China Stakes Its Claim in Latin American Energy:

China Stakes Its Claim in Latin American Energy: What It Means for the Region, the U.S. and Beijing

Foreword

e are pleased to present the Institute of the Americas Energy & Sustainability program’s latest report: China Stakes Its Claim in Latin American Energy: What It Means for the Region, the U.S. and Beijing. The People’s Republic of China (China) has become a major investor, lender and actor across the energy sector in Latin America and the Caribbean (LAC). Indeed, loans and investments from China have financed an impressive array of projects in infrastructure, energy and mining. With more than $58 billion invested between 2000 and 2019, China has clearly, as our report title notes, staked a claim in LAC’s energy sector. With the contours of the global energy transition and increased attention on reducing emissions and climate action spurring huge growth in renewable energy, China has flexed its muscles in that segment of the global energy sector and in LAC. Our report seeks to underscore a highly significant development for LAC and the United States: China’s control and dominant position in critical minerals, renew- able energy and electric networks have accelerated in the last few years. As with the more nuanced and contemporary aspect of China’s push into renewables and critical minerals, the Asian giant’s reach into LAC of late has been channeled through major acquisitions and projects won in interna- tional bidding. In 2020, Chinese M&A deals in LAC energy reached $7.7 billion, according to Bloomberg, or 25% of Chinese acquisitions worldwide. From renewables auctions in Colombia and acquisition of Mexico’s largest private renewable energy firm, to takeovers of major transmission and distribution compa- nies in Brazil and Chile, our report unpacks this new and less well-known facet of China’s economic and financial W

connections in LAC. China is furnishing countries across LAC with some of the world’s most advanced technology – solar and wind power systems – at highly competitive prices, thus gaining an edge on other international competitors. As the world’s largest oil consumer, China’s efforts to secure supplies in key markets such as Venezuela, Ecuador and Brazil are also noteworthy. China’s enormous loans and investments in the oil patch and deals with the national oil companies (NOC) of these nations have been well-documented. More recently, a major oil discovery in Guyana’s offshore counted a Chinese NOC as part of the consortium, underscoring China’s continued interest in key oil projects. LAC’s so-called debt trap element is discussed in our report, particularly with a nod to the relevance of the Chinese government’s supply of unknown sums in off-the-books financing to the region. COVID-19 economic impacts and deficit spending across most countries in LAC will only accentuate this issue. Our report concludes with an effort to inform the discussion for the Biden administration and Democratic majorities in both houses of Congress. It is a moment that is ripe for reset. Indeed, the new administration has an opportunity to strengthen US-Latin America relations by encouraging private investment, particularly in mining, clean energy and infrastructure projects. The report assesses how the Biden administration can deal with the challenge of China’s growing reach in the economies of LAC and its often unfair trade and invest- ment practices. As it moves beyond the Trump adminis- tration’s relations across the Western Hemisphere, we highlight the need for the new Biden administration to respond to China’s expanding role in LAC’s energy sector, including recent mergers and acquisition (M&A), and ways to address some of the geopolitical conse-quences of these investments.

COVER IMAGE Chinese yuan on the map of South America. Photo : Oleg Elkov / Alamy Stock Photo