Chinese state-owned banks loaned USD 22.1 billion to Latin American countries last year, helping to keep afloat struggling economies that have been hit hard by a fall in prices for oil, minerals and other commodities that they export, according to new numbers released today by the US think tank the Inter-American Dialogue.
That annual loan total is the second highest in a decade, behind only 2010, and surpassed combined loans to the region from multilateral lenders the World Bank and the Inter-American Development Bank, the data show.
China loaned USD 8.6 billion to Brazil, USD 7 billion to Argentina, USD 5.7 billion to Venezuela and USD 821 million to Ecuador in 2014.
Despite its slowing economy, China has emerged as a lender of last resort for Latin America countries that had ridden a decade-long boom in Chinese demand for commodities but are now seeing budget deficits grow and currencies slip as Chinese appetite slackens.
Many traditional lenders are reluctant to take on the risk of financing countries such as Argentina and Venezuela due to their histories of default, nationalizations and high public spending.
Over the past two months, the presidents of Argentina, Ecuador and Venezuela have visited Beijing seeking more Chinese investments, and left with billions of dollars in commitments.
Over the past decade, China has loaned Latin American countries about USD 118 billion, with Venezuela alone receiving USD 56.3 billion, the Inter-American Dialogue data showed.
The big unknown now is how long that Chinese generosity will last, and whether China will continue supporting increasingly unstable governments such as Venezuela’s, said report author Margaret Myers, director of the Inter-American Dialogue’s China and Latin America program.
At least for this year, China has indicated it will offer another USD 25 billion to USD 30 billion in credit to the region, Myers said.
“It was an important year in 2014 that despite slowing growth we saw considerable commitment to the region,” she said.