The Asian superpower has sharply increased its takeovers of major projects in electric power transmission and distribution, renewable energy and lithium, even as its other investments in the energy sector have declined. For example, in 2020 Chinese M&A deals in Latin American energy sectors surged, reaching $7.7 billion, or a quarter of all Chinese acquisitions worldwide. China made investments and loans of more than $58 billion in regional energy sectors, with most going to oil and natural gas projects, followed by renewable energy. From acquisitions of Mexico’s largest private renewable energy firm and clean energy projects in Colombia to takeovers of major electric transmission and distribution companies in Brazil and Chile, the report unpacks this new and less well-known facet of China’s economic and financial connections in Latin America. China is furnishing countries across Latin America and the Caribbean with some of the world’s most advanced technology in solar and wind power systems at highly competitive prices, thus gaining an edge on other international competitors.
Since most details of Chinese financial arrangements with regional countries are undisclosed, some researchers believe that total debt is much higher than levels reported by the World Bank, the International Monetary Fund and other organizations. While Chinese financing of energy projects provides Latin American countries with long-term loans, investments and new technology, it also has generated controversies and protests over stipulations that projects exclusively use Chinese equipment and labor, unequal treatment of local workers, environmental damage, mistreatment of indigenous peoples and foreign control of essential industries. China also has aggressively pursued new Latin American investments in lithium, a strategic mineral necessary for lithium-ion batteries used in cell phones, electric vehicles and the military/aerospace industries. China’s Tianqi Lithium committed $4.1 billion to buy a 24% stake in a Chilean company, SQM, that holds an important share of international lithium reserves. China has other major investments in Bolivia, Argentina and Chile. These three countries – plus Peru – possess more than half the world’s known lithium resources. Chinese investments in hydroelectric dam projects drew the ire of Argentine business groups due to mandates that only Chinese materials and support systems be used.