China’s dreams of expanding its influence and participation in Latin America and the Caribbean through commercial and infrastructure projects are tainted by corruption problems, financial difficulties, and criticism of the quality of their constructions. China’s fantasies have become nightmares and horror stories for many countries.
“China has shown an ability to promote an attractive slogan: The Dream; a slogan that resonates: Who does not dream, who does not think, who does not imagine?” Sergio Cesarin, coordinator of the Center for Asia-Pacific and India Studies at the National University of Tres de Febrero in Argentina, told Diálogo on September 22. “However, behind that advertising phrase, the Chinese ramblings pose a brutal reality and pragmatism.”
Cesarin says this Chinese utopia translates into ambitious infrastructure projects financed by Chinese state-owned banks for the expansion and globalization of its companies; the internationalization of its currency, the yuan; and securing continued access to natural resources and infrastructure projects in Latin America, financed with shady deals.
“This dynamic of rapprochement leads to numerous projects failing, resulting in the displacement of competition to the detriment of European and U.S. companies,” said Cesarin.
In the context of large tenders, European and U.S. regulations are characterized by the rigorousness of companies’ external relations, the standards they must meet, and the regulations they must abide by. In the case of China, the regulations are obscure and lack parameters and control levels.
“It’s difficult to pose adequate compensations to failed projects,” Cesarin said. “In debt restructuring or project review processes, Beijing opts for bilateral negotiations under conditions of confidentiality, avoiding taking cases to international courts.”
These dynamics not only cast a shadow over China’s aspirations in the region, but also leave in their wake a number of incomplete or troubled projects. Here are a few examples:
In September 2021, the Matthews Ridge Dam, built by Chinese company Guyana Manganese Inc. (GMI), collapsed, causing flooding in the region. Inhabitants had to take refuge in trees due to the sudden rise in water levels, Guyanese newspaper Stabroek News reported.
Despite instructions from Guyanese President Irfaan Ali to repair the dam, GMI failed to make improvements to the obsolete drainage pipes, which compromised the structure of the reservoir, the daily reported. Currently, residents must cross an unsafe and slippery bridge, which pose a serious danger especially to children and the elderly.
In 2015, Mexico cancelled the Chinese megaproject Dragon Mart in Cancun, Quintana Roo, due to lack of authorizations for its construction and its effect on the ecosystems and coastal roads in wetland areas, Mexican magazine Proceso reported.
This project, which began in 2013 and faced opposition from local authorities, environmentalists, business, and social organizations, had planned 722 homes, 20 commercial buildings, and 3,000 stores, in an area of 561 hectares, Mexican daily El Financiero reported.
In addition to its commercial purpose, according to Proceso, Dragon Mart planned for the extraction of natural resources and the production of genetically modified soy in Quintana Roo. These types of Chinese investments in other regions, such as Africa and South America, are often associated with the intensive exploitation of raw materials.
Coca Codo Sinclair
The Ecuadorian government and Chinese contractor Sinohydro are still in talks to resolve issues preventing the official reception of the Coca Codo Sinclair hydroelectric plant, despite the fact that it began operating in 2016, BNamericas reported on May 4.
Sinohydro carried out the construction of the dam at a cost of around $3,440 million, while Ecuador invested an additional $600 million in the transmission lines, the business platform indicated.
The government refuses to formalize the reception of the plant, due to the existence of thousands of irreparable cracks and other problems that, in 2018, led the Comptroller’s Office to conclude that the work did not meet their criteria.
Metro of Bogotá
Empresa Metro de Bogotá, in Colombia, imposed a $196,000 fine on Chinese consortium Metro Línea 1, which is building part of the first line of Bogotá’s mass transit system, for failing to deliver preliminary studies and designs by the due date in late 2022, daily El País reported.
The contract for the construction of the first line was signed in November 2019 with Chinese consortium APCA Transmimetro, which committed to complete the work by 2028. Line 1 will be 23.6 kilometers long and is currently only 20 percent complete. The Chinese consortium argued that variables were not considered and will appeal the sanction, think tank Andrés Bello Foundation reported on July 27.
Rositas Hydroelectric Power Plant
In 2018, Bolivia suspended the Rositas hydroelectric project due to opposition from affected communities, reported environmental journalism platform Mongabay. In January 2022, the companies China Three Gorges and China International Water & Electric did not provide alternatives for the populations that were to be flooded.
The hydroelectric project was intended to be built in Rio Grande, in Santa Cruz, near the confluence with the Rositas River, in an area of 150,000 hectares. It was expected to flood an area of 449 km2, equivalent to three times the urban area of La Paz, Mongabay reported. The project was financed with more than $1.5 billion from China’s Eximbank.
Despite the suspension, there is a possibility that the Rositas project could be reactivated. Mongabay noted that this controversial project, with more than five decades of history in Bolivia, has not been subjected to an environmental impact study nor has it gone through the prior consultation process. To date, each Bolivian government has attempted to reactivate it.
“Dynamics that cast shadows on Chinese aspirations negatively impact the international reputation of these companies. We are not alone in observing project failures in the region, as Chinese project failures are also recorded in South Asia and Africa,” Cesarin said. “In Latin America, the perception toward China has deteriorated due to multiple problems with the infrastructure they build. This raises doubts about previous strategic alliances with Beijing, as it often denies solution to these problems.”
“It’s important to consider that all of this could open a small window of opportunity for alternative projects by European and U.S. infrastructure companies in the future,” Cesarin concluded.