For the fourth year in a row, China Development Bank and the Import-Export Bank of China have reduced loans to Latin America. This was based on the new study, which the Boston University conducted.

In 2019, both banks lent the region an amount of $1.1 billion, a figure significantly lower than the previous year's value of $2.1 billion. This is the lowest amount over the past 10 years.

Instead of letting the Latin American governments directly borrow, the report said, the Chinese banks have decided to invest in infrastructure and energy projects instead. They will be using Chinese state-owned firms to bid for the projects as a form of funding.


China Is No Longer Latin America's "Financial Lifeline"

What's known as the "commodities super-cycle" concluded in 2015. More so, the "oil-for-loans" arrangements seem to be reaching expiration. These include 45 percent of $142 billion, which the Ecuador and Venezuela has received since 2007.

This means that China will no longer function as the "financial lifeline", for more fragile economies of Latin America.

The Dominican Republic, Suriname, and Trinidad and Tabago received a total of $904 million as loan in 2019, from a Chinese policy bank.

Among the top borrowers--Ecuador, Brazil, Argentina, and Venezuela--only Argentina, according to the report, featured in the four deals struck in 2019, a loan amounting to $236 million, for the purchase of railway cars.

Even though the latest numbers suggest cooling China's state-supported lending to back progress in the region, they more precisely mirror one way in which it has started to change, even prior to the worldwide spread of COVID-19, which created an austere economic outlook for this year.


Chinese Companies' Investments in Latin America in 2019

Last year, Chinese businesses invested around $12.8 billion in this region, up 16.5 percent from 2018. This was based on the new data which the China-Latin America Network or Red ALC-China released. 

Essentially, China used to be the source of 7.5 percent of the total foreign direct investment or FDI in Latin America last year.

This is in spite of a year characterized by investor wariness worldwide, largely, as a result of unclear consequences of the China-US trade strains.

Meanwhile, publicly owned enterprises of China accounted for more than 85 percent of the Latin American OFDI last year. Electrical companies, namely State Grid and Tree Gorges or CTG have ruled the sector in recent years.

Most of the major agreements engaged acquisition of operations of the other foreign companies, or formation of new consortia together with partners from the region. 

Last year, CTG ate up the share Peruvian projects of the US-based Sempra Energy, including its 84-percent stake in Luz del Sur, an electricity distribution firm. This was the biggest transaction of the year.


More on Business: Check these out!