By: Staff Writer
February 2, 2024
A new report by The Inter-American Dialogue says that The People’s Republic of China’s focus in the Latin American and Caribbean (LAC) region is changing amid an overall drop in investment value by more than half since 2010.
The report, “’New Infrastructure’: Emerging Trends in Chinese Foreign Direct Investment in Latin America and the Caribbean,” says China’s foreign direct investment reached $14.2bn per year between 2010 and 2019 but fell to an average of $7.7bn from 2020 to 2021, and then $6.4bn in 2022.
This drop reflects a substantial recalibration on the part of China’s government and its companies, however, as opposed to disinterest in the LAC region. As it stands, Chinese companies are in many cases pursuing more engagement with LAC, but through smaller deals on average—and in frontier sectors that are directly aligned with Beijing’s own economic growth objectives.
The report also said: “the sorts of large-scale infrastructure projects that once characterized the Belt and Road Initiative (BRI)—Chinese President Xi Jinping’s signature foreign policy initiative—are no longer as emblematic of Chinese investment in LAC as they once were. In many parts of the region, Chinese interest in canals, rail, and other major transport and energy infrastructure is being replaced by a growing emphasis on innovation, whether in information and communication technology (ICT), renewable energy, or other emerging industries—consistent with Beijing’s laser focus on its own economic upgrading and global competitiveness. Considerable evolution is also apparent within LAC’s innovation-related industries, as Chinese companies shift their attention from ICT equipment and devices to the delivery of computing infrastructure and fintech services, for instance.
“China’s traditional sectors of focus in LAC, including agriculture and energy, continue to attract Chinese companies, but interests have shifted in these industries, too—from an early focus on boosting food production to recent interest in buying agricultural chemical companies, and from a preference for equity oil to a growing focus on renewable energy deal-making. The region’s minerals and metals remain of primary interest to Chinese companies, but are now largely supporting China’s high-tech industries rather than the sort of domestic infrastructure development that spurred China’s economic growth in the early 2000s.”
The composition of this investment has meant a growing presence for Chinese companies in the region’s emerging industries. Moreover, China’s persistent focus on innovation will ensure more involvement with LAC emerging industries in the coming years—through FDI, certainly, but also in the trade and financial realms, as China exports ever-higher-value-added goods and services, and as China’s banks back “new infrastructure”-related projects in LAC and other regions