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Belt & Road and New Investments in Latin America

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The Belt and Road Initiative (BRI) is a global infrastructure development strategy adopted by the Chinese government in 2013 to invest in nearly 70 countries and international organizations. The stated objectives are to construct a unified large market and utilize both the international and the domestic markets, to enhance mutual understanding and trust between member nations through cultural exchange and integration, which results in an innovative pattern with capital inflows, talent pool, and technology database.

This Belt and Road initiative has been presented in several Latin American countries, like Peru, Venezuela, Ecuador, and Argentina. Recently, China decided to explore new areas of cooperation, namely the Health Silk Road (HSR) and the Digital Silk Road (DSR) – both have developed immensely since the beginning of the pandemic.

The HSR has been developed due to the necessity of modernizing and finding new solutions in the health industry amid the pandemic. The Chinese government is providing medical aid and food supplies, which was delivered directly to countries like Brazil, Colombia, and Spain by the Chinese embassies there. Some companies that take part in BRI projects abroad, for example Huawei and China Communications Construction Company, have taken the initiative to deliver supplies. The Jack Ma Foundation and Alibaba Foundation have delivered relief packages to more than 150 countries. China has also been lending economic support to some afflicted countries. With all these efforts, China is striving for one of the main roles in the fight against COVID-19.

To accomplish its objectives for the DSR, China has invested over US$7 billion in loans and foreign direct investment for fiber-optic cable and telecommunication network projects. These investments have transformed connectivity in many countries across the planet, from Latin America to Central Asia to the Pacific.

Chinese companies that are already well established throughout the BRI, such as Huawei, Alibaba, and Tencent, have specific and concrete plans to expand in Latin America since the area is needy in terms of technological infrastructure.

5G technology presents a big leap in terms of development for Latin America. Two of the five companies in the world offering 5G systems are from China – ZTE, and Huawei. The latter has expanded across the region in recent years.

It is possible to see a trend not only for Latin American, but for companies worldwide to import Chinese solutions for both medical and technological aspects and to implement them in their countries. Chinese medical equipment, telecommunication and digital solutions are presented everywhere.

We can clearly see that the pandemic forces China to rethink its Belt and Road Initiative and ways for better improvement. Until now, we have seen remarkable results with several partnerships being formed as well as excellent improvement in health and technological sectors in Latin America.

Written by Rafael Fraga, Latin Department, CW CPA


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