As German international media outlet DW noted, until just a few years ago, Chinese corporations were relatively unknown in Latin America, but their direct investments in the region have averaged about $10 billion per year since 2010, and this has a heavy damaging effect on the environment, according to the United Nations Economic Commission for Latin America and the Caribbean (ECLAC).
Mónica Núñez Salas, assistant professor of Environmental Law at the University of the Pacific in Lima, Peru, recently wrote a report for Florida International University (FIU), entitled China’s Investments and Land Use in Latin America, where she warns that the region has maintained its role as a provider of natural resources to China “at a high cost to its ecology and local communities. Increased demand for raw materials is affecting natural resources and local populations, at a time when climate change is making sustainability practices more urgent.”
Agriculture, mining, and drilling
In an interview with DW, Rebecca Ray, one of the authors of the report China in Latin America: Lessons for South-South Cooperation and Sustainable Development, says that “Over the past 10 years, China has tripled its importance as a destination for Latin American exports — growing from 3 percent to 9 percent of the total. But these exports are not like other exports: Nearly 90 percent of Latin American exports to China are from agriculture, mining, or drilling — compared to about half of Latin America’s exports to the rest of the world.”
Ray further explains that “in environmental terms, this means that, on average, Latin American exports to China have a much heavier environmental footprint than their other exports: they use twice as much water and produce 12 percent more greenhouse gases.”
Chinese mining and infrastructure projects also create lasting environmental damage. China’s banks support projects rejected by multilateral institutions due to their environmental and social risks, such as the Coca-Codo Sinclair dam in Ecuador, or in countries with lending problems, such as Venezuela, the U.S. foreign policy and international relations think tank Council on Foreign Relations reported.
Although China’s demand for commodities has boosted regional economic growth, it has also encouraged its trading partners’ overreliance on natural resource extraction at the expense of higher-value-added activities. Many countries voluntarily compromise their own environmental, social, and governance regulations to attract Chinese investment.
“Due to the region’s weak institutions, China’s expanding influence may also facilitate corruption and increase risks to countries’ resource security and national interests,” warned the U.S.-China Economic and Security Review Commission on its 2021 annual report to the U.S. Congress.