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China is shifting investment in Latin America to strategic areas such as critical minerals, technology and renewable energy, as it challenges the United States and Europe in the key economic battlegrounds of the 21st century, a study has found.
A decline in new investment in the region has shifted focus away from costly infrastructure projects, but has raised concerns in the United States and Europe about China’s growing competition for economic supremacy.
A report released Monday by the Inter-American Dialogue says the decline in investment levels is not a lack of interest in Latin America and the Caribbean, but rather reflects China’s increased focus on high-tech and strategic sectors. It is said that there is.
China’s foreign direct investment (FDI) in Latin America averaged $14.2 billion annually from 2010 to 2019, but declined to an average of $7.7 billion from 2020 to 2021, after the data was released. In 2022, the last full year under review, it fell to $6.4 billion. It was available.
“Our data shows a clear shift in Chinese direct investment toward specific industries in Latin America and the Caribbean,” said Margaret Myers, co-author of the Washington-based think tank’s report. ”
“Many of these new priority areas are described by China as ‘new infrastructure,’ a term that encompasses industries such as telecommunications, fintech, and energy transition, for example.” . It is critical to China’s own economic growth strategy.”
The report revealed that the Chinese government invested a total of $187.5 billion in Latin America and the Caribbean from 2003 to 2022.
China’s new investment strategy is highlighted by electric car maker BYD’s plans to build a factory in Brazil, Tianqi Lithium’s acquisition of Chile’s lithium assets, and Huawei and other Chinese companies’ data centers, cloud computing, and expansion across the region. The project included expansion of the. 5G technology.
Brazil captured by far the largest share of Chinese direct investment in the region over the 20 years to 2022, accounting for $78.6 billion or 42% of the total. Peru had the second highest number, followed by Mexico, Argentina and Chile.
Beijing’s investments in Mexico are increasingly focused on high-value manufacturing, with Chinese companies moving production from their home base to Mexico to take advantage of the country’s privileged trade access to North American markets.
While investment has steadily increased, trade between China and Latin America has skyrocketed over the past two decades, rising from $14 billion in 2000 to $495 billion in 2022. China’s exports to the region increasingly consist of high-tech goods and services, while Beijing’s imports are increasing. Just as it was more than a decade ago, raw materials still mostly come from Latin America and the Caribbean.
Biden administration officials warned Latin American governments of the dangers of over-reliance on Chinese investment, citing security risks, debt traps and the possibility that ports and other infrastructure could be used for military purposes. I have warned you repeatedly.
But many Latin American officials are frustrated that the U.S. has often failed to offer competitively priced product alternatives, cheaper financing for infrastructure projects, or new free trade agreements. I’m holding you.
The European Union launched its Global Gateway initiative in the region last year, touting up to €45 billion of funding for projects such as the green energy transition and digital transformation, but it remains unclear how much of that money will be spent. It remains unclear.
Another co-author, Angel Melguizo, said China’s new focus on high-tech investment is “challenging Europe’s investment strategy,” as the EU’s Global Gateways program also identifies the same priorities. ” he said. It also establishes a basis for competing with the United States in some markets. ”
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