

On February 11, 2016, experts from the Inter-American Dialogue and Boston University’s Global Economic Governance Initiative (GEGI) discussed new new findings on Chinese development bank finance in Latin America. The newest Dialogue-GEGI data is accessible in the China-Latin America Finance Database, which documents China’s bilateral lending to the region from 2005 to the present.

Margaret Myers, director of the Dialogue's China and Latin America program, Kevin Gallagher, co-director of the Global Economic Governance Initiative at Boston University, and Fei Yuan, a research fellow at GEGI, indicated that:

• 2015 was the second highest year on record for Chinese state-to-state finance in Latin America, with loans to the region topping $29 billion. Much of this finance was announced during Premier Li Keqiang’s 2015 trip to Latin America. 

• In 2015, Chinese finance to Latin America surpassed World Bank and Inter-American Development Bank lending to the region combined.

• China continues to be an important source of finance for those countries in LAC (e.g., Venezuela and Ecuador) with weaker access to global capital markets. 

• Venezuela has received $65 billion since 2007, or approximately 52 percent of total Chinese policy bank finance in the region. Another 34 percent of Chinese finance to Latin America went to Argentina, Brazil, and Ecuador.  

• Chinese banks continue to focus on LAC’s extractive and infrastructure sectors. From 2005 to the present, Chinese policy banks financed $40.3 billion in infrastructure projects (e.g., highway and facility contruction), as well as many energy projects with infrastructure components. Energy loans, including China’s oil-backed lending to Venezuela through the China-Venezuela Joint Fund, accounted for $70.2 billion of overall Chinese finance in LAC since 2005. 

• In addition to China’s many bilateral loans to LAC, Beijing also recently established approximately $35 billion in region-wide funds for infrastructure and other projects. It is unclear whether these funds are a means for restructuring existing bilateral capital or an entirely new source of finance.