China’s careful new focus on Latin America

Chinese President Xi Jinping and Venezuelan President Nicolas Maduro attend a welcoming ceremony in Beijing
China under President Xi Jinping (L) has doled out billions to the government of Venezuelan President Nicolas Maduro (R), but is now taking a more cautious approach (source: dpa)
  • Changes in Venezuela and Ecuador have put Chinese investments at risk
  • Beijing is reducing its sovereign debt exposure in the region
  • It is still heavily investing in strategic industries, especially lithium extraction

Latin America’s shifting geopolitics and the prolonged decline in China’s economic growth have led to a significant change in Beijing’s strategic approach to the region. The commodities boom at the beginning of this century coincided with a period of dramatic economic expansion in China. At the time, China seemed to buy everything, invest in everything and welcome its new role as the principal geopolitical alternative to the United States for many countries in the hemisphere. Over the past year, however, China has adopted a more conservative approach to its role in the region.

It has reduced its exposure in Venezuela and Ecuador, where it had accumulated significant shares of both countries’ sovereign debt in exchange for promises of petroleum at below-market prices.

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