Key issues toward efficiency in Chinese investments in Latin America

The next phase of China’s economic growth will require many Chinese companies to go global and seek international investments by acquiring companies and assets around the world. The rapid accumulation of capital through continued growth in China means fewer and more expensive investment opportunities domestically, creating a pressure that needs to be released by expanding its investment boundaries.

The next phase of investment by Chinese companies overseas is a matter that concerns not only China but the entire world. The consequences of China’s overseas expansion, and particularly its success, will have longterm effects on the global economy as a whole.

Latin America has become a key focus for Chinese overseas investments. When the Spaniards and Portuguese conquered what came to be known as Latin America they came looking for great treasures and stayed, having found them. Centuries on, most of Latin America’s treasures remain underdeveloped, and are now a primary target of Chinese companies. In 200 years of interacting with the rest of the world, little has been achieved by Latin Americans to consistently transform their natural resources into longterm, sustained economic growth and welfare. The reason for this has not been lack of foreign investment, but rather the failing of Latam countries to adjust their economic, social and political structures to the needs of sustainable, longterm development.

Pablo Rueda is a partner in the Buenos Aires office of Perez Alati, Grondona, Benites, Arntsen & Martinez De Hoz (h) (PAGBAM). He can be contacted on +54 11 4114 3047 or by e-mail at pr@pagbam.com.ar