China Grows Its South America Influence After Commodity Bust – by Juan Pablo Spinetto and David Biller (Bloomberg News – May 19, 2015)

China’s interest in Latin American isn’t just about oil and agriculture anymore. As Premier Li Keqiang tours Brazil, Colombia, Peru and Chile for the first time, China is taking advantage of cheaper prices as the commodities super-cycle ends to fast-track its influence in a region that supplies everything from crude to soybeans and copper.

High on the shopping list? Infrastructure, power and banking — credit-hungry industries that would help promote growth. Among the more than $50 billion in mostly financing deals announced in Brazil Tuesday was a plan by China’s BYD Co. to build a solar-panel factory, while China’s fifth-largest bank is taking over Brazilian lender Banco BBM SA.

“Latin America as a whole has more difficulties while at the same time China has increased capabilities,” said Paulo Vicente, a professor of strategy at Fundacao Dom Cabral business school in Rio de Janeiro. “So the environment is ripe for a wave of Chinese acquisitions or investments.”

Chinese companies announced 37 deals and investments in Latin America in the past 12 months, a 37 percent increase from the previous year, according to data compiled by Bloomberg. China is looking to step up investment as its demand for Latin American commodities slows.

China’s next steps in Latin America may mirror its approach to Africa, where the Asian giant is showing little restraint in scooping up assets and planning billion-dollar projects, including a hydroelectric dam on the Nile and railways and pipelines to transport commodities. In sub-Saharan Africa, China’s investments have grown 40-fold since 2003.

Petrobras Funding

In the past few years, China’s appetite led to various projects in Latin America, from building a $50 billion waterway in Nicaragua to a nuclear pact with Argentina and even soccer academies in Brazil.

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