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China's loans to Latin America 'rose to $22bn in 2014'

China's loans to Latin America 'rose to $22bn in 2014'

Posted by Juan Gavasa on February 27, 2015

Loans by China's state-owned banks to Latin American countries rose by 71% to $22bn (£14bn) in 2014, according to estimates published by the China-Latin America Finance Database.

The figure is the second largest on record for Chinese lending in Latin America, according to the report.

The Chinese loans exceed the combined worth of those by the World Bank and the Inter-American Development Bank, the authors say.

Brazil alone received $8.6bn, they say.

It was followed by Argentina with $7bn, Venezuela with $5.7bn and Ecuador with $821m, according to the report by US think-tank Inter-American Dialogue and Boston University's Global Economic Government Initiative.

Report authors Kevin P Gallagher and Margaret Myers say Chinese finance is particularly popular with Latin American governments because it "comes with few strings attached".

"China may tacitly require that Chinese companies have a hand in some projects, but has avoided meddling in domestic policy," they write.

However, they warn that China's mounting financial commitments to the region also carry considerable risk.

"China is heavily invested in countries with poor credit ratings and a history of default," they say.

Since 2007, Chinese state banks have loaned Venezuela more than $50bn, which the Latin American nation has invested in mining, energy, infrastructure and housing projects.

Venezuela's socialist President, Nicolas Maduro, travelled to China in early January to ask for more funding as the Latin American nation faced a worsening economic crisis triggered by falling oil prices.

Upon his return, Mr Maduro told state media he had secured $20bn.

But with prices for Venezuelan oil almost half of what they were six months ago, this may have been less than the Venezuelan leader had hoped for and not enough to make up the shortfall, analysts say.

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