By Margaret Myers, director of the China and Latin America Program at the Washington, D.C. think tank The Inter-American Dialogue
Whether in Asia, through One Belt One Road (OBOR), or in Latin America, Chinese officials have made clear their interest in developing extensive, cross-regional transport infrastructure.
One Belt One Road, which includes the land-based Silk Road Economic Belt (SREB) and the 21st Century Maritime Silk Road, comprises major road, rail, and other infrastructure projects spanning Eurasia.
If built, these projects are expected to fill Asia’s infrastructure gap while improving China’s capacity for transnational operations, establishing foreign trade strongholds and production bases, and improving financial integration.
Latin America is not a stop on the “New Silk Road,” but China’s infrastructure objectives in Asia and Latin America are strikingly similar.
In addition to their decades-long focus on energy infrastructure in Latin America, Chinese officials have expressed interest in major networks of overland road and rail that will facilitate commercial engagement in South America, in particular.
According to China Railway Engineering Eryuan Corporation, a proposed Transcontinental Railway, running from the coast of Peru, through Bolivia and Brazil’s Mato Grosso, will reduce the amount of time it takes to ship grain from Brazil to China to less than 20 days. With feasibility studies already underway, portions of the rail project are expected to be developed by Chinese, German, and local companies in the coming years.
The Transcontinental Railway will reportedly be financed by China’s State Administration of Foreign Exchange through the “Special Loan Program for China-LAC Infrastructure Projects,” announced in 2015.
China Development Bank and ICBC have similarly backed the restoration of the Belgrano Cargas rail line, which connects Argentina’s major soy producing regions to neighboring countries.
Also of interest to Chinese firms and financiers are a Venezuela-Colombia oil pipeline, the Carretera del Orinoco in Colombia, revitalization of Colombia’s Buenaventura port, a tunnel connecting Chile and Argentina, and other projects largely aimed at transporting raw materials and other goods to Pacific ports.
Like plans for the OBOR, China’s newest proposals in Latin America are intended address the region’s widening infrastructure gap while supporting Beijing’s own economic agenda. Major transport networks will promote trade—-facilitating transport of commodities from mine, energy asset, or farm to port—-while employing China’s labor, steel, and other surpluses.
By expanding access to Pacific ports, Chinese companies also hope to ensure safer maritime transport. Pacific routes are more secure than those through dangerous or contested waters in the Gulf of Aden and South China Sea.
Whether China can make these projects happen is unclear. Similar ventures have been attempted by the US and others in previous decades, with varying degrees of success. Chinese companies have encountered numerous challenges when investing in Latin America, moreover. In many cases deals have stalled or failed entirely.
Infrastructure investment is nonetheless an oft-prescribed remedy for the region’s economic ills. Major upgrades are needed in water, sanitation, and electricity infrastructure. And the World Bank indicates that less than a third of the national road networks are good condition in most Latin American countries. Backed by billions in reserves, China is an increasingly popular contender as Latin American nations structure large-scale infrastructure deals.