PODCAST: Two big Chinese lenders skip LatAm loans in 2020
February 23, 2021 |
CDB and Chexim make no loans in 2020, but Chinese inbound M&A hits $7 bln
Two of China's largest lenders to the Latin America and Caribbean region sat out 2020, making no loans to the region for the first time in 15 years, according to research published on Monday.
While the loans may not have materialized, it is not a sign that China's interest in the region has gone to zero. Chinese mergers and acquisitions activity reached $7 billion, up from $4.3 billion in 2019, data from the China-Latin America Economic Bulletin's 2021 edition showed.
The database, which is a collaboration between the Inter-American Dialogue and the Global China Initiative at Boston University’s Global Development Policy Center, showed no new financing commitments signed in the LAC region by China’s two policy banks, China Development Bank (CDB) and the Export-Import Bank of China (Chexim).
"We were surprised to see that zero number pop up on our screen, but we will say it has been, everyone on our team has seen it declining for the last several years since the peak a few years ago. So it wasn't shocking to see the number diminish, but this is really a pivot towards other ways of interacting," Rebecca Ray, economist and research associate at BU's Global Development Policy Center said in an interview with LatinFinane.
Ray highlighted that the deals that made up the $7 billion in M&A activity last year, were mostly planned, initially, in 2019, before the pandemic hit, and were finalized in 2020.
"So it's not entirely that the typical story that during a panic year, Western investors will sell out of their assets in developing countries and Chinese companies are well positioned to buy them. That's certainly a backdrop, but it's not the whole story. There's been a slowdown in Latin American and Caribbean growth for the last several years, even before the pandemic year of 2020, because Western investors had begun to settle out of that region already, and particularly in the infrastructure sector," Ray said.
Listen to the full podcast interview with Ray for views on the investment cycle, the push by China into energy infrastructure, the rivalry with the United States, as well as agricultural developments and the long-game of humanitarian support by Beijing.