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IDB Eyes China Projects Financing

China moves beyond mere trading with a growing role in financing China-Latin American business.


BY CHRONICLE STAFF

 

The Inter-American Development Bank is looking at potential Chinese bank participation in large renewable energy and transportation projects in South America.

 

“We are exploring potential Chinese bank participation in large renewable energy and transportation projects in Guyana, Ecuador and Colombia,” IDB President Luis Alberto Moreno tells Latin Business Chronicle.

Meanwhile, several Chinese companies have become suppliers of IDB-financed infrastructure projects in
Latin America.

 

The IDB has ramped up its China focus as a result of the growing trade and business between Latin America and the Asian country. Last year, trade reached $118.2 billion, according to a Latin Business Chronicle analysis of data from the International Monetary Fund.

China is now the second-largest trade partner for Latin America after the United States, according to a Latin Business Chronicle ranking of trade data from the region’s top trade partners.

Last month, IDB announced that it had signed a letter of intent with the Export-Import Bank of China to finance up to $200 million worth of China-Latin America trade.

SINOHYDRO EXPANDS

 

One Chinese company looking to boost its business in Latin America is Sinohydro Corporation, China's top dam builder. It is pursuing projects in several markets, including Argentina, Bolivia, Colombia, Chile, Ecuador, Panama, Peru and Venezuela, according to Song Dongsheng, the company’s Executive Vice President.


It currently has two gas plants on
Venezuela and a hydro power project in Ecuador as well as representative offices in five cities in Latin America.

 

Chinese interest in Latin America and vice versa is expected to increase after the IDB co-organized the China-Latin America Business summit in Chengdu, China last month.

 

“The event in Chengdu surpassed our expectations,” Moreno says. “It brought together more than 1,200 participants, including top executives, trade promotion agencies and senior public officials from Asia and the LAC region, including 400 participants from both governments and private sectors from all 26 IDB borrowing member countries in LAC. … On one remarkable single day, there were more than 700 matchmaking business sessions ranging from agri-business to clean energy. “

 

Among the participants was Sinohydro’s Song Dongsheng. “Since the difference between Latin America and China may be the largest comparing with any other region of the world, such kind of activities are always useful,” he says.

 

The $200 million loan program isn’t the only major China initiative from the IDB. It also has an agreement with China-based Alibaba, the largest electronic trading platform, to promote SME trade between China and Latin America. “We have signed financial cooperation agreements with Chinese banks [and] several Chinese banks have joined the IDB’s trade financing program,” Moreno points out.

BROAD ASIA FOCUS

 

The Chengdu summit follows major IDB summits in Korea in 2007 and in Japan in 2008. “We are truly stepping up our efforts to help forge a strategic relationship between China and Asia and Latin America and the Caribbean,” Moreno says.

The IDB plans an event in
Asia next year as well. The purpose of the Asia-Latin America Business Summits the IDB has been promoting in recent years is to bring together top level government officials and business executives to expand and strengthen the commercial ties between both sides of the Pacific Rim.

 

Next year, IDB expects to launch in 2011 an ambitious program financed by China for high-level economic officials from the private, public sectors and academia to participate in an exchange program to share business models, economic development and integration.

 

“This is one of the first steps and we are looking forward to an exponential growth in this relationship,” Moreno says. “I am a firm believer that this is the moment of opportunities for Latin American and Caribbean and our future should be built in part by increasing the relationship with Asia, by creating the conditions and building the partnerships to promote this South-South cooperation.”

 

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