In recent years, China has strategically redirected its investments in Latin America and the Caribbean.
Moving beyond large infrastructure projects, China now focuses on sectors deemed more strategic.
This pivot is evident from a report by the American think tank The Inter-American Dialogue.
The report reveals that while China’s total investment in the region has decreased, there’s a notable shift towards critical minerals, technology, and renewable energy sectors.
In 2022, about 58% of China’s Foreign Direct Investment (FDI) in the region, approximately $3.7 billion, targeted these strategic industries.
This figure constituted over 60% of the total FDI agreements announced by Chinese companies that year.
The decline in large-scale infrastructure ventures, once a hallmark of China’s Belt and Road Initiative BRI, signals a change in approach.
According to the Financial Times, China’s annual investment in Latin America dropped from an average of $14.2 billion between 2010 and 2019 to around $7.7 billion in 2020 and 2021, further reducing to $6.4 billion in 2022.
Significant examples of China’s new investment direction include
- the electric vehicle manufacturer BYD’s plan to build a plant in Brazil,
- Tianqi Lithium’s acquisition of lithium assets in Chile, and
- Huawei’s expansion in data centers, cloud computing, and 5G technology across the region.
In Mexico, China’s focus has shifted to high-value manufacturing and nearshoring, capitalizing on Mexico’s access to the US market.
This strategic realignment by China in Latin America signifies a more sustainable and technology-focused global economic strategy.
It reflects China’s adaptability and foresight in responding to global economic trends and regional needs.
Download the report here.