China-US rivalry dampens belt and road investment in Latin America and the Caribbean, but strong demand remains
- Chinese foreign direct investment in Latin America and the Caribbean accounted for 6.5 per cent of the region’s total last year, falling from 10.44 per cent in 2020
- Rivalry between China and the US is ‘greatly affecting capital flows’, analysts say, but demand for projects under the Belt and Road Initiative is still there
China’s foreign direct investment into Latin American and the Caribbean tumbled last year, with the growing rivalry between Washington and Beijing “greatly affecting capital flows” from the world’s No 2 economy.
Even so, analysts say the Belt and Road Initiative remains an effective tool for deeper Chinese engagement in the region at a time when the United States and others “don’t offer feasible alternatives”.
Deepening confrontation between the US and China last year and the first quarter of this year was “greatly affecting capital flows”, the institute said in a report released late May.
US tariffs on Chinese imports, as well as restrictions on its tech exports and financing for Chinese companies on the US stock market were all having an impact on investment, it said.
Still, China’s ties with Latin America and the Caribbean (LAC) run deep, analysts say, and there is strong demand for infrastructure development.
“After the [belt and road] announcement in 2013, more than US$60 billion worth of China-Latin America infrastructure projects were reported between 2015-20,” said Kanyi Lui, partner at Pinsent Masons based in Beijing.