Bloomberg News

Chinese Loans to Latin America Top World Bank, IDB Combined

February 20, 2012

Feb. 17 (Bloomberg) -- China lent an estimated $75 billion to Latin America since 2005, with 82 percent of the loans given by China Development Bank Corp., a report said.

The governments of Venezuela, Brazil, Argentina and Ecuador received 91 percent of the total, according to a study that will be published in the Inter-American Dialogue today and that was e-mailed to Bloomberg News. China’s lending to the region in 2010 was more than the World Bank, the Inter-American Development Bank and the Export-Import Bank of the United States combined.

China has expanded its lending overseas to help secure resources and help Chinese companies enter new markets. China Development Bank, which has businesses in 130 countries, had more than $180 billion of outstanding foreign-currency loans at the end of September, Vice President Li Jiping said at a conference in Beijing in November.

Chinese banks don’t impose policy conditions on borrowing governments and the loans require less demanding environmental standards compared to western banks, authors Kevin Gallagher, Amos Irwin and Katherine Koleski said.

“However, contrary to much of the commentary on the subject, Latin American nations generally pay a higher premium for loans from China,” they wrote. “That higher premium comes in the form of interest rates, not loans-for-oil,” which make up about 66 percent of the transactions.

The Export-Import Bank of China made 12 percent of the loans and Industrial & Commercial Bank of China 6 percent, according to the study, which didn’t consider many loans under $50 million and relied on government, bank and press reports in China and borrowing countries. Chinese banks don’t regularly publish detailed lending figures for overseas loans.

--Henry Sanderson. Editors: Katrina Nicholas, Beth Thomas

To contact Bloomberg News staff for this story: Henry Sanderson in Beijing at hsanderson@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net


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