Abstract
The rapid growth of Chinese Foreign Direct Investment (FDI) is one of the defining characteristics of the global investment scenario in the twenty-first century and reflects the development of the country’s internationalization strategy that began in the early 2000s. This chapter analyzes the characteristics of Chinese FDI in Latin America and the Caribbean (LAC) within the context of China’s broader internationalization process. The evolution of Chinese FDI in the region is studied from its origins in the 2000s when it was largely concentrated in extractive industries to its expansion into a wider breadth of sectors and countries. The benefits and challenges of the China-LAC investment relationship are assessed, and the prospects for future investment flows to address LAC’s longstanding structural problems are evaluated, particularly in relation to China’s evolving development strategy, the Belt and Road Initiative and its Health, Green, and Digital Silk Road components.
The views expressed in this chapter are those of the authors and do not necessarily reflect the views of the United Nations.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Similar content being viewed by others
Notes
- 1.
In this chapter, China will always include Hong Kong, SAR of China. In cases in which Hong Kong, SAR of China is not included in the data, it will be referred to mainland China.
- 2.
For the purposes of consistency in the calculation, the combined FDI stock of China and Hong Kong was maintained from 1990 onward, although it was not until July 1997 that Hong Kong became a Special Administrative Region of China.
- 3.
The first transnational company in China was Beijing Air Catering (BAC) in 1980, a joint venture between Hong Kong’s leading catering company Maxim’s Catering Limited and the Civil Aviation Administration of China, regulated by law that enabled the establishment of joint ventures with foreign companies in the country in 1979 (Li 2019).
- 4.
These figures correspond to the countries that report FDI data by origin: Argentina, Bolivia, Brazil (excluding reinvestment of profits), Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Paraguay, and Uruguay.
The countries represented 92% of FDI inflows in Latin America and the Caribbean in 2019.
- 5.
Considering the purchases by companies from China and Hong Kong (SAR of China) in Latin America and the Caribbean between 2005 and 2020, the value of the transaction was revealed in 83% of the registered deals (based on data from Bloomberg).
- 6.
This depends on the nationality of the parties involved (the selling firm may also be foreign), the payment method and other financial terms of the agreement.
- 7.
ECLAC on the basis of the UN Comtrade database.
- 8.
The Go Out Policy (走出 去 战略; Zǒuchūqū Zhànlüè) was a strategy launched in 1999 by the People’s Republic of China, with the aim of motivating its companies to invest abroad.
- 9.
As of October 2022, the Latin American and Caribbean countries that have signed Belt and Road Initiative cooperation agreements are Antigua and Barbuda, Barbados, Bolivia, Costa Rica, Chile, Cuba, Dominica, Dominican Republic, Ecuador, , El Salvador, Grenada, Guyana, Jamaica, Peru, Suriname, Uruguay, Venezuela (Bolivarian Republic of), Panama, Trinidad and Tobago.
References
Balza, L., R. Espinasa, and T. Serebrisky. 2016. Lights On? Energy Needs in Latin America and the Caribbean to 2040. Washington: D.C., Inter-American Development Bank (IDB).
Bridge Consulting. 2021. China COVID-19 Vaccine Tracker [online] https://bridgebeijing.com/our-publications/our-publications-1/china-covid-19-vaccines-tracker/
Chow-Bing, N. 2020. COVID-19, Belt and Road Initiative and the Health Silk Road: Implications for Southeast Asia, Friedrich Ebert Stiftung, October.
Dussel, E. 2019. China’s foreign direct investment in Latin America and the Caribbean. Conditions and challenges: Universidad Nacional Autónoma de México, México.
Dussel Peters, E. 2020. Monitor de la infraestructura china en América Latina y el Caribe 2020. Red ALC-China, México. Available from https://www.redalc-china.org/monitor/
ECLAC (Economic Commission for Latin America and the Caribbean). 2019. International Trade Outlook for Latin America and the Caribbean, 2019 (LC/PUB.2019/20-P). Santiago, October.
ECLAC (Economic Commission for Latin America and the Caribbean). 2021a. Foreign Direct Investment in Latin America and the Caribbean (LC/PUB.2021a/8-P), Santiago, August.
ECLAC (Economic Commission for Latin America and the Caribbean). 2021b. Plan for Self-sufficiency in Health Matters in Latin America and the Caribbean: Lines of Action and Proposals (LC/TS.2021b/115), Santiago, September.
Ellis, E. 2014. China on the Ground in Latin America: Challenges for the Chinese and Impacts on the Region. United States, New York: Palgrave Macmillan.
Gallagher, K., and M. Myers. 2021. China-Latin America Finance Database. Washington: Inter-American Dialogue.
Horn, S., C. Reinhart and C. Trebesch. 2019. China’s Overseas Lending, Kiel Working Paper, No. 2132, June 2019 [online] https://www.ifw-kiel.de/fileadmin/Dateiverwaltung/IfW-Publications/Christoph_Trebesch/KWP_2132.pdf.
Li X. 2019. Regulating China’s Inward FDI: Changes, Challenges, and the Future, [online] https://www.researchgate.net/publication/325922616_Regulating_China’s_Inward_FDI_Changes_Challenges_and_the_Future
Ministry of Foreign Affairs of the People’s Republic of China. 2020. Issue Note No. 3: Digital Silk Road, Meeting of the Advisory Council of The Belt and Road Forum for International Cooperation, December.
Ministry of Foreign Affairs of the People’s Republic of China. 2014. Xi Jinping Attends China-Latin America and the Caribbean Summit and Delivers Keynote Speech, Comprehensively Expounding China’s Policies and Propositions Toward Latin America, Announcing Establishment of China-Latin America Comprehensive Cooperative Partnership of Equality, Mutual Benefit and Common Development, and Establishment of China-CELAC Forum, July. Available at https://www.fmprc.gov.cn/mfa_eng/topics_665678/xjpzxcxjzgjldrdlchwdbxagtwnrlgbjxgsfwbcxzlldrhw/t1176650.shtml Accessed on 12 February 2021.
Nedopil C. 2021 China´s Investments in the Belt and Road Initiative (BRI) in 2020, Green BRI Center, International Institute of Green Finance (IIGF), Beijing, China.
Stallings B. 2020. Dependency in the twenty-first century. The Political Economy of China-Latin America Relations: Cambridge University Press, United Kingdom.
World Bank. 2021. Trade (% of GDP)—China, World Bank national accounts data, and OECD National Accounts data files. Available at https://data.worldbank.org/indicator/NE.TRD.GNFS.ZS?locations=CN Accessed on 8 February 2021.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2023 The Author(s), under exclusive license to Springer Nature Switzerland AG
About this chapter
Cite this chapter
Closset, M., Plottier, C., Kreiter, Z. (2023). Chinese Foreign Investment Policy: Internationalization in LAC and Future Perspectives. In: Schneider, A., Teixeira, A.G. (eds) China, Latin America, and the Global Economy. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-18026-2_3
Download citation
DOI: https://doi.org/10.1007/978-3-031-18026-2_3
Published:
Publisher Name: Palgrave Macmillan, Cham
Print ISBN: 978-3-031-18025-5
Online ISBN: 978-3-031-18026-2
eBook Packages: Economics and FinanceEconomics and Finance (R0)