Scaling Back: Chinese Development Finance in LAC, 2019

The Inter-American Dialogue's Asia & Latin America program and the Global China Initiative at Boston University’s Global Development Policy Center (GDP) estimate that China's policy banks, China Development Bank and China Eximbank, issued roughly $1.1 billion in loans to LAC governments and state-owned firms in 2019. See the newly-updated Dialogue-GDP China-Latin America Finance Database and our report, Scaling Back: Chinese Development Finance in LAC, 2019, for details on last year's and previous loan agreements. 

Main findings:

• The year 2019 was among the lowest on record for Chinese state-to-state finance in Latin America, with only approximately $1.1 billion in loans from China Development Bank and China Eximbank to Latin American governments and state-owned enterprises. The low levels of Chinese policy bank lending last year are part of a broader, downward trend in Chinese finance to regional governments and state-owned enterprises, evident since 2015. See the Dialogue-GDP China-Latin America Finance Database for details.

• China is no longer acting as a financial lifeline for the region’s more fragile economies. Venezuela, which accounted for 45 percent of China’s overall lending to LAC since 2007, received no new loans from Chinese policy banks over the past three years.

• China Development Bank and Eximbank are instead issuing loans to wider range of actors but in generally smaller amounts. Argentina, the Dominican Republic, Suriname, and Trinidad & Tobago all received loans from Chinese policy banks in 2019.

• Another reason for the drop in sovereign lending is that CDB and Eximbank are in some cases providing financing directly to Chinese companies as opposed to LAC governments or SOEs, especially in those countries that have rejected China’s model of state-to-state lending.

• Chinese state finance to LAC still differs in important ways from loans issued by traditional development finance institutions. CDB and Eximbank loans continue to focus on hard infrastructure and energy sector development. Chinese loans also refrain from imposing policy conditions on recipients but continue to promote the use of Chinese companies and/or equipment.

• Even if Chinese policy banks continue to lend to LAC at low levels, as they have over the past three years, the combined effect of Chinese policy bank activity, co-financing initiatives, commercial bank finance, 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. But total combined Chinese finance to the region is unlikely to ever approximate policy bank peak lending.