To access the full paper, download the PDF on the left-hand sidebar.
Chinese investment in Latin American energy resources has stimulated a great deal of attention in both Latin America and the United States. While Chinese investment is significant for the region, it is by no means the main focus of China’s foreign interests. Moreover, U.S. investments continue to significantly surpass Chinese assets in the region. Still, some Latin American governments are betting heavily on Chinese energy-related activity while others are not. In addition, China is not the only Asian country newly interested in Latin American energy resources—India and South Korea are also investing in the region. There are differences among Chinese, Indian, and South Korean investment patterns in Latin American energy. The differences are important, and their implications for Latin American governments can be significant, depending on political dynamics internal to the Latin American country.
It is believed by Asian governments, their financial advisers, and the investment community that the 2007 financial crisis lowered the costs for energy assets and corporate shares, creating new opportunities to buy assets that will rise in value as economic recovery takes hold. Investors believe the economic growth in Asia will cause holdings in oil, gas, and mining assets in Africa, Latin America, and elsewhere to appreciate in value, and therefore these holdings are seen as a means to preserve and enhance government wealth. While early Asian national oil company (NOC) investment focused on large assets in the Middle East and the Caspian region in the 1990s, more recently, Asian NOCs have been diversifying their activities globally, increasing their interest in Latin America. Recent instability across the Middle East is demonstrating the rising risks of investing there, rendering the Americas as more attractive.
In this paper, I first review the geopolitics of China’s energy strategy, comparing it with that of South Korea and India. In the second section, I examine Asian investments in specific Latin American countries, comparing and contrasting the approaches taken by the three Asian countries to access energy resources in the region. The third section analyzes the impact of Chinese, South Korean, and Indian energy investments on politics in each of the recipient nations, explaining why they are significant in some countries but not others.
This material may be quoted or reproduced without prior permission, provided appropriate credit is given to the author and Rice University’s Baker Institute for Public Policy. The views expressed herein are those of the individual author(s), and do not necessarily represent the views of Rice University’s Baker Institute for Public Policy.
