China's Belt And Road Initiative And Its Two Latin American Gateways

In 2013, President Xi Jinping, recreating the Silk Road—a network of trade routes that connected the East and the West for over 1,500 years—announced a multibillion USD investment plan aimed to achieve market integration and economic development in Asia, Europe and Africa. This plan formerly known as the "One Belt One Road" and latterly "Belt and Road Initiative" ("BRI") reflects the land ("Belt") and sea ("Road") networks at its heart. "Belt" is short form for "Silk Economic Belt", a plan that envisages the development of a transcontinental network of roads and railways linking China with South East Asia, Central Asia and Europe. In turn, "Road" is short form for "21st Century Maritime Silk Road", a plan for the development of a sea route connecting China's coastal regions with South Asia, the South Pacific, the Middle East, Eastern Africa and Europe.

The BRI and Latin America

The BRI did not originally include Latin America. This, however, changed in January 2018 when China's Foreign Minister announced China's plans to expand the BRI to Latin America at a meeting with the Community of Latin American and Caribbean States ("CELAC").1

The extension of the BRI to Latin America is not surprising as it represents the renewal of the significant trade route known as the "Manila Galleons" between China, Manila (Philippines) and Acapulco (Mexico), which operated from the 16th century to the beginning of the 19th century.

More recently, China's investment in Latin America, including in key infrastructure projects, has rapidly grown, particularly after the inception of the BRI in 2013. In 2017 alone, Chinese investment in Latin America reached US$ 115 billion, three times more than all the Chinese investments in Latin America between 1990 and 20122 and 46% higher than in 2016.3 This trend is set to continue. President Xi expects that by 2025, Chinese companies will have invested US$ 250 billion in Latin America.4 This is welcome news for most Latin American countries, many of which depend on foreign direct investment to develop vital infrastructure projects.

The greatest Latin American beneficiaries of Chinese investment between 2005 and 2018 were Brazil (approximately US$ 64.89 billion), Argentina (approximately US$ 28.75 billion), Peru (approximately US$ 24 billion) and Venezuela (approximately US$ 21 billion).5

Focus on Chile and Panama

Although Chile and Panama were not among the top recipients of Chinese investment during that periodChile received US$ 9.44...