Chinese infrastructure projects in Latin America and the Caribbean have learned the lessons of the past

Since it was first proposed in 2013, the Belt and Road Initiative has highlighted "interconnectivity", specifically infrastructure projects, in addition to trade, financial integration, and people-to-people exchanges and cooperation. This is no coincidence since connectivity has become one of the centerpieces of the Chinese development process since China launched its reform and opening-up to overcome absolute poverty and substantially increase the quality of life of its population. China helps developing countries construct telecommunication networks, ports, airports, highways, hospitals and schools, among many other facilities under the framework of the Belt and Road Initiative, and the projects include such aspects as conception, design, construction as well as multiple post-construction processes. Based on its experience, China is able to provide turnkey solutions, that is, integrating all of these aspects agreed on through a negotiation process with the host countries and with multiple options for implementation.

These issues are relevant since the Academic Network for Latin America and the Caribbean on China has been annually publishing the Monitor of Chinese Infrastructure in Latin America and the Caribbean, and the most recent version was released just a few weeks ago, containing several notable points for discussion.

First, the 129 finished and effectively realized infrastructure projects by China in Latin America and the Caribbean until 2021 had an accumulated investment of $98.4 billion and generated more than 673,000 jobs (for the host countries); they have increased significantly during the COVID-19 pandemic. Interestingly, the employment per project had fallen from 4,004 jobs during 2010-2014 to 2,988 jobs during 2020-2021, signaling important changes.

Second, most of the Chinese infrastructure projects in LAC during the period from 2005 to 2014 were in Argentina, Bolivia, Brazil and Ecuador, and Chile, Colombia and Mexico, all of them with practically no prior projects, accounted for 31 percent of the projects during the 2020 to 2021 period.

Third, the Chinese infrastructure projects in LAC have become more diversified. While the share of energy infrastructure projects was 60 percent from 2005 to 2009 and mainly concentrated in fossil fuel resources, it dropped to 22.81 percent from 2020 to 2021; even in these recent projects, non-fossil energy infrastructure projects have increased their presence in countries such as Chile and Mexico. Today, transportation (ports, airports, roads and electric public transportation) accounts for the highest share (57.66 percent in the period 2020 to 2021).

Fourth, the same dataset indicates there has been a slow diversification process in terms of geography: in the first stages of the Chinese infrastructure projects in the 2005 to 2009 period, 80 percent of the companies located their headquarters in Beijing, which fell to 56.14 percent in the 2020-2021 period. Guangdong province, Hubei province, Shanghai and Hong Kong are playing an increasing role in their relationship with LAC in this area.

The trends are significant from several perspectives.

On the one hand, the LAC-China cooperation in infrastructure projects overcomes an effective gap in LAC by leveraging decades of experience of the Chinese companies in China and becomes increasingly international. These projects are having an important effect in the quality of life of dozens of millions of people in the LAC region, in addition to a small but increasing impact on employment. The Chinese companies and LAC governments at all levels have importantly learned from the implementation of these complex and sophisticated infrastructure projects, after initial misunderstandings and mistakes in some cases. Today public and private Chinese companies are participating and winning in dozens of bidding processes in the region.

On the other hand, the Chinese infrastructure projects in the LAC region reflect that Chinese companies can offer state-of-the-art technology with competitive conditions, including financing, for non-fossil energy sources and thus are effectively supporting and implementing the energy transition and its acceleration in the Global South. Thus, China is also proving to other countries that infrastructure projects in developing countries with a long-term perspective can have an economic and sustainable rationale; massively committed international resources for these objectives could even further incentivize these global processes.

The Chinese infrastructure projects in LAC reflect that important challenges remain, such as the transfer of technology and know-how which can help the Global South develop these technologies endogenously, and increasingly difficult, but possible, dialogues with local, regional and national populations affected by infrastructure projects. These challenges are probably most evident in regional LAC-China institutions such as the Forum of the Community of Latin American and Caribbean States (CELAC)-China and the LAC-China Business Summit that require reports of activities to evaluate and improve infrastructure projects. As in the first two decades of the Chinese infrastructure projects in LAC, the next decades will provide fertile ground for additional learning processes.

All in all, these experiences should provide an important and concrete basis for the overall South-South cooperation under the framework of the Belt and Road Initiative, but also for the developed countries in their relationships with developing countries.

The author is a professor at the National Autonomous University of Mexico and coordinator of the Center for Chinese-Mexican Studies at the university. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn