Chinese Finance to Latin America and the Caribbean in 2016

The Inter-American Dialogue’s China and Latin America program and Boston University’s Global Economic Governance Initiative (GEGI) are pleased to publish “Chinese Finance to Latin America and the Caribbean in 2016,” which highlights the primary features of Chinese lending over the past year. We estimate that China Development Bank and China Eximbank issued approximately $21 billion in loans to LAC governments and state-owned companies in 2016.

Information on the various loans issued to Latin American governments and SOEs from 2005 to the present is available in the newly-updated Dialogue-GEGI China-Latin America Finance Database.

Main report findings include the following:

• The year 2016 was the third highest on record for Chinese state-to-state finance in Latin America. Many of these deals were announced during high-level meetings between Chinese and Latin American leaders.

• In 2016, Chinese finance to Latin America surpassed the World Bank’s and the Inter-American Development Bank’s individual lending to the region.

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

• Brazil, Ecuador, and Venezuela accounted for 92 percent of total lending to the region in 2016, with approximately 72 percent—or $15.2 billion—issued to Brazil alone. National oil company Petrobras received the vast majority of Brazil’s share, despite being immersed in a sprawling corruption scandal.

• Bolivia also received considerable attention from Chinese policy banks in both 2015 and 2016. China announced a $7 billion credit line to Bolivia in 2015, which was extended to $10 billion in 2016. In addition, Chinese Foreign Minister Wang Yi promised the delivery of $4.8 billion in mostly infrastructure projects during his October 2016 visit to the Andean nation.

• Chinese banks continue to focus on LAC’s extractive and infrastructure sectors. From 2005 to the present, Chinese policy banks financed $24 billion in infrastructure projects (e.g., highway and facility construction), as well as approximately $100 billion in energy projects, some of which included energy infrastructure development.

• As China’s financial sector grows, a wider range of lenders is issuing finance in LAC. In addition to policy bank lending, China’s commercial banks are increasingly active in Latin America and other regions, often in cooperation with other international banks. China’s three regional funds, announced during high-level visits to the region in 2014 and 2015, are also slowly beginning to result in new projects.

REPORT: Chinese Finance to Latin America and the Caribbean in 2016

China-Latin America Finance Database