Background on the Situation
Following Colombia’s adhesion to China’s New Silk Road initiative, the United States has expressed its opposition to future disbursements from the Inter-American Development Bank (BID) and other financial institutions to Chinese state-owned enterprises in Colombia.
US Concerns
The US claims that these projects jeopardize regional security and stated, “their dollars should not be used to finance international organizations that subsidize Chinese companies in the Western Hemisphere.”
Indirect Investment Channels
According to a report by the Hernán Echavarría Political Science Institute, citing the University of William & Mary in the US, one indirect way China’s investment reaches countries is through co-financed loans for various sector projects. The document mentioned that between 2018 and 2021, nearly $1.366 billion (mdd) in loans entered Colombia for co-financing projects.
Key Projects and Investment Breakdown
The 4G Autopistas al Mar project received the largest amount, with nearly $417.7 million (mdd) or 30.57% of the total resources China co-financed in local initiatives.
- Banco de Desarrollo de China
- Banco Comercial e Industrial
- Fondo de Cofinanciación
- Zijin
- Banco de China
Over the past four years, Chinese investment has accounted for 1.1% of total foreign investment directed towards mining. However, it reached 40.6% of the investment between 2018 and 2022, according to the OECD.
Key Questions and Answers
- What is the main issue? The US opposes BID loans to Chinese state-owned companies in Colombia due to security concerns.
- Why is the US concerned? The US believes these projects threaten regional security and should not use their funds to support Chinese companies in the Western Hemisphere.
- How does China indirectly invest in Colombia? China’s investment reaches countries through co-financed loans for various sector projects, as reported by the Hernán Echavarría Political Science Institute.
- Which project received the largest investment from China? The 4G Autopistas al Mar project received nearly $417.7 million (mdd) from China.
- What percentage of mining investment in Colombia is attributed to China? Chinese investment accounted for 1.1% of total foreign investment in mining from 2016 to 2020. Between 2018 and 2022, it reached 40.6%.
