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CEOWORLD magazine - Latest - Banking and Finance - Decline of Chinese Investment in Latin America

Banking and Finance

Decline of Chinese Investment in Latin America

China’s financial interest in Latin America has waned since the late 2010s and shows no signs of recovery. A report by the Inter-American Dialogue and the Boston University Global Development Policy Center highlights this trend, noting that Chinese development finance institutions (DFIs) issued less than $1.5 billion in loans to Latin America in 2023, continuing a downward trend. Foreign direct investment (FDI) also declined, from an annual average of $14.2 billion between 2010 and 2019 to $6.4 billion in 2022.

This nearly decade-long downturn reflects China’s scaling back of its Belt and Road Initiative and a reduced demand for Latin American commodities due to a slowdown in China’s real estate and construction sectors. Additionally, China’s past investment missteps, including substantial loans to Venezuela and Ecuador, have contributed to this decline. In 2023, the majority of China’s $1.5 billion loans in Latin America were directed toward Brazil for infrastructure and green economy projects. In contrast, Chinese FDI in Southeast Asia increased by 130% over the last decade, reaching approximately $16 billion in 2022.

China’s reduced lending leaves a significant financing gap for Latin American countries looking to upgrade their digital and physical infrastructure. However, this gap presents an opportunity for new lenders to offer loans on more favorable terms. Chinese loans have often been criticized for their opacity and onerous conditions. Greater use of public auctions could enhance transparency and accountability in public works and infrastructure projects. With the World Bank and the Inter-American Development Bank regaining their positions as the region’s largest funders, Latin American governments now have more influence in setting development priorities.

 

GDP (nominal)CapitalHead of StateHead of GovernmentGDP (nominal) per capitaGDP (PPP)GDP (PPP)GDP (PPP) per capita
ChinaBeijingXi JinpingLi Qiang17.700.89912.54135.004.00023.309

 

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CEOWORLD magazine - Latest - Banking and Finance - Decline of Chinese Investment in Latin America
Anna Siampani
Anna Siampani, Lifestyle Editorial Director at the CEOWORLD magazine, working with reporters covering the luxury travel, high-end fashion, hospitality, and lifestyle industries. As lifestyle editorial director, Anna oversees CEOWORLD magazine's daily digital editorial operations, editing and writing features, essays, news, and other content, in addition to editing the magazine's cover stories, astrology pages, and more. You can reach Anna by mail at anna@ceoworld.biz