China-Latin America investment cooperation brims with new vitality

Estimated reading time: 5 minutes

By Li Jiabao

In Mexico, the section 2A of the Mexico City Metro Line 1 has been renovated, promising locals a more comfortable, intelligent, and convenient transit experience.

In Antigua and Barbuda, the newly expanded St. John's Harbor is poised to bolster the country's ambitions of emerging as a key regional shipping hub.

These transformative infrastructure projects, supported by Chinese investment, are commonly seen in Latin American countries.

Driven by the Belt and Road Initiative (BRI), investment cooperation between China and Latin America is flourishing across various sectors. Latin America is the second-largest destination for Chinese overseas investment, while China is Latin America's third-largest source of foreign investment.

Infrastructure is a focal point in China-Latin America investment cooperation. According to incomplete statistics, as of September 2023, China had undertaken over 200 infrastructure projects in Latin America and the Caribbean, building thousands of kilometers of roads, railways, and light rail; more than 100 schools, hospitals, and sports venues; nearly 100 bridges and tunnels; dozens of airports and ports; and over 30 power stations and energy facilities, creating close to a million jobs in the region.

In recent years, China-Latin America investment cooperation has been upgraded in quality, with new highlights emerging in sectors such as green energy, digital economy, aerospace, artificial intelligence, and cross-border e-commerce.

Chinese companies are rapidly increasing their green investments in Latin America. According to a report by the Brazilian government-led research organization Institute of Applied Economic Research, between 2019 and 2022, the photovoltaic power capacity invested by Chinese companies in Latin America quadrupled, rising from 363 MW to 1.4 GW. Similarly, the wind power generation capacity funded by Chinese firms doubled, increasing from 1.6 GW to 3.2 GW.

Chinese electric vehicles (EVs) are gaining popularity in Latin American markets, with several Chinese automakers accelerating their investment in countries like Brazil and Mexico.

Additionally, lithium mining - a crucial resource for EV batteries - has become a key area for China-Latin America cooperation on energy transition, drawing more and more Chinese investors to the lithium-rich "lithium triangle" region of Argentina, Bolivia, and Chile.

In the realm of digital economy, Huawei and other Chinese tech firms are advancing 5G infrastructure in Latin America and developing data centers and cloud computing facilities as part of the region's digital foundation.

Some Chinese telecommunications and e-commerce companies are promoting "smart city" and "digital village" initiatives. So far, multiple Chinese cross-border e-commerce platforms have entered Latin American markets.

This year marks the 10th anniversary of the Forum of China and the Community of Latin American and Caribbean States. Over the past decade, friendly cooperation between China and Latin American and Caribbean countries has flourished within this framework, providing a solid foundation for investment partnerships.

Statistics show that by the end of 2022, China's direct investment stock in Latin America and the Caribbean reached $596.2 billion, nearly seven times higher than that at the end of 2013.

Earlier this year, a report by the Inter-American Dialogue think tank highlighted the evolving focus of Chinese companies' investments in Latin America - from mineral extraction to large-scale infrastructure construction, and now increasingly to innovation sectors, including information and communication technology, renewable energy, and other emerging industries.

Jorge Heine, former Chilean Ambassador to China and professor at Pardee School of Global Studies, Boston University, noted that this investment approach aligns closely with Latin America's urgent need for economic transformation, with China poised to play a key role in injecting the region with much-needed development momentum.

"China and Latin American countries are both developing nations. Their shared interests and mutual needs drive investment cooperation," said Yuan Dongzhen, deputy director of the Institute of Latin America and professor at Guangdong University of Foreign Studies.

Yuan believes that China's strengths in infrastructure, manufacturing, new energy, and digital technology position the country well to support Latin American countries' economic transition and reindustrialization through investment partnerships. This aligns with Latin American countries' aspirations to attract foreign investment and boost their economies.

Gonzalo Gutierrez, secretary-general of the Andean Community, noted that China's direct investment in Latin America and the Caribbean is widely welcomed, as it plays a crucial role in generating employment and stimulating economic development in the region.

"Today, the collective rise of the 'Global South' is a defining feature of a changing world order. Seeking peace, pursuing development, and promoting cooperation are common aspirations for countries in the Global South," said Yuan.

He added that strengthening investment cooperation between China and Latin America fosters mutual benefit and shared prosperity. As China-Latin America relations enter a new era, the two sides' investment cooperation will continue to expand into new fields and spaces.

China's investments in Latin America are characterized by equality, mutual benefit, innovation, openness and more benefits for the people. These investments come with no political strings attached, nor does China impose its will, setting a model for South-South cooperation.