-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
1/61
Title
Understanding Investment by Chinese
SOEs in Latin AmericaA theoretical perspective on practical issues,
2!"2#!
论文作者:胡安 Juan Pablo Dominguez)
学 号:DE2012600!
"#学$:%&'学$()*+:%&,)-./012:
333 a45io7)
2#$ %
Understanding Investment by Chinese
SOEs in Latin AmericaA theoretical perspective on practical issues,
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
2/61
2!"2#!
学位论文原创性声明
89:;?@A学B论文CD89E02A/
0FCGHIJKLM作>NOAPQRS文TUVW=X
YAZ[\C8论文]^_`abc9defUVghdi
jkA作lPQRm8文>noAKLM作pq;rstA
c9uefCvUE文Tw=xyz{=R89|}~•€
8
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
3/61
学B论文作者‰*: 2016 Š 3 ‹ 7 Œ
学位论文版权使用授权书
89|}Žm\V‘’学“”e–—˜–™Y学
B论文Aš›Cœ~FžŸZ[:¡学¢r£¤@学B
论文A¥¦8u§¨©8ª学¢«¬—˜学B论文A¥¦8
u§¨©C®Y¯¥–°¥–±²–³´µda¶·¸—
˜论文ª学¢«¬¤¹º»¼½wo¤¹8学B论文}文d¾¿AÀÁÂê学¢«¬¡«“š›Ä%Å«“¾Æd
者ÇÈÉ@论文; 学¢Êw®Y¯¥–°¥d者a¶yzË.
™Y学B论文CdÌ学B论文AZ[ÍÎÏ“³Ðѹ¼½
—ÒA学B论文EŽÒÓÔÕˆš›R
学B论文作者‰*: 2016 Š 3 ‹ 7 Œ
02‰*: Š ‹ Œ
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
4/61
Abstract
The following research aims to evaluate the existent conceptual framework in the
decision making process for Chinese multinational enterprises (MNEs) investment inLatin America during the last decade !t is a multidisciplinar" approach to a #usiness
pro#lem that has political and economical ramifications The theoretical framework is
an integrated approach to !$ theor" #ased the %eneral Theor" of Multinational &irms'
which finds the motivation for foreign investment in unning eclectic paradigm' #ut
we complement it with organiational theor" aspects (Transaction Costs Economics'
*tategic Asset *eeking' and +esource ependence Theor") and tr" to understand its
relations with the num#er of cases for investment #" chinese companies ,e propose
a structural e-uation methodolog" #ecause in this particular t"pe of anal"sis
(varia#les with measurement errors' simultaneous causation and uno#served
explanator" varia#les) it has advantages over regression techni-ues
!n terms of academic relevance' there are three issues that are relevant when
stud"ing the #ehavior of Chinese outward direct investment (.!)/ 0 Chinese
investment in other countries responds different to western paradigms (motivations
and paths) This means that most likel"' traditional existing theories are not ade-uate
when explaining the phenomenon (Mathews 1223) 1 Chinese .! is ever more
relevant these da"s !n .cto#er 1204' the Ministr" of Commerce has reported a non5
financial investment of over 6* 74 #illion in the first ten months of the "ear 0 That8s
an increase of 039: "5o5" and places China as an important pla"er in the
international s"stem 9 Latin American countries is an important destination for
Chinese .! in recent "ears !t would #e important to understand the reasons #ehind
this
! aim to anal"e the #ehavior of Chinese MNEs in its invesment decisions !t is
important to take into consideration that the ;%o5%lo#al< estrateg" is a relativel" new
polic" and therefore its development is still not clear This is perhaps one of the
reasons wh" the #ehavior of Chinese MNE .! is not the full" understood at the
moments +esource seeking motives' market seeking and other theoreticalexplanations has #een given' #ut it seems the" are not appropriate to explain it The
idea that emerging markets multinational enterprises' such as those from China' have
an =asset augmentation8 approach to .!' involving strategic asset seeking #ehavior'
has gained considera#le traction within specific theories (eng 1201) Man" now
argue that MNEs from China do in fact =deviate from the predictions of existing
theories8 (Cui > ?iang' 1201' p 133) Chinese .!' in particular' has #een identified
as #eing strongl" driven #" aggressive ac-uisitions' predominantl" in developed
markets' in their pursuit of strategic assets (@edia' %affne" and Clampit 1201) ow
0 *ee/ http/BBeconomictimesindiatimescomBnewsBinternationalB#usinessBchinas5
odi5goes5up5to5745105#illion5this5"earBarticleshowB7D2197cmsprtpageF0
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
5/61
is the case in developing economies
&igure 0 Continental istri#ution of Chinese .E *tock' 120
*ource/ ,orld +esource !nstitute' 1204
Additional to the former' ! #elieve that there is a second stage of the investment
decision making process and it is concentrated in fostering Chinese diplomac"' as
well as making use of chinese resources in other locations so as to maximie their use
as a slowing chinese econom" has reduced the amount of locall" needed capital+esearchers have identified new focus of research within the realm of Chinese .! to
#e concentrated in four non5traditional explanations/ the latecomer perspectiveG
Chinese state and government influencesG the d"namics of firms and institutionsG and
the lia#ilit" of foreignness8 (eng' 1209)
!n this fashion' the main purpose of this writing is to provide additional evidence
Chinese MNEs in Latin America into which #ehavior (market5seeking' resource5
seeking or strategic resource5seeking) ,ith this o#Hective in mind' ! argue that there
are several la"ers to #e considered previous to the investment decision and are more
related to concepts outside the traditional market or resource seeking #ehavior so
associated with the homos5economicus portra"ed in traditional economic research
&or this reason' ! pretend to use a multidisciplinar" approach with elements from
!nternational $usiness Theor"' !nternational +elations Theor" as well as
.rganiational Theor" &urthermore' it is defined in this document that the unit of
stud" #ecomes Chinese MNEs .! investors in the last decade in Latin America
Keywords
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
6/61
China' Latin America' Multinational Enterprises' .utward irect !nvestment'
structural e-uation modeling' investment
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
7/61
Table of Contents
A&ST'ACT(
)ey*ords (II
TA&LE O+ COTETS (III
C-A.TE' #/ IT'O0UCTIO #
Sino"Latinamerican conte1t ##
Economic and political Links 11
Literature 'evie* #%Cultural links 22
COCLUSIOS 22
C-A.TE' 2 C-IAS .OLITICAL (IE3 TO3A'0S LATI
A4E'ICA 2%
Chinas 5oreing policy and Latin America 2%
Strategic considerations 26
Current status and the Zouchuqu (Going-out) strategy 28inancing and in!estment 2"
COCLUSIO %
C-A.TE' % 6 A T-EO'ETICAL A..'OAC- TO C-IAS O0I
I LATI A4E'ICA %2
E1tant theories o5 5oreign direct investment %2
#arket seeking $%& '
Eciency seeking $%& '
*esource-seeking $%& '+Strategic asset-seeking $%& '+
The chinese case o5 O0I %$
,nalance in the access to Capital and distorted Capital #arkets '.
$/nership ad!antages o0 Chinese #Es '8
lnstitutional 0actors inuencing Chinese $%& '8
Current research areas !
A simple theory o5 Chinese O0I in Latin America !#
3ssumptions 24ypothesis5 '
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
8/61
COCLUSIOS !!
C-A.TE' ! 4O0ELI7 C-IESE O0I TO LATI A4E'ICA !8
A model 5or Chinese O0I !8
'evie* o5 previous 9uantitative studies o5 Chinese O0I !:
4odel speci;cation and SE4 !:
#arket-seeking !ariales +
Eciency seeking !ariales +
*esource-seeking !ariales +1
Strategic asset-seeking !ariales +1
.'O.OSE0 4O0EL A0 -
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
9/61
Chapter 1: IntroductionChina8s relevance in the world affairs is more and more evident !t has grown its .!
tremendousl" not onl" in num#ers #ut in value' furthermore it is now one of the most
important commercial partners of most of developing economies () A logical step to the
highl" successful development path of the oriental hegemon is to expand its sphere of influence via economic ties with more distant economies The stud" of Chinese .! is a
relativel" new su#Hect' simpl" #ecause onl" after its accession to the ,T.' China had
virtuall" no su#stantial .! to account for The -uestion comes then to/ what drives such
decision making process ,hich elements are to #e most pressing in the moment when
the people who run the process' go for an opportunit" in another econom"
The present pages are part of a stud" intended to decipher' at least partiall"' to the
theoretical constructs that might #e enticing to illustrate the current state of affairs of
Chinese .! 6nfortunatel"' given the #road spectrum that .! entails and the practical
difficulties of making a theor" a#out investment that can #ecome a theor" a#outever"thing' we are #ound to limit the scope of the stud" into more specific geographies
and time coordinates This restriction comes for the unluck" ina#ilit" of the author to
grasp the whole universe of events that ma" #e of worth stud"ing' #ut as most of "ou
should know' parsimon" is the ke"
The most pressing idea that the #ook aims to deliver to the reader is that the process
of investing' for large scale proHects #" Chinese *.Es' is undou#tedl" a matter more
concerned with the issues of international politics and relations than those of financial
varia#les and monetar" -uests That doesn8t not mean that there is a pure market gain
aspiration when the proHects are proposed that are considered #" the decision makers (or
polic" makers for that matter)' #ut the histor" of the state of affairs #etween the Chinese
side and its counterpart pla" a maHor role in moving the locomotor of investment from the
Chinese #anks arcs to the fields' roads' dams' ports and other important infrastructure
proHect that $eiHing is supporting in man" developing economies
!t is m" personal #elief that the stud" of Chinese investment a#road should #egin #"
understanding the mentalit" of Chinese rulers and how decisions are made within an
organiation that is characteried #" tradition' values and verticalit" That is wh" an"
modeling' theor" or h"pothesis that aims to test the conditionals of Chinese .! have tohave their genesis in a field outside of the simplicit" of maximiation of returns
!s in this fashion' that a rather well structure economic stud" of China has to include
at least a chapter on histor" of diplomatic relations as well as a short introduction to the
main areas that $eiHing is strategicall" considering for expanding its #usiness overseas
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
10/61
Sino-Latinamerican context
Chinas presence in the region is #ecoming more and more apparent Latin America is pro#a#l" one of the last #astions of atttention for Chinese enterprises and "et the results
are more and more interesting !f one reviews the trade flows and investment figures'
most pro#a#l" some of the largest figures will have a good proportion of Chinese
presence ow to attract a more productive and win5win relationship with China is a
topic of interest not onl" to scholars or polic"5makers' #ut also to the population in
general This chapter introduces some of the most relevant topics in *ino5Latinamerican
relations so as to provide a context into which the whole dissertation will concentrate
Economic and political Links
Lets #egin #" talking a#out China8s ascendance as a world power China8s role in the
international arena as a glo#al power has #een propelled largel" #" the explosive growth
of China8s econom" over the last 94 "ear (Lin and ?ohnson 120) ,ith an econom"
second onl" to the 6*' China wields huge swing in the world econom" and #" extension
in its relations with over other nations As more countries turn to China for sources of
growth' markets for their products and investment' China has found itself in an
unprecedented position to move into unfamiliar terrains of international relations at a rate
and in scope unthinka#le until now even for the most savv" o#servers of the countr" (Lin
and ?ohnson 120)
&or nearl" a decade now' trade relations #etween China and Latin America have #een
#ooming &rom 1229 to 1209 alone #ilateral trade has increased #" over DI40 percent
(M.&C.M' China *tatistical Jear#ook 120 and 122) !n the period since the financial
crisis' countries such as $rail' Chile and most recentl" Keru have all seen China -uickl"
rise to #ecome their num#er5one trade partner $rail5China trade increased D percent
from 1202 to 1209 alone' while Mexico5China trade rose 93 percent over the same period
(ALA!' 1204)
&igure 1 Trade with China' 0774 5 1209 (6* $illions)
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
11/61
72 72
712
7+6
78'
717'
71"
7+
768
71 727.
72.
7'+
71 727+
712718
ra9il #e:ico Chile 3rgentina
*ource/ National !nstitute of *tatistics (!NE)G Latin American Association of !ntegration (ALA!)G
Economic Commission for Latin America and the Cari##ean (ECLAC)
The expansion of economic ties has not #een limited to trade Chinese firms have
also recentl" dramaticall" stepped up their foreign direct investment in the region &or
example' within the last two "ears China has #ecome the top source of foreign direct
investment in first $rail and then Keru This #oom in trade and investment ties has #een
primaril" driven #" China8s rapidl" expanding demand for Latin American mineral'
agricultural and energ" resources At the same time' Chinese exports to Latin America of
manufactured goods ranging from modems to motorc"cles have also grown dramaticall"
&igure 9 Kroportion of trade with China over total trade' 0 120
Chile
ra9il
;eru
,ruguay
Colomia
3rgentina
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
12/61
Jet the #oom in trade and investment ties #etween China and Latin America has not
had an e-ual impact throughout the Latin American region Exports to China have #een
largel" concentrated in a small num#er of raw materials (copper' iron ore' so" and oil)
from a core group of commodit"5rich *outh American countries (Argentina' $rail' Chile
and Keru) .ther countries throughout the region' with Mexico as a primar" example'
have a less complementar" and more competitive relationship with China8s export sector
Even in those countries like $rail' whose iron ore and so" #ean producers have
#enefited greatl" from China8s rapidl" expanding production of steel and pork' domestic
manufacturers have come under heav" pressure from Chinese competition
&igure Chinese Loan to Latin America and the Cari##ean' 122I51209 6* $illions
2.= 28= 2"= 21= 211= 212= 21'=
*ource/ National !nstitute of *tatistics (!NE)G Latin American Association of !ntegration (ALA!)G
Economic Commission for Latin America and the Cari##ean (ECLAC)
The following pages will provide a -uick view on what the literature has produced to
explain the relations #etween China and Latin America from an academic point of view
!t serves as an starting point for the main part of the paper to which we dedicate our
different h"pothesis and model estimation efforts in order to provide additional evidence
for the theoretical constructs that we #uild in the coming chapters
Literature e!iew
The growth in China8s economic' political' and cultural relations with Latin America
has #een widel" noted in the academic literature' popular press' and even in the halls of
the 6nited *tates Congress () *cholars in Latin America were particularl"
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
13/61
concerned with the relationship Chinese economic fundamentals' namel" its need for
raw materials and new export markets' led to a rapid expansion of trade and scholars
argued whether this #urgeoning relationship was good or #ad for Latin America (Lora
122IG +osen 1229G $l-ue5Lido"' +odrOgue' and *antiso 1223G *ham#augh and
Murph" 1201) *imilarl"' press stories focusing on *ino5Latin American relations also
sk"rocketed Latin American Regional Report and the Latin American Monitor reported
Hust 1I stories in 1221 and 1229' while this num#er grew to I0 #" 1200 and 1201' and 31
from ?anuar" 1204 to ?anuar" 1203 (authors8 count) Committees in the 6nited *tates
*enate and ouse held multiple hearings relating to *ino5Latin American relations'
pa"ing particular attention to China8s expanded trade in the region and its focus on
securing access to raw materials' especiall" oil (?ohnson and ,asson 1200) ence' we
see that scholars' the popular press' and others are pa"ing close attention to *ino5Latin
American relations
,hile these relationships have drawn increased scrutin"' much of the extant
literature focuses these relationships from limited viewpoints The Chinese governmenthas largel" focused on expanding trade and investment opportunities in Latin America'
while downpla"ing conflict with the 6nited *tates (Ellis 1227G *tate Council of the
Keople8s +epu#lic of China 122D) The Latin American literature focuses on whether
China8s rise is good' #ad' or mixed for the region8s economies (%onale5Picente 1201G
Armon" 1201G ille#rand 1229G Mes-uita' Moreira 122I) *imilarl"' the American
literature focuses on whether China8s presence in the region is good or #ad for the 6nited
*tates and her national interests' not onl" her economic interests' #ut also her national
securit" (?ohnson1224G ?ohnson and ,asson 1200G Ka 1223) 6nfortunatel"' relativel"
little of this work has s"stematicall" examined how experts and individuals within China
view these relationships
.n the one hand' several studies of the !nteramerican evelopment $ank ($! 1224G
Lora 1224) note that the new economic relationship #etween China and Latin America
generated a group of winners countries' particularl" commodit" exporters in *outh
America' and losers' in particular Mexico and Central America !n addition' the" #elieved
that the effects of China in Latin America would #e lower' mainl" as a result of the
financial impact of China in the glo#al econom" and' therefore' indirect (Lora 1224)
This view has changed significantl" in 1202 (!$ 1202) and allowed a #roader'
proactive perspective towards China' continuing the original anal"sis of Mes-uita
Moreira (122) rightl" noted that the enormous challenges China meant for Latin
America' especiall" in the manufacturing sector
*everal studies linked to ECLAC (CEKAL 122G 1224 B #) anal"ed the relationship
of Central America and Mexico to China in general and focusing on value chains relevant
to these countries' such as "arn5textile5garment and electronics These documents
concluded that China was alread" an important region for trade and economic partner and
was massivel" displacing domestic production in domestic markets and other markets
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
14/61
such as the 6*
*ince then a growing num#er of studies have pointed out that/ 0 The massive
integration of China into the world market and economic relations and direct trade with
Latin America are rapidl" changing economic and trade patterns in the region and its
potential Qde5escalationQ (upgrading)' ie its a#ilit" to integrate new segments of higher
technolog" and higher value5added *everal recent studies indicate that significant
demand for raw materials from China in the region' from copper ores' so"#eans and
energ"' have created a new group of companies QwinningQ
$" contrast' the manufacturing sector in the region which had achieved some degree
of scaling and development since the nineties' and in several countries such as $rail and
Mexico as a result of import su#stitution industrialiation (!*!) since 0732 he has lost
presence in terms of
%K' emplo"ment and trade (CesarOn and Moneta 1224' CorneHo 1224G %allagher
and Korecanski 122D B #' 1202G ?enkins' ussel Keters and Mes-uita Moreira 122DG
*argent and Matthews 122IG .ropea 122D) The positive effect of China on exports of raw materials from the region has also #een considered as critical in current times of
glo#al crisis ($ar#osa and %uimaraes 1202G ECLAC 1202 B a)
,hile it is important to recognie that much more empirical work is re-uired (ussel
Keters 1224Ba' 1202BaG %allagher and Korecanski 122DBaG Lall and ,eiss 1224G
*hafaeddin and Kiarro 122I)' initial results suggest that China has carried out a thorough
process of technological upgrading' unlike Latin America (ussel Keters 1227G .EC
1202) !n addition' we have anal"ed in detail the initial displacement and growing Latin
American sales to domestic markets and exports to the 6nited *tates or the European
6nion' #" China .ther authors ($l-ue5Lido" et al' 1223G Lederman et al' 1227) point
out that the evidence for these negative effects on Latin American exports is poor' whilethe proximit" to the 6* market has #ecome one of the comparative advantages a#solute
most relevant vis5R5vis China (*argent and Matthews 122I) Karticularl" macroeconomic
and exchange rate policies are also powerful mechanisms for competition #etween Latin
America and China
*everal recent anal"es have noted that reduced levels of &! #etween China and
Latin America (although flows from China in the form of search for natural resources
have increased) reflect the still low levels of productive integration #etween the two (!$
1202G ecomtec 122DG ?enkins and ussel Keters 1227G @awai and Shai 1227)G until
1202' and as highlighted #" the !$ (1202/ 1)' that the *ino5Latinamerican relationship
;has remained predominantl" on a pillar/ tradeQ
The former explains in part wh" such economic relation is the focus of large part of
the existing literature As &igure 9 and &igure show' trade #etween the two regions
sk"rocketed during the 1222s' from onl" 13D0 #illion in 1229 to 130 #illion #" 1209
(M.&C.M' Jear#ook of National *tatistics) Much of this trade involved the export of
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
15/61
primar" products from Latin America to China' and the export of manufactured goods
from China to Latin America China is $rail and Chile8s largest export market and
Argentina8s second largest (M!T 120) China imports increasing amounts of Peneuelan
oil' Chilean copper' Keruvian fishmeal' and Colom#ian and Costa +ican coffee (Ellis
1227) This led to high growth in commodities5#ased sectors throughout Latin America
(*antiso 1223) China has also sought to diversif" its export markets' selling greater
-uantities of manufactured products ranging from textiles to electronics (*ham#augh and
Murph" 1201)' sometimes at the expense of Latin American manufactures themselves
(%allagher' Moreno5$rid' and Korecanski 122DG ?enkins and de &reitas $ar#osa 1201G
Mes-uita Moreira 122I) The most concrete sign of China8s long5term plans are the &ree
Trade Agreements (&TAs) with Chile' Keru' and Costa +ica (*ham#augh and Murph"
1201) $" an" measure *ino5Latin American trade increased markedl" during the 1222s
,hile trade has #een the central focus' the literature also discusses Chinese
investment in the region (see Ta#le 0) Latin American leaders excitedl" anticipated atsunami of Chinese investment after state visits from Chinese leaders and investment did
increase Almost half of China8s &oreign irect !nvestment (&!) outflows in 1223 went
to Latin America (.EC 122D)' while China accounted for a#out 02 percent of total
foreign investment in Latin America #" 1202 (*ham#augh and Murph" 1201) %onale5
Picente8s (1201) case stud" of Chinese investment in Keruvian mining showed that
markets' rather than political factors determine Chinese investment strategies
Nevertheless' Chinese investments have #een a point of some contention $railian
leaders in particular have complained a#out the relative lack of investment' going so far
as to complain that $rail had #een ;deceived< #" Chinese promises (Economist 1224G
?ohnson and ,asson 1200) China has also #een criticied for ;phantom< investments'with Chinese companies hiding profits in Cari##ean tax havens rather than investing in
more productive economic sectors (e 122D) +egardless' the literature8s focus on the
d"namic economic relations #etween China and Latin America occup" center stage in the
extant literature
Ta#le 0 eepening Economic ties #etween China and Latin America' 6* million
Countr" or
+egion
.verall
trade with
China (120)
:
!ncrease
122I 51200
: of
ChinaUs
Total(122I)
: of
ChinaUs
Total(1200)
&!
from China
(1200)
As :
of All &!
fromChina
1200
Latin
America
&!o China(1200)
As : of
All &! to
China
Latin 1391II I7 2222 331D 00'794 0477 01'24 02ID
$rail D'190 7D 09I 190 013 4 9 223V
Mexico 99'9 019 23D 270 0 4
Argentina 0'I47 7 24 20 0D4 I
Peneuela 0D'132 100 217 27 D0 1
Chili 90'9D4 094 23I 2D3 09 0I
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
16/61
Colom#ia D'199 04 204 211 99 220
Pirgin 3'12DV 7'I1VV
Caiman '793V 1'10VV
*ources/ Annual +eport on Latin America and the Cari##ean (120151209)' *ocial *ciences Academic
Kress (China)' 1209
V As : of $rail investment overseas
VV !nvestment from Chinese entities registered in the island(s)VVV!nvestment from companies registered in the island(s)
,hile *ino5Latin American economic ties have grown su#stantiall"' the relative
value of the region to China is still considera#l" small (M!T 120) Taken together' the
growth in economic ties com#ined with uneven knowledge of the region8s economies
will influence attitudes ,hile the literature8s primar" focus has #een *ino5Latin
American economic relations' much of this discussion takes place in the shadow of
changing political relations .ver 022 Latin American and Cari##ean heads of state have
visited China and multiple Chinese leaders have visited Latin America in recent "ears
(?ohnson and ,asson 1200G *ham#augh and Murph" 1201)' including Kresident u'
Kremier ,en' Kresident i and Kremier Li (see Ta#le 1) China was a#le to convince
Costa +ica to switch its diplomatic recognition from the +epu#lic of China to the
Keople8s +epu#lic (Ellis 1227) and other Central American and Cari##ean states were
likel" to follow' at least until Taiwan8s government and Chinese leaders tacitl" agreed to
ta#le this competition Man" Latin American leaders see China8s rise as an antidote to
6* domination' though China has #een ver" cautious on this front (Shimin and %regg'
120) China sought and gained o#server status in the .rganiation of American *tates
and the Latin American Karliament' as well as sponsoring exchanges #etween the CCK
and parties in Latin America (*ham#augh and Murph" 1201) The Chinese militar" has
-uietl" increased militar" sales and education exchanges (,atson 1202)' #ut has
maintained a relativel" small footprint in the region The Kacific5Alliance was signed into
effect in 1204' #ridging China not onl" with some Kacific states of Latin America' #ut
also additional economies
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
17/61
Ta#le 1 Chinese *tate visits to Latin America ($" Countr")
"ountry #$o #$en %urpose &ccomplis$ed
Mexico
i ?in King >une 21'
?li0ting China-#e:ico ties to ahigher le!el=?
3greements to cooperate on commercialde0ense
Jang ?iechi (M&A) >uly@3ug21 China-#e:ico ;ermanent ational Commission
$elie none
%uatemala none
El *alvador none
onduras none
Nicaragua none
Costa +ica
i ?in King ?un509Qpromoting cooperation #etween the Asiangiant and the Central American countr"Q
22M loan from China to C+
Jang ?iechi (M&A) Aug502
Kanama none
Cu#a
i ?in King ?ul50To demonstrate ChinaUs strong willingness todeepen cooperation with Latin America ininfrastructure construction
i ?in King ?un500 ;increase friendship WandX deepencooperationQ 02 economic accords signed
Jang ?iechi (M&A) Aug502
Colom#ia Chen eming(MoC)
.ct501 Dth China5Colom#ia intergovernmentaleconomic and trade committee
*igned the China5Colom#ia Economic andTechnical Cooperation Agreement and letters of exchange' and a Memorandum of 6nderstandingon *trengthening Trade +emed" Cooperation
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
18/61
Li @e-iang Ma"504 !nvestment and trade deals
China signed more than I2 cooperation documentsin the areas of energ"' mining' infrastructureconstruction' nuclear plants and scientific andtechnological innovation' valued at more than 92 #illion dollars in Colom#ia' Keru' $rail and Chile
Peneuela i ?in King ?ul50A num#er of cooperation deals on infrastructureconstruction with Peneuela
Ecuador &an iaoHian
(L%.K)
*ep509 Kovert" reduction fact finding trip*igned M.6 to identif" cooperation mechanisms
on povert" eradication
KeruGuo o:iong(C#C
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
19/61
i ?in King ?un5007 cooperation agreements signed (agriculture' #anking' telecomm)
Li @e-iang Ma"504 !nvestment and trade deals
China signed more than I2 cooperation documentsin the areas of energ"' mining' infrastructureconstruction' nuclear plants and scientific andtechnological innovation' valued at more than 92 #illion dollars in Colom#ia' Keru' $rail and Chile
Argentina
i ?in King ?ul50A num#er of cooperation deals on infrastructure
construction with Argentina,en ?ia#ao ?un501 +ioY12
Jang ?iechi (M&A) *ep500
6rugua" ,en ?ia#ao ?un501 +ioY12Kledged to foster their trade ties and to step up #ilateral exchanges #etween the two nationsUlegislative #odies
Karagua" none
%u"ana none
*uriname none
&rench%uiana
none
*ource/ Shimin and %regg 120 with additional entries from author
$rail was the first stop on Chinese premier Li8s tour of Latin America' his first visit to the region since he assumed the
premiership in 1209 China has alread" announced 42 #illion in deals with *outh America' and this time the" focus largel" on
infrastructure proHects The contents of the tour gave indications of a shift awa" from procuring commodities to cooperation and
investment represents a new model for *ino5Latin American relations ()
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
20/61
.ver the last several "ears' China has provided more loans to Latin America than the
,orld $ank and !nter5American evelopment $ank () Most of those loans have
#een for oil !t is estimated that #etween 1224 and 120' $eiHing granted loans 007222
million dollars throughout Latin America and is expected that this trend will increase in
the coming "ears This is confirmed #" the fact that in the coming "ears' China has
pledged to invest more than 42'222 million dollars in a series of maHor proHects
Morevore' i ?inping said in 1204 that China was preparing to invest in Latin
America 142'222 million dollars over the next 02 "ears !n earl" *eptem#er 1204' the
Central $ank of China announced the esta#lishment of a fund of 02'222 million for
#ilateral cooperation with Latin America in areas of high technolog"' energ"' mining and
infrastructure proHects These figures make it clear that China is displacing 6* in Latin
America ,hile in 120 Chinese investment in the region experienced an increase of
I0:' 6* lenders' on the other hand' the" suffered a decline of 12: since 1200
&inall"' it is important to sa" that China8s growing influence in Latin America ma"
induce some governments to #reak with Taiwan ()' thus intensif"ing the island8s
isolation Among the 14 states that maintain diplomatic relations with Taiwan' nearl" half
are in Latin America and the Cari##ean/ $elie' Costa +ica' %uatemala' aiti' onduras'
Nicaragua' Kanama' Karagua"' the ominican +epu#lic' *aint @itts and Nevis' *aint
Pincent and the %renadines' and *alvador
&or its first fift" "ears the Keople8s +epu#lic of China (K+C) took little interest in
Latin America The 6nited *tates exercised unrivalled political and economic power in
the region' and is still the dominant influence1 ,hile Cu#a esta#lished diplomaticrelations with China from 0732 onwards' most Latin American governments waited until
Kresident Nixon8s visit to $eiHing in &e#ruar" 07I1 #efore recognising the Keople8s
+epu#lic/ in 07I1 Argentina and Mexico recognised the K+C' followed #" $rail two
"ears later and' later still' $olivia in 07D4 This period of relative indifference was now at
an end Kresident u ?intao8s visits' towards the end of 122' to $rail' Argentina' Chile
and Cu#a and' a "ear later' to Mexico attested to $eiHing8s interest in the region9 ,hile
numerous studies have focused on China8s polic" towards Africa' its role in Latin
America is less fre-uentl" touched upon Jet' its growing presence there is of the greatest
economic and geostrategic significanceG and raises concerns and anxieties #oth in Latin
America and in the 6nited *tates' where $eiHing8s interference in the region has aroused
something less than enthusiasm !n media and political circles' periodic alarms have #een
sounded over the Chinese presence in America8s ;#ack "ard
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
21/61
"ultural links
,hile economic and political relations dominate coverage of *ino5Latin American
relations' some research also examines changing cultural links Ethnic Chinese
communities are found throughout Latin America' with approximatel" 0 percent of surve" respondents self5identif"ing as ;Asian< according to the Latino#arometer
(Latino#arometer Parious Jears) Not all who identif" as ;Asian< in these surve"s are
ethnic Chinese' "et ties #etween these China and iaspora communities have #een the
focus of CCTP #roadcasts (*ummer 1209) China has opened a num#er of ;Confucius
!nstitutes< in Latin America and Chinese tourism and student exchanges have grown
(*ham#augh and Murph" 1201) &urthermore' the growing popularit" of soccerBfoot#all
in China and the awarding of #oth the ,orld Cup (hosted this past summer) and
.l"mpics to $rail likel" increased Chinese interest in and knowledge of Latin America
!n short' we expect experts and interviewees with links to Latin America to have more
positive evaluations of the region' as well as a desire for continued deepening ties
ConclusionsMost of the literature has revolved around economic ties !nvestment is also part of
it
China8s influence in Latin America is growing alongside its economic links
There are positive cultural links #etween the regions and there is also a growing
political approachment in the region
ChinaUs presence in Latin America is growing at an unprecedented pace
Notwithstanding long tradition of the relationship' it seems to have #ecome much more
visi#le in recent "ears
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
22/61
Chapter 2 China’s political view towards Latin
America
!n China' #usiness and politics go hand in hand No maHor investment in Latin
America has #een achieved without the prior visit of high5ranking officials Thisdemonstrated for instance' #" the signing of the relevant agreements in Argentina during
the last presidenc" of Cristina @irchner and presinde i for the h"droelectric power
plants in *anta Cru called ?orge Cepernic " Nestor @irchner A 6*4I #illion proHect'
came as one of the most important diplomatic and economic links #etween the China and
Latin America in the nearest decade *ince then' several large5scale proHects have #een
announced #ut none of them have #een put into execution as the N@?C proHect
The aim of this chapter is to provide evidence that the anal"sis of investment #"
chinese companies in Latin America is an event that must consider political and
diplomatic ties #etween the two !n this fashion' we divide the chapter into 4 main parts
The first one talks a#out the guiding principles of chinese diplomac" and how the" relate
to Latin America The second one provides examples on how such diplomac" was a
prere-uisite for investment The following section presents some strategic concerns of
China in the region and finall" while the fourth section talks a#out current investments
and the =go5glo#al8 strateg" in the region &inall" we end the chapter with a set of
concluding remarks
"$inas 'orein( policy and Latin &merica
ChinaUs diplomac" over the past 32 "ears can #e divided into two periods with
07ID as the watershed (Shang 1202) !n the first 92 "ears (077 5 07ID)' the focus of
ChinaUs diplomatic tasks was to oppose the threat from #ig powers' consolidate national
independence' and safeguard sovereignt" and territorial integrit" owever' since its
opening up and reform in 07ID' China has re5oriented its diplomac" to create an external
environment conducive to its domestic economic development in the midst of the
changing international situation
Most recentl"' one stum#les into the notion of a Uharmonious worldU This concept
of diplomac" offers a principal guideline to the future direction of Chinese foreign #ehavior and polic" !ts concept is a strategic innovation to further facilitate the #ack#one
of ChinaUs foreign polic" principie' known as Q&ive Krincipies of Keaceful Co5existenceQ
!ts aim is twofold .ne is to further the precipitation of ChinaUs desire to preserve world
peace and sta#ilit" #" realiing harmon" in a world of diversit"' there#" serving the
foremost goal of current Chinese foreign polic" () Another aim is to materialie the
practice of such principies as mutual #enefit' e-ualit"' and non5interference of domestic
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
23/61
affairs !n sum' respect to diversit" in ideolog"' values' and s"stem is a prere-uisite to the
realiation of a harmonious world Nevertheless' China pursues a foreign polic" with its
own conviction and #elief in such principies regardless the status of a state ow others
perceive it does not seem to concern China as long as their relationship is deemed to #e
mutuall" #eneficial and practiced on e-ual #asis ()
espite the longevit" of the &ive Krincipies' on which the idea of creating a
harmonious world is founded' China has "et to win sufficient trust and confidence from
predominant actors like the 6* regarding its recent diplomatic excursion into developing
countries including Latin America Although China gets a wide approval of #eing a late
comer to international affairs' and therefore' it is an inevita#le due course for China to
#ecome more deepl" engaged in and integrated into the world s"stem' at the same time' it
raises a dire concern to maHor international actors Their concern is simpl" arisen #" the
sense of uncertaint" a#out where the rise of China will take it to' and the sense is deepl"
rooted in the theor" of power transition According to the theor"' it will #e inevita#le for a
state like China to challenge the primac" of the 6* in due time as a result of itsascendanc" to a great power status underpinned #" its accrued power from economic
success and enhanced political influence
The stud" of the motivations #ehind ChinaUs growing presence in Latin America
appears to #ear significance not onl" #ecause of its political and diplomatic conse-uences
#ut alos for its economic relevance A more in depth anal"sis of this issue re-uires
including Chinese domestic politics and foreign politics #ut unfortunatel" we onl"
provide a superficial account of the issue Most ofthe literature on the su#Hect is heavil"
approached from American or ,estem perspectives' focusing onl" on the phenomenal
aspect of Chinese engagement discourse with the region' which has naturall" led to a lack
of su#stantial anal"sis on Chinese polic" motivation' orientation' principies' strategies'and goals ()
uring the Cold ,ar period' issues conceming ChinaUs interest in Latin America
was #asicall" oriented towards its political and securit" outlook China and Latin
American states also shared a strong interest in pursuit of independent and autonomous
foreign polic" !n materialiing this' the" #oth activel" participated in Non5alliance
movement and the %roup II The" also strove hard in furthering their efforts towards the
idea of creating a new intemational political and economic order
Economic interest remained secondar" and marginal during this period .ne of
the most attri#uting factors was their economic conditions/ #oth were underdeveloped
and poor Third ,orld economies !n addition' #oth economies did not have much to offer
to each other in part #ecause of similarities in their industrial structure Moreover' the
a#sence of formal diplomatic recognition #etween China and Latin American states was
another salient impediment to the chance of developing economic relations in part
#ecause most ofthe states had diplomatic relationships with Taiwan () LatOn
America during the Cold ,ar period was heavil" influenced #" the 6* as it intervened
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
24/61
ver" much into domestic politics of Latin American states in the name of UMonroe
doctrineU
,ith the end of the Cold ,ar' coupled with the rapid processing of glo#aliation
and deepening integration of world econom"' China and Latin America would find
renewed political and economic interests in each other () ChinaUs interests in its
relations with developing countries are multifaceted There is a variet" of issues
conceming Chinese national interest Most of all' developing countries em#od" the
fundamental foreign polic" outlook and values of Chinese foreign polic" China remains
a part of Third ,orld' and it is unthinka#le to exclude itself from Third ,orld (?u#an"
and Koon 1223/ ) !ts polic" and polic" goals' therefore' naturall" fall in the same line
with those of most of developing countries ()
Chinese polic" on Latin America and developing countries shares the same polic"
goals in enhancing solidarit" and cooperation' according to ChinaUs Kolic" Kaper on Latin
America and the Cari##ean pu#lished on Novem#er 4' 122D Although China in recent
"ears has #een restraining from making explicit of its desire for a multipolar world'however' it is well represented in its polic" towards Latin American' and well respected
and accepted #" Latin America states (elamer' Malena' and Kom 122/ I7) The" #oth
value the importance of *outh5North dialogue and *outh5*outh cooperation as a means to
settle the economic disparit" #etween the rich and poor
*econdl"' ChinaUs interest in issues is awakened #" the economic opportunities in
developing countries and LatOn America in particular ChinaUs international trade has
expanded at a rapid pace Trade has #een the driving engine of its miraculous economic
development %iven its ever5expanding intemational trade in terms of #oth sheer volume
and market share' Chinese expansion into LatOn America was naturall" destined %iven
the reciprocal nature of intemational trade' LatOn AmericaUs economic engagement withChina also #egan to grow' largel" for growing Chinese interest in Latin AmericaUs
economic merits/ markets' natural resources' and raw materials China values LatOn
American market not onl" for its potential #ut also for the progress it has made in the
regionaliation process Moreover' their industrial and economic structure is viewed as to
#e mutuall" reinforcing and #enefiting (Lu 122I/ 3159)
Thirdl"' Latin America' for instance' is a world5class supplier of natural resources
including energ" resources and raw materials (?iang 1223/ 0) China relies heavil" on
imports for copper' iron ore' and food grains !ts import dependence for energ" resources
is ever growing larger Energ" ties with Latin America have the dual #enefits of an
alternative source of suppl" as well as a #argaining power over other suppliers China has
long pursued to diversif" its import source of energ"' expanding from +ussia to Central
Asia to Africa This diversification polic" has helped China gain leverage over suppliers'
there#" enhancing its #argaining power ,ith respect to Latin AmericaUs potential as an
export market' China has #een proactive in pioneering Latin American markets !ts efforts
have paid off large dividends owever modest the trade share is' Latin America rapidl"
rose to #ecome ChinaUs fifth largest export market
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
25/61
Lastl" #ut not least' Latin America remains an itsmus test of Chinese diplomatic
competition against Taiwan !t is a region with a num#er of states that maintain
diplomatic relationship with Taiwan .f the thirt"5three regional states' twelve recognie
Taiwan as a sovereign state' a diplomatic challenge to Uone China polic"U in the e"es of
$eiHing(avis 122I/ 12)
Strate(ic considerations
ChinaUs approach to LatOn America is carried out strategicall" #ecause it is
political As indicated a#ove' China priorities political relations a#ove an"thing else
() A sound political relationship is a precondition to the relationships in other
sectors Economic relationship' for instance' is premised upon friendl" polOtica) relations
() Cultural exchange can #e facilitated #" sta#le political relationsG ChinaUs Usoft
powerU will otherwise #e viewed as vigilant
ence' ever since Chinese leadership #egan to emphasie the value of relationship
with Latin America in the late 0772s' it was the" themselves who took the initiative to
pursue political relationship with regional states () uring this pursuit' Chinese
approaches were revealed' and from this' Chinese strategies can #e inferred () At
the outset of development of the relationship' Chinese top leaders called for summit
meetings with Latin American counterparts (see Ta#le 1) ,hile the" toured regional
states' the" would #asicall" discuss and negotiate their interests at the #ilateral level6pon the foundation of political relationship' China furthers its relations in other areas A
salient strateg" applied in the economic realm is 'zouchuqu (going out)U strateg"
Chinese leaders sustained their summit diplomac" with Latin America !n 1220'
then president ?iang Simin made his last official trip of his tenure (077951221) to four
regional states After succeeding ?iang in 1229' the fourth generation leader u ?intao did
not hesitate to follow his predecessor in visiting the region (six states' to #e specific) in
Novem#er ofthe following "ear uUs visit was considered historie #ecause it paved wa"
to enhanced strategic understanding #etween China and Latin America' improved trust
and confidence' and conse-uentl" led to mutual understanding on the importance of exchange to a new level
.ne of the most prominent achievement u retrieved from his visit was the
winning of $eiHingUs coveted designation of market econom" status from some of the
largest economies in the region' namel" Argentina' $rail' Keru' and Chile !n retum'
from 0773 to 1222' D presidents' 9 govemor5generals' and 9 prime ministers from Latin
America visited China !n its active pursuit of interests in Latin America' ChinaUs strateg"
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
26/61
of #ilateral approach was further emphasied China has thus far succeeded with this
approach #" successfull" capitaliing on the concept of partnership in promoting its
relations with the Latin American states
Argentina moved up the ladder of partnership at a much faster pace !t was first'
for instance' recognied as a Qcooperative partnerQ as ?une of 122 uring uUs state
visit in Novem#er 122' it was UpromotedU to #e a Qstrategic partnerQ The fast changing
character of the #ilateral relationship' according to sorne anal"ses' is attri#uted to the
result of ArgentinaUs conve" of a greater willingness for political colla#oration with China
(omingue/ 19) Peneuela was endowed with Qfriendl" cooperative relationsQ upon
former president ?iangUs visit in April 1220 !t would take onl" a month after the
#estowment ofthis la#el that China upgraded the #ilateral relationship to Qstrategic
partnerQ during Peneuelan president ChaveUs visit to $eiHing
Economic ties #ased on improved political relationship have #een manifested in
the rapid increase of trade volume and investment ChinaUs trade with the region in 07I4'for instance' stood at mere 122 million After thirt" "ears in 1223' the total trade volume
exceeded I2 #illion ,hat is noteworth" is that a great portion of this was achieved
#etween 1222 and 1223 when the #ilateral trade increased #" over 422 percent (e 122I/
D1)
ow the improved political ties had a spillover effects in other aspects of the
#ilateral relationship #etween China and Latin America is summaried in the following
#ilateral cases ,ith $rail' unlike other cases' the political impact on the economic
realm in particular has #een much more visi#le *ince $rail received strategic
partnership in 0779 when the then president Cardoso #ecame the first $railian president
to visit China' the #ilateral relationship #urgeoned upon a solid political foundation (,u1224/ 09) !n 1221' China surpassed ?apan as $rail Us largest trade partner in Asia !n
122' as the #ilateral trade exceeded 01 #illion' and #" -uintupling from 1222 and 122'
China #ecame $railUs fourth most important trade partner $rail supplies 92 percent of
ChinaUs total so"#ean imports and03 percent of total imports of iron ore concentrates
(omingue/ 1I) Chile has #een the most visited LatOn American nations #" Chinese top
leaders *ince former president JangUs visit in 0772' former president ?iang visited twice
in 0779 and 077I' and president u in 122 +eciprocall"' ever" Chilean president
visited $eiHing since 077250771' 0774' and 122l Kinochet as militar" commander5in5
chief also visited China in 0779 and 077I Moreover' Michelle $achelete' the newl"
elected president in 120' has also declared for continuit" in his nationUs polic" to China
Mexico was one ofthe earliest LatOn American states that recognied China in
07I1' onl" second to Cu#a *ince the normaliation of relations in 07I1' the relationship
experienced a great magnitude of fluctuation *trange enough' it enHo"ed its peak during
the Cold ,ar era' and it is somewhat contrar" to the post5Cold ,ar period' full of
controversial relation to intemational affairs The dark side of the relationship #egan to
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
27/61
!oom large in 0779 when the Mexican government imposed 0222 anti5dumping measures
on Chinese goods (omingue/ 9D) Conflicts in trade relations eventuall" developed
over into political ones .ut of fears of Chinese growing competition' Mexico would take
the economic issues into political arena to challenge China issues such as human rights
issue' Ti#etan issue' and others alike Nonetheless' Mexico as one of the leading
economies in LatOn America #ears significant strategic meanings to ChinaUs national
interests lt is recognied as a strategic partner to China in 122 The notion of
partnership was not' however' appreciated #" the &ox administration when it declared
China as a competitor and not partner during Pice5president Seng inghongUs visit in
1224
$eiHing and Caracas signed numerous contracts to develop Peneuelan oil fields
Apart from energ" resources' the cooperation #etween the two nations is -uite active in
technolog" transfer area !n 1224' Peneuela signed a deal with China to #uild and launch
a satellite in 122D uring his visit to China in ecem#er 122' Peneuelan president
Chave o#served that the investment and trade agreements signed could generate 9 #illion in 1224
!n development in other areas' a Hoint venture compan" #etween Ecuador and
China agreed on the ac-uisition of EnCana CorporationUs oil and pipeline asset in 1224
for 01 #illion $olivia invited China to develop its gas reserves !n the Cari##ean'
China is enticing' for instance' ominica with 001 mi!lion investment at the expense of
cutting off ties with Taiwan (Noriega 122I/ 9)
$rail' Cu#a' Argentina' and Chile in 122 were selected as QChinese group
travelersU destination'Q or also known as QApproved estination *tatus (A*)Q Cu#a wasthe first Latin American nation to #e granted of such a status in 1229 Mexico and Keru
Hoined them in 1224 +egarding the Cari##ean' China listed Antigua and $ar#uda'
$ar#ados' the $ahamas' %renada' %u"ana' *t Lucia' ominica' *uriname' Trinidad and
To#ago' and ?amaica as tourist destinations Nonetheless' the" are "et to witness
su#stantial num#ers of Chinese tourists' and hence' the status seems to remain rather
s"m#olic This designation is politicall" significant and economicall" meaningful
#ecause it serves as a diplomatic tool for $eiHing and selected nations can hope to realie
millions of dollars in revenue per "ear (re"er 1223/ 71)
"urrent status and t$e Zouchuqu )*oin(-out+ strate(y
Zouchuqu strateg" has in recent "ears #een an impetus #ehind ChinaUs improved
relations with developing countries and Latin America in particular () lt offers
Hustification and legal grounds to its efforts for a greater economic engagement through
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
28/61
investment with those states whose relationship is much improved as a conse-uence of
summit meetings and #ilateral efforts () The goals of the strateg" are multifaceted
,hile it emphasies the need to pursue this strateg" to secure the resources to help its
econom" to sustain continuous growth' it also envisions its econom"Us place in the world'
especiall" in developing countries &urthermore' it values the market opportunities in
these states !t also encourages Chinese firms to go a#road to achieve these o#Hectives
Moreover' it underscores Chinese governmentUs support to such endeavor #" Chinese
enterprises At the same time' it also highlights the need for Chinese #usinesses to
advance into the developed world through aforementioned multilateral efforts
!n sum' the strateg" can #e viewed from two different perspectives &rom the
perspective of ChinaUs advancement into developing countries' the purpose is o#viousl"
to pioneer new markets' to secure natural and strategic resources' and to help the
economic development of developing countries in the end () ,ith regards to the
developed nations' the strateg" is designed to overcome the o#stacles and #arriers thathinder ChinaUs pursuit of high technolog" and related information and skills through
direct engagement of Chinese firms in these nations !n practice' this strateg" in
developed economies has translated into the M>A fields were technolog" and know5how
are the main o#Hective of chinese investors so as to -uickl" reduce the gap #etween
mainland and foreign competitors
Thus far' ChinaUs zouchuqu strateg" has #een most active and visi#le in Latin
America As of 1209' ChinaUs outward direct investment stock in Latin America totaled
6*D3 #illion Most of the investment is in financial assets directed to The Ca"man
!slands' followed #" the Pirgin lslands The next four largest host countries are Mexico'Keru' $rail' and Peneuela
,inancin( and in!estment
The flow of financing from China to Latin America dou#led in 1204 to 17'222
million dollars' Peneuela' $rail and Ecuador as principal recipients' and shift towards
infrastructure proHects
espite the glo#al economic slowdown and the #leak outlook for 1203' with asecond consecutive "ear of negative growth in Latin America' funding from China to
Latin America was 17'222 million in 1204 compared to 07'222 million in 120
The" come' as has #een previousl"' #" two government institutions/ China
evelopment $ank and Export5!mport $ank Again' as has #een the case in recent "ears'
ChinaUs investment in Latin America exceeded Hoint loans provided #" the ,orld $ank
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
29/61
(,$)' the !nter5American evelopment $ank (!$) and the evelopment $ank of Latin
America (CA& ) said @evin %allagher' a professor at $oston 6niversit" and coordinator
of the report at the press conference presentation
The data show China Qto strengthen its investments in Latin America at a time when
other institutions are reducing theQ as the ,orld $ank' which lowered its lending to the
region #" D: to D'222 million last "ear' and the !$ it made a 0: to 00'422 million
$" countr"' the trend a decade ago' when it #egan to #e compiled this data#ase in
1224' Peneuela' $rail and Ecuador remained ahead !n 120 $rail received 02'342
million dollars' followed #" Peneuela with 02'222 million dollars' and Ecuador I'222
million
!n the case of $rail' most of the funding went to the state oil compan" Ketro#ras for
petroleum developmentG as in Peneuela' the state oil compan" KP*A' earned 4'222
million Ecuador' meanwhile' received most of the funding for transport proHects' health
and education
Then stood $olivia' which approved funding of D42 million' all dedicated toimproving the road network' including its share of the proposed #io5oceanic corridor
linking $rail' $olivia and Chile &or its part' Costa +ica earned 22 million' its first
agreement with China and will #e used to finance the highwa" #etween the capital *an
?ose and LimonG and $ar#ados' 0I2 million for the reha#ilitation of ,"ndham Tourist
Complex
China has announced three new platforms funding' totaling 94'222 million dollars' so
it is expected that Qthese flows grow further in the futureQ The China5LAC !nvestment
&und for !ndustrial Cooperation with 02'222 millionG *pecial Loan Krogram for
!nfrastructure KroHects China5LAC' with 12'222 millionG 4'222 additional to the alread"
esta#lished &und China5LAC cooperation *ince 1224' funding for China to LatinAmerica amounted to 014'222 million
"."L/S.
Chinese advancement in #oth diplomac" and economic realms in Latin America
has #een a recent phenomenon Although the #ilateral relationship #etween China and
Latin America #egan in the earl" 07I2s' however' the development of the relationship has
remained in most of time ver" much id le lt has not advanced as much as #oth partiesdesired due to historical reasons (eg ChinaUs Cultural +evolution) and political reasons
(eg 6* intluence) (Shang 122I/ 1) *oon after ChinaUs engagement #ecame visi#le first
with fre-uent visits #" the head of the state and later #" high ranking officials' heated
de#ates naturall" arose in the American polic"making communit" and academia in order
to find the Chinese true intention #ehind all these maneuvers
*trategic and go5glo#al
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
30/61
&inance
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
31/61
Chapter 3 – A theoretical approach to China’s !I in
Latin America
The previous chapters presented a rough sketch of academic literature review
alongside with a context into which economic' political and cultural phenomena wasdescri#ed revolving Chinese5Latinamerican relations in the past decades This chapter
pretends to center its focus in providing a more specific academic view on such relation
with the o#Hective to provide material for future model estimation The different concepts
and constructs displa"ed #elow are the continuation of several works from several
researchers with the added value of putting it into the Latin American context
!n this sense we divide this chapter into main sections The first section will
provide a -uick review of extant investment theories The second section is pro#a#l"
more interesting #ecause it shows wh" such theories have failed to explain the Chinese
experience of outward direct investment and the current research areas in the field The
third section will provide some of the current field of stud" in Chinese .! literature
The fourth section provides a short theor" that we #elieve might provide some
ellucidating conditions into which .! in Latin America would #e #etter explained
&inall" we end the chapter with a set of concluding remarks
Extant t$eories o' 'orei(n direct in!estment
The stud" of wh" firms put reources into different production activites in different
locations is as old as the stud" of #usiness itself !nternational #usiness activit" can #e
traced #ack to the ancient world and further along the road' several multinational
corporations (MNEs) can also #e identified in Europue in the middle ages and in the
#eginning of the modern era (unning' 0779)
Modern international #usiness acitivt" #ecame more apparent onl" after the
industrial revolution !t is when' after realiing the power of factor specialiation' which
entrepeneurs were a#le to learn tat efficienc" is o#tained through organiing the relevant
factors according to their advantages That is to sa" that modern MNEs' in particular'
have their roots in the massive international movement of factors that took place in the
nineteenth centur" (unning' 0779a/ p77) +esource5seeking was the most commonmotivation of &! in this period' even if #" 0D42 man" firms had alread" crossed the
Atlantic' in #oth directions' in what can #e defined as market5seeking investment
(unning' 0779a/ p022G ?ones' 0773/ p4)
espite the presence of &!' most foreign investment in the nineteenth centur" 5 and
indeed until the late 072s Z was portfolio capital As a result' international #usiness
activit" was largel" ignored in economic theor" until the late 0742s () After the end
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
32/61
of colonialism and the spread of capitalism' onl" then did the international movement of
capital was considera#le enough to catch the attention of academics A possi#le reason for
such late #loom is that the phenomenon did not have a maHor perceived economic impact
.n the other hand (and pro#a#l" more importantl")' the neo5classical theor"' #ased upon
perfect markets and the international immo#ilit" of factors' did not easil" incorporate
multinational activit" ()
The growth of &! (and of the MNEs themselves) that followed ,orld ,ar !!
emphasised the inade-uac" of the neo5classical theor" to explain the phenomenon and the
need for a whole new approach Economic theories passing from +icardo8s classic model
of comparative advantage' passing through the eckscher5.hlin model' failed to explain
the growth of &! during the post5war era The volume of international investment not
onl" grew su#stantiall"' it started to reduce its concentration in primar" goods' and to #e
increasingl" directed towards the production of knowledge5#ased products in other
developed countries ($uckle" and Casson' 07I3/ p93) &urthermore' important changes
in the organisation of international #usiness were taking place' in particular' thedevelopment of horiontal MNEs and the new ?apanese vertical foreign investments
(unning' 07I7/ pp1I251G 0779a' pp0135I)
!t was not onl" after Pernon8s seminal piece of the product c"cle theor" that research
on the determinants of foreign production #ecame extensive () Two schools of
thought emerged as the contesting approaches for providing a consistent explanation of
the reasons wh" firms choose to own production and trading facilities a#road/ the
=+eading *chool8 with the ;internalisation theor"< headed #" $uckle"' Casson' +ugman
and ennartG and the ;eclectic paradigm< maximied #" unning Additional to these
efforts' scholars at the 6niversit" of 6ppsala (?ohanson' ,iedersheim5Kaul' Pahlne)
started investigating the internationalisation process of individual firms' widening thescope of the new discipline ()
!s in this fashion' and #earing that the scope of this paper isn8t a deep discussion of
the histor" of &! theor" development' we skip most of the work to #ring up some of the
most relevant constructs/
The internatilisation approach which has #een most most associted with $uckle" and
Casson (07I3) and it represents a different perspercitve from the traditional ;market<
view of the interaction of the agents that compose an econom"' regardless if its an
international economic s"stem or a simpler isolated one This view provides a new set of
tools that give the universe of &! stud" a compeling starting point into which one can
derive certain principles that could #e useful in order to explain or understand the
complexities around it &ollowing their work' a ver" #asic generaliation could #e the
starting point/ (0) firms internalise missing or imperfect external markets until the costs
of further internalisation outweigh the #enefitsG and (1) firms choose locations for their
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
33/61
constituent activities that minimise the overall costs of their operations (K ? $uckle"' ?
Clegg' et al 122I) !n other words' the classical principles of economic theor" are #eing
applied in the sense of rationaliation and resource allocation efficienc" Neoclassical
schools of thought are immediatel" represented in this traditional wa" of thinking and
model especification follows the same path as economics would do
A #asic tenant of such view is that the expansion #" the internalisation of markets
means that firms use &! to replace imperfect external markets in intermediate products
and knowledge (as exemplified #" exporting and licensing) and appropriate the profits
from so doing !n the case of emerging econom" MNEs' there are likel" to #e particular
imperfections in home countr" capital markets that ma" re-uire special applications of
the theor"' and this' as we shall see' is true of China (K ? $uckle"' L ? Clegg' et al
122I)
Now' it was with unning that a separation from the pseudo5orthodox economic
perspective of the theories of &! that a shift in theore" came a#out unningUs eclectic paradigm came to the rescue and suggested three primar" motivations (unning' 07II'
0779)/ foreign5market5seeking &!G efficienc" (cost reduction)5seeking &! and
resource5seeking &! (including a su#set that is known as strategic5asset5seeking &!)
arket seekin(
As noted #" 6NCTA' ;market5seeking .! is #" far the most common t"pe of
strateg" for developing5countr" TNCs in their process of internationaliation< (6NCTA,!+ 1223) *everal recent studies point to the rise of strategic asset5seeking motives
driving Chinese .! particularl" towards large developed markets (@edia' %affne" and
Clampit 1201) !n their stud" covering Chinese .! from 07D to 1220' $uckle" and al
discovered that market seeking was a ke" motive for Chinese .! in the period under
stud" (K ? $uckle"' L ? Clegg' et al 122I) owever' over this period' Chinese firms
have moved awa" from undertaking mainl" market5seeking strategies in near#" foreign
markets towards the securing of raw material even in riskiers markets (K ? $uckle"' ?
Clegg' et al 122I)
E''iciency seekin(
;Efficienc"5seeking .! is an important motive' #ut its prevalence varies
considera#l" among developing5countr" TNCs' especiall" in terms of their countr" or
region of origin and industr" (%ugler and $oie 122D) Most of the companies for which
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
34/61
efficienc"5seeking .! is important are Asian and in three main industries' electrical and
electronic products' garments and !T services< (6NCTA ,!+' 1223) owever' in
some sectors where competitive pressure is ver" high' other cost5reducing factors'
including national and international policies' seem to have induced efficienc"5seeking
investment #" emerging countries firms including Chinese companies &or example'
companies from China have invested in African countries such as Lesotho' Malawi'
*enegal and *wailand to #enefit inter alia from special treatment (dut"5free) accorded
#" some developed countries to product exports from these African countries (6NCTA
,!+' 1223)
esource-seekin(
China tremendous economic development re-uires a stead" suppl" of natural
resources' including ferrous and non5ferrous metals' precious metals' minerals and oil and
gas Chinese companies have thus developed enormous activities in resource5seeking
.! in natural resources are not driven #" regional proximit"' #ut simpl" #" the
availa#ilit" of assets (%ugler and $oie 122D) The active ac-uisition of natural resources
stands out amongst Chinese investments a#road' and destinations for Chinese outward
.! are resource5rich countries around the glo#e' such as African and Central Asian
countries' along with Australia' +ussia and Canada (K ? $uckle"' L ? Clegg' et al
122I) The common rationale to set up su#sidiaries a#road is to ensure a sta#le suppl" of
resources for the own operations in production and construction (%ugler and $oie 122D)
Strate(ic asset-seekin(
According to the glo#al surve" carried out #" 6NCTA' Chinese companies
investing a#road regard strategic asset5seeking as the second most important motivation
after market5seeking Among Chinese MNEs' 40 per cent regard created5asset5seeking as
an important motive for their .!' compared to D4 per cent for market5seeking' 97 per
cent for efficienc"5seeking and 2 per cent for resource5seeking .! (6NCTA ,!+'
1223)%enerall"' strategic asset5seeking is often aiming at the ac-uisition of information
and knowledge on how to operate internationall" owever' with growing experience of
Chinese firms in this' their goal has rather turned to concrete intangi#le assets' such as
advanced proprietar" technolog" and immo#ile strategic assets' #oth through greenfield
investments and ac-uisitions (Anderson5!!! 120) The ac-uisition of foreign
technologies and #rands is often regarded as a short cut to esta#lish a compan" as an
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
35/61
internationall" known' -ualit" producer with a portfolio of latest technologies and
services' and an efficient distri#ution channel Ac-uisition will function as a fast route to
such #enefits' and in addition' will also den" them to competitors (Anderson5!!! 120)
The previous section gave a -uick look at the theoretical development of &! in the
last I2 "ears The initial postulation #egan as an offspring of economic theor" tradition'
which emerged onl" after capital gains in the post5war era' were large enough that the
traditional economic theor" failed to account for it Academics #egan to ponder the
necessit" of providing new wa"s of explaining &! and came up with different options
*ome of the most studied motivatiosn #ehind the increasing flow and stock of Chinese
.! include/ ac-uiring strategic resourcesBassets' adopting advanced technologies'
attracting glo#al talents' avoiding trade protections and high tariffs ($arne"' 0770G eng'
122IG $oisot and Me"er' 122DG +ui and Jip' 122DG eng' 1201)The internalisation approach' #ased upon Coase8s perspective of the firm' has
provided a roadmap that produced research and theories that seems to fit in some cases
6nfortunatel"' that doesn8t seem to #e the case when one is stud"ing developing
economies' and in particualr China8 .! The following paragraphs gives several
arguments into which a different perspective should #e considered in this case
$e c$inese case o'
The process of China8s reintegration with the glo#al world econom" #egan with the
;.pen oor< policies in 07I7s uite soon' in the middle of the 07D2s' clear and concrete
political motivations for the opening were stated (%ugler and $oie 122D) As Shan notes'
the important aims were to secure a sta#le suppl" of resources that cannot #e sourced in
China' to contri#ute to foreign exchange earnings and generating export opportunities'
and channeling advanced technolog" and e-uipment to China (Shan 0774) As a ke"5
stone' in 0777' the ;go5glo#al< initiative (ou chu -u) was esta#lished' aiming at
promoting the international competitiveness of Chinese firms
!n its search for newer markets' China would #e then prone to have a Market5*eeking
motivation of &! for traditional trade supporting reasons' ie to access distri#utionnetworks' to facilitate the exports of domestic producers' and to enhance exports from the
host countr" to other large and rapidl" growing markets () +egarding to efficienc"5
seeking &!' such will occur when outward investors seek lower5cost locations for
operations' in particular in the search for lowercost la#our %iven ChinaUs comparativel"
low la#our cost levels this motivation is unlikel"' and is not explicitl" considered here
+esource5seeking &! from emerging economies occurs to ac-uire or secure the suppl"
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
36/61
of raw materials and energ" sources in short suppl" at home This ma" well involve
Chinese .! in relativel" high5income countries that have significant energ" reserves
and raw material deposits (eg' Australia and Canada) !t ma" also involve the search for
specific assets such as +> capacit" and output' design facilities and #rand names that
are em#edded in advanced countr" firms and which can usuall" #e accessed onl" #"
takeover of these firms or su#divisions of them (unning' 1220)
The -uestion then arises as to whether &! from emerging economies and'
specificall"' from China re-uires a special theor" nested within the general theor" a#ove
$uckel" et al have proposed three main conidtions that appear when a specific case of
stud" does not fit into the general theories of &!/ capital market imperfections' the
special ownership advantages of Chinese MNEs and institutional factors ()
/n4alance in t$e access to "apital and distorted "apital
arkets
!n China for instance' given the large sums of capital that were availa#le after
decades of unprecedented growth' the market for capital showed a semipermanent
dise-uili#rium that gave incentives for companies and people to exploit overseas !n this
sense' market imperfections ma" #e transformed into ownership advantages #" emerging
econom" firms ($uckle"' 122a) !n other words' firms' as in the case of large chinese
investors in the infraestructure secto in Latin America' have found eas"5cheap capital
made availa#le #" the China evelopment $ank and the Export5!mport $ank' to developactivities at #elow standard capital rates This t"pe of situation is what $uckle" refers to a
market imperfection that incetivises Chinese .!
&urthermore' one can argue that *tate5sponsored soft #udget constraints make
ac-uisition #" Chinese enterprises a UnormalU mode of entering and penetrating a host
econom" (,arner et al., 122) The Usiea#le venture capitalU afforded to *.E is
exemplified #" the *tate CouncilUs provision to the China !nternational Trust and
!nvestment Corporation (C!T!C) when it was instructed to explore overseas investment
opportunities in priorit" resource sectors (Shang' 1229) ifferent authors have given
several other examples &or instance' The *tate Council also directed the transfer of the
China !nvestment and Trust Corporation for &oreign Economic Cooperation and Trade(&.T!C' previousl" the financia[ arm of M.&TEC) to the *inochem %roup' effectivel"
giving it an Uinternal #ankU (Shang' 1229)' while the $eiHing steel producer' *hougang
%roup' was granted the right to start and own a #ank' virtuall" guaranteeing the lifting of
a hard #udget constraint (*teinfeld' 077D) The ac-uisition of !$MUs personal computer
#usiness #" Lenovo (concluded in 1224) was generall" regarded to have #een
underwritten #" the Chinese government' who at the time held a stake of * I: in the
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
37/61
compan" (Business Week, 122) &rom this discussion' it appears possi#le that capital
market imperfections ma" account for the ease with which #oth natural5resource5seeking
&! (t"picall" in energ" and raw materials sectors) and strategic5asset5seeking &! might
have #een undertaken #" Chinese MNEs during the period of stud"
wners$ip ad!anta(es o' "$inese .Es
There is an argument that emerging econom" MNEs have developed ownership
advantages that allow them to operate certain t"pes of activit" in foreign countries more
effectivel" than local firms and industrialised countr" MNEs !t is a concept related to
cultural affinit" provided #" local diaspora !t provides certain #enefits such as familiarit"
with the local conditions' easier access to resources and their control ,here these
conditions are relativel" long5lasting then the" provide the case for semi5permanent
Uownership advantagesU of emerging econom" MNEs 5 the third element of unningUs
eclectic theor" after internalisation and location factors (unning' 0779) !f these
conditions are met' then market information a#out the most suita#le and profita#le
investment opportunities can circulate with ease' and fruitful commercial relationships
can #e esta#lished that facilitate market entr" and development !nvestment and
commercial risk can #e reduced as a conse-uence (Lecraw' 07IIG Shan' 0774)
lnstitutional 'actors in'luencin( "$inese
The institutional fa#ric of an emerging econom" can determine the a#ilit" and will of
domestic firms to invest a#road A straightforward' consistent and li#eral polic" towards
outward &! will encourage it' while a discretionar" and fre-uentl" adHusted polic" ma"
do the opposite There is an emerging #od" of theoretical work that concerns the
institution5#ased view of strateg"' or institutional theor" for short (North' 0772G Keng'
1221G Me"er and Ngu"en' 1224G ,right et al., 1224) This has the potential to help
explain distinctiveness in the #ehaviour of outward5investing Chinese firms (K ?
$uckle"' ? Clegg' et al 122I) The #asic thrust of this contri#ution is that firmsU strateg"
is shaped #" the home institutional environment (more collo-uiall" Uthe rules of thegameU)' which is formall" and informall" enforced #" government and its agents (*cott'
1221) and which #ears upon the norms and cognitions that influence investment'
including foreign investment' #ehaviour
%iven the extent of state control of the Chinese econom" (*cott' 1221)' the
institutional environment is likel" to have had far5reaching and profound effects on the
internationalisation decision of Chinese firms (K ? $uckle"' ? Clegg' et al 122I) The
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
38/61
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
39/61
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
40/61
The Lia#ilit" of &oreignnessG The +ole of %overnment and *tate and The "namics of
&irms and !nstitutions At a -uick glance we can see that the role of the government and
instutions in the .! decision takes a maHor role' impl"ing that several techni-ues from
&oreign Kolic" anal"sis ma" #e suita#le for the stud" of Chinese .! The description of
such perspective or areas of research falls outside the scope of this paper' #ut we make
use of some of the principles outlined #" them in the next section when talking a#out the
model and which varia#les are necessar" for anal"sing the main factors #ehind Chinese
.! in Latin America
Moreover' !t is widel" accepted that the support of the governments is a main driver
of the Chinese .! () *cholars argue that .! promotion policies are economicall"
imperative and institutionall" complementar" to mitigate the latecomer weakness and
lia#ilit"5of5foreignness of the Chinese MNCs in glo#al competition *ome argue that the
rapid growth of the .! is the outcome of the Chinese ;going5out< strateg" to serve its
national development priorities (*ong' Jang' > Shang' 1200)' no dou#t fuelled #"
China s huge foreign currenc" reserve' as much as 94 trillion at the end of 1201‟
(Cheung > ian' 1227)
&inall"' when considering a different level of ana"sis' al#eit the interactions #etween
firms and institutions when stud"ing their effect on investment strategies' management
scholars advance #oth institutional and resource5#ased arguments with respect to strategic
options #ased on resource' institution' and transaction cost considerations (Luo > +ui'
1227) &or example' formal institutional constrains such as weak intellectual propert"
rights (!K+) and inefficient legal frameworks discouraging Chinese firms investing in
+> and innovations in China As such some Chinese firms use .&! as an alternative
to ac-uire strategic resources including advanced technologies (eng' 1227) !n addition
some Chinese firms chose to go a#road and invest overseas #ecause the fragmentation of the Chinese econom" imposed high costs to do #usiness across local #oundaries ($oisot
> Me"er' 122D) *imilarl"' international expansion ma" indicate that more Chinese
MNCs ma" escape domestic limitations and competitive disadvantages through .!
Although current research helps shed considera#le lights on how Chinese investors
respond to various institutional constraints' research is lacking on the interactions
#etween firms and institutions as the" Hointl" influence Chinese .! ()
& simple t$eory o' "$inese in Latin &merica
All throughout the chapter we have shown some of the most known academic
postulates that have #een written with the intention to understand the motivations #ehind
Chinese .! in Latin America *till there is no consensus a#out which are the main
elements that interact in the decision making process of .! in China when investing in
Latin America That is to sa" that China8s .! #ehavior has somewhat fallen outside the
-
8/20/2019 Understanding Investment by Chinese SOEs in Latin America_ Juan Pablo Dominguez
41/61
general norms of what the traditional theor" sa"s a#out the main impulse #ehind its
investment decisions
The