Chinese investments abroad have been growing at an incredible rate in the past decade. The rise of the country as a major pillar in the world’s economy has led to an investment spree abroad by Chinese firms. These investments are a great way for the Chinese economy to continue to grow. Additionally, this has the added advantage of increasing Chinese influence abroad. Chinese firms and businesses are encouraged by the strong government support to foreign direct investments abroad as part of the government’s “Going Global” strategy. The Chinese economy’s international footprint has rapidly expanded especially in the wake of the financial crisis of 2008.
The case of Latin America is an interesting one in this regard. Before 2010, the total annual investments by China in the Latin American and Caribbean economies stood at less than 5 billion dollars. This number rose to 25.3 billion in 2010 after a series of investments in the region by the Chinese firms that year. Since then, the total FDI that has flown into Latin American countries has almost touched 80 billion dollars.
The Latin American region has traditionally been considered as the backyard of the US and to some extent even that of European countries. That concept has been rapidly changing over the last few years as Chinese investments flow into the economies across the region. At the moment, Chinese firms lead when it comes to acquisitions and mergers in Latin American economies. The energy-rich economies of the Latin American region make a for lucrative investment option for Chinese companies and China as a whole. Brazil and Venezuela sit on top when it comes to Chinese investments in the energy sector. The investments have also bought China considerable influence far from home.
Major Chinese banks such as the Export Import Bank of China (Chexim) as well as the China Development Bank have been at the forefront of the investments in these regions. Between 2005 and 2017 alone, the loans that these banks have provided amounted to a whopping 150 billion dollars. In fact, China surpassed even the World Bank and the American EXIM bank’s combined loan commitments in 2010.
The Chinese investments in Africa have followed similar trajectory. Africa has been an investment playground for the US and former colonial powers such as the UK and France. China has seen both its investments and influence grow in the region ever since it started investing abroad. Chinese investments have funded major construction works and manufacturing projects with its investments which have also been received well by locals in many African economies. A 2018 UNCTAD World Investment Report puts China’s investment in Africa at $40 billion which is a huge jump from the $16 billion mark where it stood back in 2011.