In several Latin American countries, the China Development Bank (CDB) has gained a foothold through investments in key sectors such as energy and transportation. These investments, however, raise concerns about their environmental impact, lack of transparency in their agreements, and the influence they may have on the sovereign decisions of democratic nations.
The CDB, closely tied to the Chinese Communist Party (CCP), is one of Beijing’s main financial instruments for expanding its global influence. Its loan portfolio includes infrastructure, energy, transportation, and urban development projects, both within and outside the framework of the Belt and Road Initiative (BRI).
Together with the Export-Import Bank (CHEXIM) and other state-owned banks, the CDB channels public resources to international megaprojects. These investments are complemented by capital from Chinese companies operating abroad with the CCP’s backing, strengthening their presence in various regions, think tank Institute of the Americas indicates in a report.
In Latin America and the Caribbean, Chinese investments have financed large-scale projects ranging from oil and gas exploration to power generation and mining linked to energy transition. Between 2019 and 2023, the region received an average of $1.3 billion a year from the CDB and CHEXIM, investigative journalism platform Dialogue Earth indicated.
Political orientation
“Chinese banks and financial institutions operate under the political guidance of the Chinese Communist Party,” Sergio Cesarin, coordinator of the Center for Asia-Pacific and Indian Studies at the National University of Tres de Febrero in Argentina, told Diálogo. “Although they present themselves as credit and investment institutions, their actions respond to state directives.”
Cesarin emphasized that through loans, financing, and even technical cooperation packages, these large banks, such as CDB, act as foreign policy instruments designed to promote China’s strategic interests around the world. “In that sense, they are China’s main lenders in the international arena and in the BRI blueprint.”
According to Cesarin, the CDB is one of China’s main banks operating in Latin America, along with the Industrial and Commercial Bank of China, the largest in the world. “They are part of a state architecture of foreign financing, which responds to geopolitical and economic objectives, beyond traditional commercial banking logic.”
Non-compliance and controversies
The CDB’s footprint can be seen in projects such as the Santa Cruz Hydroelectric Complex in Argentina, El Dorado International Airport in Colombia, the Shougang iron mine in Peru, the Mirador copper mine in Ecuador, and the Las Cristinas gold mine in Venezuela, according to the report, China Development Bank: Financing, Governance, and Socio-Environmental Challenges for Latin America and the Caribbean, by Ecuadorian nongovernmental organization Latinoamérica Sustentable (LAS).
The report warns of deficiencies in the governance of the CDB in the region. According to LAS, many of the projects financed do not adhere to environmental and social standards, nor are there institutional mechanisms within the bank to address complaints or establish communication with affected communities.
One of the most controversial cases is the hydroelectric complex in the Argentine province of Santa Cruz, whose project, led by the Chinese company Gezhouba, is negatively impacting the Perito Moreno Glacier, a World Heritage Site. In 2023, the project was suspended due to lack of funding, Argentine news site Infobae reported.
Other projects financed by the CDB were also not completed. In Venezuela, the Tinaco-Anaco railway line and the PDVSA Agrícola rice processing plant in the state of Delta Amacuro were left unfinished, according to LAS. According to the same report, Venezuela, Ecuador, and Brazil account for 85 percent of the Chinese bank’s loan portfolio in Latin America.
In Peru, the CBD is financing the construction of the San Gabán III Hydroelectric Power Plant, a project that, after delays, is expected to begin operating in 2026, according to Peruvian daily Gestión. In Colombia, the Mar 2 highway, CDB-financed and executed by China Harbour Engineering Company, has caused landslides and buried small communities in Dabeiba, affecting more than 300 families, German news agency DW reported.
Conditions and economic dependence
According to the Institute of the Americas, CDB financing agreements often include conditions that privilege the exclusive use of Chinese inputs, technology, and personnel. These practices create tensions with local sectors and raise questions about the level of autonomy with which recipient countries can make strategic decisions when accepting this type of financing.
“In Latin America, there is a persistent belief that China provides financing without demanding concessions,” Cesarin said. ‘However, this perception is mistaken. Behind the ‘sure profit’ rhetoric, conditions are often established that involve the transfer of control over strategic resources, majority ownership of key projects, or exclusivity.”
Federico Rabino, an expert in international relations and geopolitics and director of the Fernando de la Mora Institute in Paraguay, told Diálogo about the risks of economic dependence derived from Chinese loans. According to Rabino, “when China grants financing through its state-owned banks, there is no thorough analysis of the risk or the countries’ ability to pay.”
For Rabino, what really interests China is the positioning of these loans, “which ends up putting countries in a debt trap.” This indebtedness limits nations’ negotiating power, leaving them at a disadvantage when it comes to discussing favorable terms in the future.
“When negotiating with Chinese financial institutions or companies, you are ultimately negotiating with the CCP. This limits the countries’ ability to retaliate, since they are not dealing with a private actor,” Cesarin concluded. “The great asymmetry in the negotiations puts countries at a disadvantage in the face of Chinese demands, a key aspect that must be weighed in sovereign decisions.”
