Latin America playing a risky game by welcoming in the Chinese dragon

in Announcements, In the News
May 30th, 2013

Chinese finance is more in tune with what Latin America wants, rather than what western development experts say it needs

From The Guardian
By Kevin Gallagher
May 30, 2013

The Chinese president, Xi Jinping, travels to the US and Latin America this week, for the first time since he took office in March. What a difference a decade makes. Ten years ago, there would hardly have been any fanfare about a Chinese visit to the region. Now, for Brazil, Chile and others, China is the most important trade and investment partner. China-Latin America trade surpassed $250bn (£165bn) last year.

Although China’s impact in Africa receives the most attention, China trades just as much in Latin America as in Africa, and has more investments in the region. Chinese finance in Latin America – chiefly from the China Development Bank and the Export-Import Bank of China – is staggeringly large and growing. In a recently updated report, colleagues and I estimate that, since 2005, China has provided loan commitments of more than $86bn to Latin American countries. That is more than the World Bank or the Inter-American Development Bank have provided to the region during the same period.

China’s presence is a great opportunity for Latin America, but it brings new risks. If the region can seize the new opportunities that come with Chinese finance, countries could come closer to their development goals, and pose a real challenge to the way western-backed development banks do business. However, if Latin American nations don’t channel this new trade and investment toward long-term growth and sustainability, the risks may take away many of the rewards.

Read the full article at Guardian.co.uk.