BEIJING: Neither mushrooming debt at home nor political upheavals and economic crises in partner countries stemmed the steady flow of finance from China to Latin America last year – the third highest on record for state-owned bank loans, according to new data from the Inter-American Dialogue and Boston University. Updated figures for the China-Latin America Finance Database for 2016 show that despite economic slowdowns in both regions, China’s policy banks provided some US$22 billion in loans. Last year’s lending is surpassed only by the US$25 billion and US$35 billion disbursed in 2015 and 2010, respectively. Chinese finance to the region now totals over US$141 billion since 2005, making it by far the biggest lender. “The bulk of Chinese finance was directed to some of Latin America’s most fragile economies,” says the report announcing the figures. Some 92% went to Ecuador, Venezuela and Brazil.
Brazil received US$15 billion, or 72%, in a year that was beset by an economic contraction of around 3.5% and a wide-ranging corruption scandal that tainted multiple high-level politicians in both government and opposition. Meanwhile, in China, national debt rose to 279% of GDP in 2016, in part because of large-scale investment overseas. Boston University’s Kevin Gallagher, who co-authored the research, said China’s massive currency reserves mean this is not yet a major concern, although he pointed out that the country has “burned through” a lot in the past 20 months. “They have to be more concerned about the exposure of their global portfolio,” Gallagher told Diálogo Chino.
