China will not be resuming the mega oil-backed leaning of yesteryear as its focus turns to debt negotiations, according to the Inter-American Dialogue (IAD) and the Boston University (BU) Global Development Policy Center.
A decade ago, Chinese lending to the Latin American-Caribbean region surpassed lending from the World Bank and the Inter-American Development Bank (IDB).
Between 2005-2023, China Development Bank (CDB) and Export-Import Bank of China (Ex-Im Bank) provided $120 billion via 133 loan commitments to countries across Latin American and the Caribbean (LAC) and state-owned enterprises, IAD and BU said June 18 in a joint press release announcing the results of a recent study.
Of the $120 billion, energy projects investments were $94.1 billion or 78% of the total followed by other ($12.1 billion), infrastructure ($12.1 billion) and mining ($2.1 billion). By region, the distributions were destined to four countries with received 92% of the financing: Venezuela ($59.2 billion, 49%), Brazil ($32.4 billion, 27%), Ecuador ($11.8 billion, 10%) and Argentina ($7.7 billion, 6%).
But now, lending from the World Bank and IDB to the Latin America-Caribbean region has surpassed lending from Chinese financing institutions, the IAD and BU said in the release.
“As in previous years, there is little to indicate a resurrection of the multibillion-dollar, oil-backed lending that once characterized the bulk of China’s financial engagement with the region,” the IAD and BU said in the release.
However, the CDB and Ex-Im Bank will remain committed to issuing smaller loans more closely linked to Chinese and host country development objectives. Such loans could be for transport infrastructure development or generating investment and trade in priority-emerging industries, the release said.
“The next few years will be marked by debt negotiations between China and its debtors in the region, but also by continued recalibration as China adjusts its domestic economic policy and as the Belt and Road Initiative (BRI) and related finance and investment follow suit,” IAD and BU said in the release.
In the Latin America-Caribbean region, only Suriname reported debt levels to Chinese creditors of over 5% of GDP or projected debt service payments amounting to over 2% of projected exports over the next 5 years.
Chinese companies—now well established in much of the area—are no longer dependent on development finance institutions loans to generate opportunities for their involvement in infrastructure projects. With CDB and Ex-Im Bank focused on debt reduction, China’s smaller commercial banks have increasingly stepped into the fold through syndicated loans to Chinese or LAC companies.
Recommended Reading
TGS Starts Up Multiclient Wind, Metaocean North Sea Campaign
2024-05-07 - TGS is utilizing two laser imaging and ranging buoys to receive detailed wind measurements and metaocean data, with the goal of supporting decision-making in wind lease rounds in the German Bright.
PGS Gets Greenlight to Begin Surveying for Petrobras 4D Contract
2024-05-30 - After a long permitting process, PGS has secured the last permit needed to begin its large 4D survey contract with Petrobras at the Barracuda-Caratinga field offshore Brazil.
Chemex Agrees to FEED Contract for Verde’s NatGas-to-gasoline Plant
2024-06-05 - Verde said the project will be located in Martin County, Texas. Completion of Chemex’s FEED work is anticipated in early 2025.
Exclusive: Blue Latitudes’ Ever-evolving Process to Decommission Offshore Rigs to Reefs
2024-06-05 - Environmental consulting firm Blue Latitudes looks at decommissioned offshore rigs as potential fisheries habitats, and the process is always evolving as the energy industry evolves, Amber Sparks, co-founder of Blue Latitudes, told Hart Energy's Jordan Blum at the Offshore Technology Conference.
Quantum Capital’s View on AI: Lots of Benefits, Pain Points
2024-05-16 - The energy industry is lagging in the race to implement AI, but Sebastian Gass, CTO of Quantum Capital Group, offered a few solutions during Hart Energy’s 2024 SUPER DUG Conference & Expo.