China's Foreign Direct Investment in Latin America and the Caribbean. Conditions and Challenges
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CENTRO DE ESTUDIOS CHINA-MEXICO UNIVERSIDAD NACIONAL AUTONOMA DE MEXICO CONDITIONS AND CHALLENGES CONDITIONS hina ’s increasing international presence in the 21st century has re- Csulted in substantial outflows of foreign direct investments (ofdi), parallel to foreign direct investment inflows. The scale and dynamism of China ’s ofdi have been explosive: in 2018 Chinese ofdi accounted for almost $us 130 billion —a more than six-fold in- crease since 2005, and only second to the United States— and foreign direct investment inflows and outflows have been practically equi- valent in the last years. This book will examine the characteristics of China ’s ofdi in Latin America and the Caribbean (lac) against the background of this global context. The book is divided in two sections, totaling 15 chapters. The first section discusses general trends of Chinese overseas foreign direct investments (ofdi) in Latin America and the Caribbean (lac) from a Chinese perspective and includes the most recent strategies and re- gulations of China ’s ofdi, while other chapters focus on destination countries for Chinese ofdi that provide relevant points of compari- son with lac: the European Union, Africa and Australia. Section II concentrates on country-level case studies of China´s ofdi in lac. In addition to the regional lac experience, 10 analysts reflect upon coun- try-specific experiences: Argentina, Uruguay, Brazil, Colombia, Vene- zuela, Panama, Costa Rica, Dominican Republic, Jamaica, and Mexico. The book is also a continuation of the Academic Network of Latin America and the Caribbean on China ’s (Red alc-China) more re- cent and systematic research highlighting the substantial differences CHINA’S FOREIGN between trade, financing, infrastructure projects, and ofdi. These contributions are relevant to improve the learning process between DIRECT INVESTMENT lac and China. IN LATIN AMERICA AND THE CARIBBEAN CONDITIONS AND CHALLENGES Edited by CHINA’S FOREIGN DIRECT INVESTMENT IN LATIN AMERICA AND THE CARIBBEAN. FOREIGN DIRECT INVESTMENT IN LATIN CHINA’S Enrique Dussel Peters CENTRO DE ESTUDIOS CHINA-MEXICO UNIVERSIDAD NACIONAL AUTONOMA DE MEXICO CHINA’S FOREIGN DIRECT INVESTMENT IN LATIN AMERICA AND THE CARIBBEAN CONDITIONS AND CHALLENGES Edited by Enrique Dussel Peters UNIVERSIDAD NACIONAL AUTÓNOMA DE MÉXICO Enrique Luis Graue Wiechers Rector Leonardo Lomelí Vanegas Secretario General Leopoldo Silva Gutiérrez Secretario Administrativo Alberto Ken Oyama Nakagawa Secretario de Desarrollo Institucional Raúl Arcenio Aguilar Tamayo Secretario de Prevención, Atención y Seguridad Universitaria Mónica González Contró Abogada General UNIÓN DE UNIVERSIDADES DE AMÉRICA LATINA Y EL CARIBE Henning Jensen Presidente Roberto Escalante Semerena Secretario General http://www.udual.org FACULTAD DE ECONOMÍA Eduardo Vega López Director Alberto Morales Sánchez Secretario General María del Carmen Aguilar Mendoza Secretario Administrativo Juan M. M. Puiz Llano Coordinador de Publicaciones CENTRO DE ESTUDIOS CHINA-MÉXICO Enrique Dussel Peters Coordinador Yolanda Trápaga Delfín Responsable http://www.economia.unam.mx/cechimex RED ACADÉMICA DE AMÉRICA LATINA Y EL CARIBE SOBRE CHINA Enrique Dussel Peters Coordinador General y del Eje Temático Economía, comercio e inversión José Ignacio Martínez Cortés Coordinador del Eje Temático Relaciones políticas e internacionales Yolanda Trápaga Delfín Coordinadora del Eje Temático Recursos naturales y medio ambiente Liljana Arsovska Coordinadora del Eje Temático Historia, cultura y aprendizaje del chino http://www.redalc-china.org CHINA’S FOREIGN DIRECT INVESTMENT IN LATIN AMERICA AND THE CARIBBEAN. CONDITIONS AND CHALLENGES Enrique Dussel Peters Coordinador Megan McLean Edición Socorro García Diseño y formación de interiores D.R. ©2019, Universidad Nacional Autónoma de México, Facultad de Economía Ciudad Universitaria, 04510, México, D.F. Primera edición: agosto 2019 ISBN: 978-607-8066-45-2 “Prohibida la reproducción total o parcial por cualquier medio sin la autorización escrita del titular de los derechos patrimoniales” Impreso y hecho en México/Printed and made in Mexico CHINA’S FOREIGN DIRECT INVESTMENT IN LATIN AMERICA AND THE CARIBBEAN CONDITIONS AND CHALLENGES Edited by Enrique Dussel Peters CONTENTS INTRODUCTION 9 Enrique Dussel Peters SECTION I. CHINA’S OFDI IN THE WORLD 1. REGULATIONS OF CHINESE OFDI 15 General Trends in Latin America and the Caribbean (2000-2018) Xiaoyu Song 2. EU-CHINA FDI 33 Working towards Reciprocity in Investment Relations with China Mikko Huotari and Thilo Hanemann 3. CHINESE OFDI IN AFRICA 61 Linda Calabrese 4. CHINESE INVESTMENT IN AUSTRALIA 87 Sustainable Diversification? Adrian H. Hearn SECTION II. CHINA’S OFDI IN LATIN AMERICA AND THE CARIBBEAN 5. CHINA’S OFDI IN LATIN AMERICA 105 AND THE CARIBBEAN (2000-2018) Debates and General Tendencies Enrique Dussel Peters 5 CHINA’S FOREIGN DIRECT INVESTMENT IN LATIN AMERICA AND THE CARIBBEAN. CONDITIONS AND CHALLENGES 6. CHINA’S OFDI IN ARGENTINA 121 Leonardo E. Stanley 7. CHINESE OFDI IN URUGUAY 151 Conditions, Challenges, and Policy Proposals Gustavo Bittencourt 8. CHINESE OFDI IN BRAZIL 167 Trends and Impacts, 2000-2017 Celio Hiratuka 9. CHINESE FOREIGN DIRECT INVESTMENT 189 IN COLOMBIA Benjamin Creutzfeldt 10. CHINESE OFDI IN VENEZUELA (2000-2017) 211 Conditions, Challenges, and Policy Proposals Carlos Eduardo Piña 11. CHINA’S FOREIGN DIRECT INVESTMENT 231 IN PANAMA Historical Trajectory and Patterns of Investment Nehemías José Jaén Celada 12. CHINESE OFDI IN COSTA RICA 253 Rafael Arias R. and Luis Vargas M. 13. RETROSPECTIVE AND PROSPECTIVE 271 OF DOMINICAN REPUBLIC AND CHINA RELATIONS Expected ofdi Eduardo Klinger Pevida 6 14. THE IMPACT OF CHINESE OFDI IN JAMAICA 287 (2000-2017) Two Case Studies Jevon Minto 15. CHINA’S OVERSEAS FOREIGN DIRECT 309 INVESTMENT IN MEXICO (2000-2018) Enrique Dussel Peters ABOUT THE AUTHORS 329 7 INTRODUCTION Enrique Dussel Peters China ’s increasing international presence in the 21st century has resulted in substantial outflows of foreign direct investments (ofdi), parallel to foreign direct investment inflows. The scale and dynamism of China ’s ofdi have been explosive: in 2018 Chi- nese ofdi accounted for almost us$ 130 billion –a more than six-fold increase since 2005, and only second to the United States– and foreign direct investment inflows and outflows have been practically equivalent in the last years. This book will examine the characteristics of China ’s ofdi in Latin America and the Caribbean (lac) against the background of this global context. In addition to the size of China ’s ofdi in lac –during 2011-2018 it accounted for $us 79.12 billion or almost $us 10 billion annually in average or 7% of lac´s foreign direct investments during the period– both the dynamism and its characteristics are significant. China ’s ofdi accounted for less than $us 500 million until 2003 and increased to levels above $us 15.88 billion in 2016, i.e. rapid growth of China ’s ofdi glob- ally and in lac is one of its most important features in the 21st century. There are relatively few in-depth regional and country- level analyses of Chinese ofdi, and even less systematic analyses at the firm level. As several chapters point out, there are even very substantial different methodologies used to register statistics on China ’s ofdi globally and in lac.In order to respond to some 9 CHINA’S FOREIGN DIRECT INVESTMENT IN LATIN AMERICA AND THE CARIBBEAN. CONDITIONS AND CHALLENGES of these topics the book is divided in two sections, totaling 15 chapters. The first section discusses general trends of Chinese ofdi in lac from a Chinese perspective and includes the most recent strategies and regulations of China ’s ofdi (Xiaoyu Song), while the other three chapters focus on destination countries for Chinese ofdi that provide relevant points of comparison with lac: the European Union (Mikko Huotari and Thilo Hanemann), Africa (Linda Calabrese) and Australia, (Adrian H. Hearn). All three cases are significant in the sense that not only do they pro- vide accounts of the different strategies driving of China ’s ofdi –the search for raw materials, exports, the domestic market, or the acquisition of technology– but they also reflect the respec- tive extension and depth of China ’s ofdi and its economic, social, environmental and political repercussions. Section ii concentrates on country-level case studies of China ’s ofdi in lac. In addition to the regional lac experience (Enrique Dussel Peters), 10 analysts reflect upon country-specific experi- ences: Argentina (Leonardo E. Stanley), Uruguay (Gustavo Bitten- court), Brazil (Celio Hiratuka), Colombia (Benjamin Creutzfeldt), Venezuela (Carlos Eduardo Piña), Panama (Nehemías José Jaén Celada), Costa Rica (Rafael Arias R. and Luis Vargas M.), Dominican Republic (Eduardo Klinger Pevida), Jamaica (Jevon Minto), and Mexico (Enrique Dussel Peters). These chapters start with over- views of each country’s diplomatic relations with China and also explore other factors that play into the bilateral relationship. These chapters ultimately seek to explain the regional and national strat- egies of China ’s ofdi in each country while also explaining the respective impacts. In some cases, Chinese ofdi has grown sub- stantially and plays an important macroeconomic and political role, while in other countries Chinese ofdi has not accounted for a single transaction, although expectations are very high. Even in the cases in which China ’s ofdi has not been signifi- cant, the prevailing belief is that Chinese