Mongabay has recently started publishing a new edition of the book, “A Perfect Storm in the Amazon,” written by academic and expert Timothy J. Killeen. The book, which is available in Spanish, English, and Portuguese, chronicles the efforts of nine Amazonian countries to curb deforestation and provides an overview of the topics relevant to the conservation of the region’s biodiversity, ecosystem services, and Indigenous cultures.
One of the key issues discussed in the book is the increasing presence of Chinese companies in South America, which has raised concerns among social and political analysts. Security specialists argue that Chinese companies are a geopolitical threat to Western nations, as they support authoritarian governments and undermine democratic traditions. Environmental advocates believe that Chinese companies prioritize profits over sustainability, leading to the loss of biodiversity and ecosystem services. Nationalists view them with suspicion, fearing a new form of imperialism and dependency on China.
Despite these concerns, Chinese investment has brought much-needed funds to the region, particularly in infrastructure development. Chinese companies have provided loans to finance infrastructure projects and engaged in direct foreign investment (DFI) by acquiring or operating businesses. The preferred model for investment varies among countries, with loans being more prevalent in Venezuela, Ecuador, and Bolivia, while DFI is common in Brazil and Peru.
Chinese investment in Latin America is part of the Belt and Road Initiative (BRI), a foreign policy and infrastructure development program launched by China in 2013. Although not all countries in the Amazon region have formally joined the BRI, they have bilateral agreements facilitating trade and investment with China. In terms of financing, Chinese institutions, such as the China Development Bank and the Ex-Im Bank of China, operate similarly to multilateral institutions like the World Bank but with less oversight from civil society.
Chinese banks and companies are known for their efficiency in project development, often delivering projects in a fraction of the time taken by projects financed by multilateral agencies. However, Chinese lending policies may not be as rigorous in terms of corruption prevention and environmental review. The majority of Chinese investments in the Amazon region have focused on extractive industries, energy, and infrastructure, compared to the multilaterals, which also invest in sectors like health, education, and governance.
China’s infrastructure lending has been channeled through the Chinese Development Bank (CDB) and the Export-Import Bank of China. Loans have been mainly directed towards investments in the Pan Amazon, particularly in hydropower, electricity transmission, and roads. However, since 2016, loan transactions have reduced significantly, while DFI continues but at lower values.
Ecuador and Bolivia are among the countries that have received significant Chinese investments. In Ecuador, Chinese loans allowed the government to pursue infrastructure projects, including highways, oil refineries, and hydropower facilities. The loans were backed by future oil production and revenues from a copper concession granted to a Chinese mining company. However, Ecuador’s ability to service its debt has been affected by the decline in oil prices, leading to debt restructuring with the assistance of the International Monetary Fund (IMF) and Chinese creditors.
In Bolivia, Chinese credit has financed approximately ten percent of the highways constructed in the past two decades. Chinese construction companies were awarded several projects, with a combined value of $1.78 billion. However, the debt incurred for highway construction from Chinese banks over the same period was $1.1 billion.
While concerns about the environmental and social impacts of Chinese investments in the Amazon region are valid, the influx of Chinese funds has also contributed to much-needed infrastructure development. The challenge lies in ensuring that these investments are balanced with sustainable development goals, the protection of biodiversity and indigenous cultures, and the preservation of democratic traditions in the region.