Excluding Brazil, Chinese investments in South America jump 30 percent

china Mexico City's Chinatown. Photo: Eve Orea/Shutterstock
Mexico City’s Chinatown. Photo: Eve Orea/Shutterstock

A new study by the Brazil-China Business Council (CEBC) shows that the Asian giant’s investments in South America, excluding Brazil (China’s biggest investment destination worldwide), grew by 30 percent in 2021. 

Another data source, the China Global Investment Tracker (CGIT) compiled by the American Enterprise Institute and the Heritage Foundation, estimates Colombia received the third highest amount of investments from China last year, with 9.1 percent of the total. 

CGIT also shows that, after Brazil — which accounted for nearly half (48 percent) of all Chinese investment in the region — Peru, Chile, and Argentina also attracted Chinese companies, being the final destination of 19, 12, and 8 percent, respectively, of the entire volume of investments in the region between 2005 and 2021. 

“In comparison with 2005-2020, Brazil and Chile increased their shares by one percentage point each, while Peru and Argentina lost two and one percentage points, respectively,” says the CEBC study.

According to data from China’s Ministry of Commerce (MOFCOM), there were 18 mergers and acquisitions involving Chinese companies in Latin America last year, a number of transactions that is 20 percent higher than in 2020. However, these deals amounted to USD 2.1 billion, only 3.7 percent of the total volume worldwide and 37 percent less than the previous year.

The devaluation of Latin American currencies and growing political proximity with Beijing have favored Chinese investments in the region.

CBEC’s study recalls that, in 2021, Nicaragua – which until then had formal ties with Taiwan – established diplomatic relations with China, and that Chile and Argentina made their first deals with the Asian Infrastructure Investment Bank (AIIB). In 2022, Buenos Aires and Beijing also announced Argentina’s entry into the Belt and Road Initiative (BRI).

The study’s author, Tulio Cariello, research and content director at CBEC, said that political frictions alone do not affect the willingness of Chinese companies to invest in Brazil. “The Chinese have the perception that political dynamics change [in Brazil and Latin America], but as investments are thought of in the long term, this has little effect [on them].”