China’s Investments in Latin America Tanking

China’s Investments in Latin America Tanking

For many years, China has invested more money in Latin America than any other region. Though the US still maintains its status as the largest trading partner to Latin American nations, China has been closing the gap at a rapid pace. While US trade increased by nearly 250 percent in 2013, China’s trade increased by a staggering 2500 percent. China has had plans to start railway constructions, to buy farmland and oil hotspots, and more.

Legitimate concerns over China's inroads in Latin America & the effect on the U.S..
Legitimate concerns over China’s inroads in Latin America & the effect on the U.S..

Experts have explained that the reason why China has been able to dominate in Latin America is because China has a set economic plan while other nations do not. This allows China to effectively invest in Latin America while other nations have to create a plan first. Part of China’s economic plan includes being able to send its cheapest goods to Latin America, goods that it would never trade with the US or Europe. China charges at least the same price that it would charge other nations, if not more, for these goods. China has consequently been able to generate significant profits from Latin American people.

Over the past few years, however, many Latin American countries have had serious financial issues,  which have caused China’s investments to tank significantly.

One of the chief issues for China is that the Chinese government, which typically implements its policies quickly and effectively within China, is not used to having to wait so long for its plans and policies to take action in Latin America. For example, in 2011, China had advanced plans for constructing a railway connecting Colombia’s Pacific and Atlantic coasts in order to challenge the US-controlled Panama Canal. However, five years later in 2016, the railway is yet to go under construction because Colombia’s economic ministry has yet to respond to China’s requests to build such a railway.

Furthermore, in Venezuela, China has made large-scale investments in order to build an advantageous energy partnership. The Venezuelan oil industry should have been a great investment for China as it holds the world’s largest oil reserves. However, the Venezuelan economy has fallen into a terrible  recession and is arguably the world’s most struggling economy. In order to repair  the Venezuelan economy and reap benefits from its previous investments–or at least to prevent deficiting in its previous investments, China has been pouring in more and more money into Venezuela in hopes of saving its failing economy.

As of right now, China’s previous investments are becoming more of an economic burden due to suffering Latin American economies. China still has a far way to go before its investments generate significant profit. Although it is not China’s responsibility to rebuild the Latin American economies, China’s attempts to save its investments may contribute positively to combatting decline. Certainly, China’s decisions will influence the global economy and have repercussions that will be felt around the world.