China continues to cut back Latin America loans

For the fourth consecutive year, China’s two main banks tasked with financing overseas development have rolled back loans to Latin America, according to new research from Boston University and think-tank The Inter-American Dialogue. The China Development Bank (CBD) and the Import-Export Bank of China (China Exim) lent USD 1.1 billion to the region in 2019, the lowest amount for a single year in the last decade, down from USD 2.1 billion in 2018.

Instead of lending directly to Latin American governments, Chinese banks are investing in energy and infrastructure projects by way of funds or financing Chinese state-owned companies bidding for projects, the report said.

As the so-called “commodities super-cycle” ended in 2015, the oil-for-loans agreements extended to countries such as Ecuador and Venezuela — the recipient of 45 percent of the USD 142 billion lent to the region since 2007 — are also in decline.

“China is no longer acting as a financial lifeline for the region’s more fragile economies,” said the report.

The Dominican Republic (USD 600 million), Suriname (USD 200 million) and Trinidad and Tobago (USD 104 million) each received one loan from a Chinese policy bank in 2019. Of the top four borrowers Venezuela, Brazil,...