Chinese Loans Hurt South American and U.S. Interests

    Paul Book

    economy, South America

    Venezuela's President Nicolas Maduro speaks during a meeting with the ministers responsible for the economic sector at Miraflores Palace in Caracas, Venezuela March 22, 2018. REUTERS/Marco Bello TPX IMAGES OF THE DAY

    Chinese investment also encourages poor governance and perpetuates corruption in the region.

    China is extending its economic, military, and political influence in the Western Hemisphere and, while the short-term benefits are appealing, countries in the region should be wary of long-term consequences.

    At the Summit of the Americas in Lima, Peru in April, it was clear to me in my conversations with regional leaders that many U.S. partners are looking for U.S. leadership. They see the U.S. as their partner of choice, and they prefer doing business with Washington over China.

    However, Beijing’s offers are appealing because they have a lot of money and they don’t play by Western standards of transparency, the rule of law, and democratic principles. Besides, the U.S. has lacked enthusiasm in the Western Hemisphere due to other crises in the world demanding Washington’s attention.

    That is no longer the case. With a new Secretary of State and a President focused on solving the Venezuela crisis, the U.S. is looking at the many opportunities for investment and stronger partnerships. The administration is also concerned about China’s increasing reach into Latin America and the Caribbean.

    Unfortunately, Beijing’s engagement serves to benefit its geostrategic agenda while hindering the region’s sustainable economic growth. Its practices foster corruption and poor governance practices and undermine democratic principles in the region.

    Although China’s seemingly-unlimited resources and no-strings-attached approach to its investment deals make it appear an attractive partner, it ultimately does not deliver the economic prosperity it promises. Instead, those deals advance Beijing’s goals to secure access to energy resources and new labor markets while providing limited economic benefits for host countries- even making conditions worse in some instances.

    This was most evident in China’s ventures in the region’s energy sector where it has invested over $ 105 billion since 2005. More than half of that is concentrated in Venezuela. China financed oil-for-loan deals to secure direct access to Venezuela’s vast natural resources. As a result, Beijing’s investment has exploited Venezuela’s natural resources and its people’s wealth.

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