2018 China-Latin America Economic Bulletin

China-LAC

These are the findings of the 2018 China-Latin America Economic Bulletin, which brings together the most important annual trends for this burgeoning relationship in terms of trade, finance, and investment.

In 2017, Latin America and the Caribbean (LAC region) continued to strengthen economic ties with China, especially with respect to trade and foreign direct investment in extraction, infrastructure, and to a lesser extent, manufacturing activities. Conversely, there were fewer loans from Chinese policy banks to Latin American governments at this time, according to the China-Latin America Finance Database jointly administered between the GDP Center and the Inter-American Dialogue.

China’s relationship with the LAC region took on a more targeted focus than the broader engagement of years past. While previous years were marked by discretionary official loans and a broad array of investments, in 2017 energy became a primary driver of both finance and investment.

Other findings of the 2018 bulletin include:

    • The LAC region’s trade deficit with China eased slightly to 0.7% of GDP, buoyed by a rebound in the prices of the major commodities that continue to dominate LAC-China exports, especially petroleum, copper, and iron.

 

    • LAC exported approximately $104 billion in goods to China and imported $140 billion from China in 2017, up from $84 and $122 in 2016. China continues to be the most important export market for South America, and the second largest for the LAC region overall.

 

    • Chinese firms invested $4.4 billion in LAC in new (greenfield) FDI projects in 2017, up from $2.7 in 2016. Extraction maintains an important role, but metals and manufacturing — which account for four of the top five new projects — are also taking positions of prominence.

 

    • Chinese firms spent a record $17.7 billion on mergers and acquisitions in LAC in 2017, mostly in the Brazilian energy sector, where the State Grid Corporation of China and the State Power Investment Corporation both made important deals totaling $14.5 billion.

 

      • While official Chinese loans to LAC dipped to a five-year low in 2017 — at just $9 billion — they intensified their focus on energy. Oil, solar, and wind projects made up over $8 billion.

 

    • Chinese participation in LAC infrastructure and energy sectors is expected to grow in the future, as several deals have already been signed for Chinese financing and contracting for future roads and dams, especially in the Andean Amazon region.

Read the Bulletin

For the China-Latin America Finance Database, click here.

 

This China-Latin America Economic Bulletin is the fifth annual note summarizing and synthesizing trends in the burgeoning China-Latin America economic relationship. The goal of the bulletin is to provide analysts and observers a handy reference to the ever-changing landscape of China-Latin America economic relations, a landscape where data is not always as readily accessible.