Chinese Lending to LAC in 2014

The Inter-American Dialogue (IAD) and Boston University’s Global Economic Governance Initiative (GEGI) began working together in 2011 to address a lack of publicly available information on Chinese finance in Latin America and the Caribbean (LAC). In 2012, IAD published a report by GEGI researchers entitled “The New Banks in Town: Chinese Finance in Latin America,” which examined Chinese bank financing in LAC since 2005, including in-depth analysis of the terms and conditions associated with Chinese loans.

IAD and GEGI later transformed the “New Banks” findings into an online, interactive database for use by policymakers, journalists, academics and the general public. Since it was first developed, the China-Latin America Finance Database has been the only publicly available and regularly updated source of empirical data on Chinese finance in LAC. The database now features $119 billion in Chinese loan commitments to the region since 2005.

China’s Finance to Latin America and the Caribbean in 2014: Key Findings

• 2014 was the second highest year on record for Chinese finance in Latin America, with loans to the region topping $22 billion. Many of these loans were announced during President Xi Jinping’s July 2014 trip to Latin America.
• Chinese finance to Latin America in 2014 was more than that of the World Bank and the Inter-American Development Bank combined.
• China continues to be an increasing source of finance for those countries in the region with weaker access to global capital markets.
• Countries in the region with higher levels of perceived risk receive finance from China far in excess of their share of the region’s total GDP. Venezuela received $56.3 billion since 2007, or approximately 47 percent of China’s total finance in the region. Another 43 percent of Chinese finance to Latin America goes 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 $49.9 billion in infrastructure projects. Energy projects accounted for $32.9 billion of overall Chinese finance in LAC.
• Most of China’s overseas lending is issued by the China Development Bank ($83 billion since 2005) and China Export-Import Bank ($20.9 billion). Both were created as “policy banks” to support the Chinese government’s policy objectives. Other Chinese banks, such as ICBC and Bank of China, are also increasingly important lenders in the region.