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Confidence in Chinese investment in Latin America runs high

By Jiang Jie (People's Daily Overseas New Media)    14:43, March 29, 2019

An electric bus factory of Chinese car manufacturer BYD in Campinas, Brazil

A decade after Chinese enterprises’ ambitious stride into the Latin American market, confidence in the robust investing activities from the Asian economy in the far-end region remains high, according to international observers and Chinese business operators.

“There is a natural marriage between Latin America and China, as China is a major commodity consumer and Latin America is a commodity producer,” Shelly Shetty, head of sovereigns ratings Latin America at Fitch Ratings, pointed out at a panel discussion during the 9th Latin America China Investors Forum hosted in Beijing on March 26.

Such a relationship will go forward, as China, with global infrastructure construction experiences, could feed the thirst of Latin America, which is longing for such investments to increase its competitiveness, Shetty noted.

“For the past 30 years, they have already built up fantastic infrastructure in this country. China created a high-speed rail network bigger than that in the world in ten years,” echoed Gaston Fernandez, a partner of international law firm Hogan Lovells.

Liu Wei, global head of resource banking at ICBC, agreed that Chinese enterprises are good Engineering Procurement Construction (EPC) contractors with unique strength and strong financing capability, thus the strong investment in local markets in Latin America.

“China, historically, has not been known as a leader in external investment arena, but that’s changing. The nature of that investment is starting to change. Infrastructure investors and contractors are now eager to engage, whether in Brazil or Argentina, or any bigger or more advanced economies in the region,” Taimur Ahmad, CEO of LatinFinance, a leading intelligence source about financial markets and economies of Latin America and the Caribbean, told People’s Daily Overseas Social Media.

“Latin America is rich in resources, which means a broad market. The business environment in some countries is not inferior to those in developed countries like in Europe and America. It is a new blue ocean for Chinese companies,” a Chinese business operator in Brazil surnamed Wang commented.

Chinese enterprises used to stay for shorter period in Latin America, with immediate sell-out after the purchase. Now that Chinese businesses are expanding to other areas, from car manufacturing to road construction, the previously inexperienced Asian investors are gradually gaining local expertise through cooperation with local partners, and the necessity to stay for the long-term has become a widely-recognized rule, Liu observed.

Strong Chinese investment in local markets can in turn provide a sound buffer for Chinese commercial banks to provide longer-term financing services, he added.

China has become the second largest trading partner of Latin America, while Latin America is ranked the second for Chinese overseas investment, following Asia, data from China’s Ministry of Commerce (MOC) showed last year.

In 2017, trade volume between the two sides was $257.8 billion, up 18.8 percent year on year. The same year, Chinese enterprises invested $387 billion in Latin America, and the contracts signed were worth $164.2 billion. Turnover from completion of contract projects was $112.9 billion, Xinhua reported.

“We need a very stable Latin America. In the coming five years, for myself, I will try to encourage more investments into those countries, not just buy and sell. We want to stay there longer. It is like a marriage. We have to pledge each other future,” Liu concluded.

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Web editor: Jiang Jie, Bianji)

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