Chinese investments grow in Latin America

Over the next five years, China is expected to invest more than $500 billion overseas, much of it in Latin America.

Chinese companies last year invested $80 billion in Latin America, increasingly in infrastructure development.

In each of Mexico, Guatemala and Honduras, Chinese entities have proposed the construction an inter-ocean dry canal, while Nicaragua awarded has to a Chinese company, a concession to build and operate a waterway between the Atlantic and Pacific Oceans.

Chinese state enterprises have in addition won bids to build a highway and an oil refinery in Costa Rica, although both projects are currently stalled by political uncertainty.

In the past, 90 percent of direct foreign investment by Chinese companies in Latin America involved natural resources, especially mining and oil-gas projects in Argentina, Brazil, Peru and Venezuela.

Growth in investment has in turn led to a significant increase in Chinese-Latin American trade, which in 2012 was worth $260 billion, compared to only $10 billion at the start of the century.

Resource-industry commodities continue to dominate Latin American exports to China, but food products are increasingly important.

China has a deficiency in soybeans, corn, milk and sugar, all of which are abundant in Latin America.

At current rates of growth, China will in fewer than 20 years displace the United States as Latin America’s leading trade partner.

Another concern for Washington is the extent to which Chinese investment and trade involve businesses, which are wholly or partly owned by the state, and which in many cases have a close relationship not only with the government, but also the military.