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research-article2019
WAFXXX10.1177/0043820019883251World AffairsBernabe Malacalza

What LED to the Boom?

Unpacking China’s Development Cooperation
in Latin America

Bernabé Malacalza
National University of Quilmes

What led to the boom of Chinese development cooperation in Latin America? This
article provides a systematic analysis of China’s foreign behavior, motives, and poli-
cies regarding development cooperation toward the region between 2000 and 2014.
I propose a comparative framework that defines Chinese development cooperation
as a tool of economic diplomacy. Drawing on empirical evidence from AidData’s
Global Chinese Official Finance Dataset and Chinese white papers on foreign aid,
the findings evidence that China was motivated by multiple and conjunctural fac-
tors in providing development cooperation. In the realm of theory, the article con-
tributes to the literature on economic statecraft—filling in gaps in understanding
the relationship between economics and politics. Empirically, it provides a set of
tools for understanding the important role that development cooperation plays in a
nation’s statecraft. Regarding Chinese foreign policy studies, it offers insight into
the financial dimension of China’s international economic relations.

Keywords: Chinese Economic Statecraft, China, Latin America, Econom-

ic Diplomacy, Development Cooperation, Foreign Aid, Development Fi-
nance, International Political Economy.

¿Qué razones han llevado al auge?

Desempacando la cooperación al desarrollo de China en
América Latina
¿Qué razones han llevado al auge de la cooperación al desarrollo de China en
América Latina? Este artículo brinda un análisis sistemático del comportamiento
externo de China, sus motivaciones y políticas en el campo de la cooperación al

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 Ber nabé Malacalza

desarrollo con la región entre 2000 y 2014. Para ello, se propone un marco de
análisis comparado que entiende a la cooperación al desarrollo de China como una
herramienta de diplomacia económica. Basándose en la evidencia empírica prove-
niente de base de datos de Finanzas Oficiales Chinas de AidData así como de los
documentos blancos sobre la Ayuda del gobierno chino, los hallazgos demuestran
que China hace uso de la cooperación al desarrollo motivada por múltiples factores
coyunturales. Desde el punto de vista teórico, el artículo contribuye a la literatura
sobre diplomacia económica, intentando cubrir parcialmente la vacante de estudios
sobre la relación entre política y economía. En el plano empírico, provee un conjun-
to de herramientas para entender el importante rol que la cooperación al desarrollo
tiene en la influencia internacional de los países. En lo que respecta a los estudios
sobre política exterior china, se ofrece una aproximación a la dimensión financiera
de China en sus relaciones económicas internacionales.

Palabras clave: Decisiones de estado sobre la economía, China, América

Latina, Diplomácia económica, Cooperación y desarrollo, Economía
política internacional.

是什么导致了（经济）激增？ 解析中国在拉美地区的发展合作

是什么导致了中国在拉美地区大力发展合作？本文提供一项系统性
分析, 研究了2000年至2014年间中国对拉美地区发展合作的外交行为、
动机、 政策。 我提出一项比较框架, 将中国发展合作定义为一种经济外
交工具。 通过由AidData”全球中国官方财务数据集”和《中国的对外援
助》白皮书得出的证据, 发现中国在提供发展合作一事上受到了多个关键
因素的激励。理论上, 本文促进了有关经济治国之术的文献发展, 填补了理
解经济和政治关系的研究空白。实证上, 本文提供一系列工具, 用于理解发
展合作在国家治国之术上发挥的重要作用。在中国外交政策研究背景下,
本文对中国国际经济关系的财政维度提供了见解。
关键词： 中国的经济治国术, 中国, 拉美, 经济外交, 发展合作, 外交援助,
发展金融, 国际政治经济.

Since its World Trade Organization (WTO) accession, China has

increased its economic diplomacy (ED) activity in the Latin American
region involving several economic fields ranging from investment, trade,
aid, and finance. It turned out to be crucial to the development of the
“Go Global” strategy as a natural extension of the “Going out” policy in
2000, which totally transformed the landscape of China’s foreign policy

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 What LED to the Boom?

and its ED. The actions of two key groups of domestic actors in China
were particularly relevant: the international expansion of state-owned
enterprises (SOEs), and the increasing finance support from state-
owned banks (SOBs). This led to a dramatic boom in loans, grants, and
export credits toward Latin American countries to over US$46.5 billion
in 2000–2014, through bilateral agreements in which state agencies,
SOBs, SOEs, the private sector, and other actors interacted to produce a
variety of links (AidData 2017).
What led to the boom? China’s increasing role in ED and the expo-
nential expansion of its development cooperation toward Latin Ameri-
can countries has been the subject of considerable interest in the aca-
demic literature. However, comparative studies on Sino-Latin American
relations that attempt to integrate the realms of foreign aid and develop-
ment finance in a single analysis are scarce. This article aims to partially
fill this gap by indicating and examining how frames of China’s develop-
ment cooperation vary with format changes and sectoral allocation in
different theaters or contexts. It covers traditional aid, but also financing
tools in the form of non-concessional lending that go far beyond China’s
aid program, such as export credits, official loans at market rates, and
strategic lines of credit provided to Chinese enterprises (J. Xu and Carey
2014). While I am not primarily concerned with the impacts of China’s
variegated ED in the region, the present study enables us to understand
different and sometimes seemingly divergent trends and rationales. For
that reason, the question of why and how China provides development
cooperation should be addressed on a case-by-case basis, giving due
consideration to the interplay between particular and changing drivers,
specific sets of formats, and the combination of sectoral priorities that
shape each interaction.
With a view to disaggregating the financial dimension of Chinese ED
in Latin America, this article looks at development cooperation through
the lens of ED. Drawing on empirical evidence gathered from AidData’s
Global Chinese Official Finance Dataset 2000–2014, it maps the politi-
cal economy of the boom of Chinese development cooperation to Latin
America, illuminating the geographic and sectoral allocations of aid and
market-based development finance as well as the relationship between
the central government and the Ministries, SOEs, and Chinese SOBs.
My assumption is that there was no one singular form of Chi-
nese development cooperation. Rather, there were at least five frames,
depending on the different balances between aid and market-based
development finance and the sectoral priorities that shaped interac-
tions. The concept of theater is addressed on a case-by-case basis, with

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due consideration given to the interplay between particular combina-

tions of formats and sectoral priorities.
The first section examines some of the most relevant existing litera-
ture on Chinese economic statecraft and development cooperation in
Latin America. I next define the conceptual framework for addressing
and comparing Chinese ED and development cooperation and unpack
the research question and the conceptual definitions of aid and official
finance. I then explain China’s approach to foreign aid and develop-
ment finance and the definition of frames in development cooperation.
Next, I describe and compare Chinese development cooperation frames
in South American Organization of the Petroleum Exporting Countries
(OPEC) countries (Venezuela and Ecuador), the Caribbean basin, MER-
COSUR, Peru and Bolivia, and the Pacific Alliance and their distinctive
features. The conclusion discusses this study’s main findings in addition
to its limitations.

Chinese Development Cooperation in Latin America: Literature

Review
China’s development cooperation and the motivations behind its
ED have generated numerous debates in the last two decades. Most
academic literature focuses on China’s economic statecraft, aid, and
investments to African countries. Yet a deeper discussion is required to
analyze why and how China has considerably increased its development
cooperation commitments with Latin America since the beginning of
the 21st century. The main question is: What led to the boom?
Four perspectives have dominated the analysis of the political econ-
omy of Sino-Latin American contemporary relations. The first is that
Chinese economic statecraft in Latin America has been framed in terms
of geopolitical reasons and soft power as primary motivating factors.
Ellis (2009) was the first to examine the interplay of strategic and eco-
nomic factors underpinning China’s statecraft in Latin America. If there
is a dominant assumption within this perspective, it is that Beijing uses
grants and loans for mega-infrastructure projects as vehicles to ensure
its own domestic security and to advance China’s diplomatic isolation of
Taiwan. This “stadium diplomacy” has served as a tool to diplomatically
persuade those governments who have historically recognized Taiwan as
a separate national entity to change their position, and also to ensure
that countries that diplomatically recognized the Popular Republic of
China remain faithful to the “One China” policy (Ellis 2014b; Hearn and
Leon-Manriquez 2011; Hongbo 2017; Norris 2010). Recent research has

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 What LED to the Boom?

led to the conclusion that loans are politically driven and formulated
with the aim of filling the void left by a declining U.S. presence in the
region (Urdinez et al. 2016). These studies reveal that discussions on
Chinese ED should take into account the specific conditions of different
geopolitical contexts.
A second generation of studies states that China provides develop-
ment cooperation in order to gain access to natural resources: specifi-
cally, oil, minerals, and raw materials. This is the driving concern among
scholars analyzing Chinese extractive diplomacy, particularly regarding
the China Development Bank (CDB)’s cross-border energy deals in
Venezuela, Ecuador, and Brazil. Scholars also highlight the political rel-
evance of agreements related to oil and energy issues, by which loans are
engaged, repaid through oil exports to China (Downs 2011; Giacalone
and Ruiz 2013; Rubiolo 2010; Wang and Li 2016; Y. Xu 2017). This litera-
ture provides useful insights into the complexities of loans-for-oil agree-
ments, and the implications of governance systems in which Chinese and
Latin American oil companies share international joint ventures and
participate in joint decision-making processes. Consequently, extractive
diplomacy is considered as the main driver of Chinese finance.
A third group of studies is concerned with the roles played by China’s
“Going Out” policy and state-owned policy banks as central components
of the internationalization of the Chinese state and companies. These
scholars stress the significance of the state in domestic developmental
processes, but also in their overseas infrastructure investments. Gallagher
and Irwin (2015, 100) reveal how China’s loans have become tools of a
neo-developmental state’s strategy that “guides state and private-sector
investments to make commercial profit.” Other studies addressing the
issue of the links between state-owned banks, development finance, and
infrastructure investments in Latin America are Lum (2009); Gallagher,
Irwin, and Koleski (2012); J. Xu and Carey (2015); Kaplan (2016); Stan-
ley and Fernández Alonso (2018); and Dussel Peters, Armony Enrique,
and Shoujun (2018).
A fourth group of studies aims to demonstrate certain issues of the
domestic competition that underpins China’s development cooperation.
They emphasize that decision making in China is open to a multiplicity
of agencies, with sometimes contrary interests (Gu et al. 2016). Gonzalez-
Vicente (2011, 403) describes the Chinese state’s internationalization
as a process of gradual reterritorialization. Such holistic approaches
can also be found in works emphasizing the competition between the
Ministry of Commerce (MOFCOM) and the Ministry of Foreign Affairs

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(MOFA) (Varrall 2016). Others underscore the importance of China’s

provinces and companies (D. Zhang and Smith 2017; Zhou and Xiong
2017). Myers and Wise (2016; see also Creutzfeldt 2016; Stallings 2016;
Ellis 2016) question the myth of the Chinese state as a well-coordinated
and monolithic actor. Yang (2015) highlights the role of individual
actors and classifies policy designs as top-down (the Chinese govern-
ment as pioneer), bottom-up (the enterprises as pioneers), and platform
designs (quasi-government organizations as pioneers).
Together these four groups of contributions have helped create a
better understanding of Chinese ED in Latin America. However, this
article brings a new set of considerations by employing a systematic
comparative analysis of the different motivations and combinations of
formats and sectoral priorities that actually shape Chinese development
cooperation in different theaters. A major contribution of this article
is thus the comparative approach that allows distinguishing the nature
of the motivations behind China’s cooperation initiatives toward five
distinctive frames in Latin America, focusing not only on the economic
variables, but also on political goals.

Development Cooperation as a Tool of Economic Diplomacy:

Analytical Framework
The article adopts an International Political Economy theoretical
approach and anchors the analysis on the concepts of ED to understand
China’s development cooperation policy. The perspective is original
given that there are few studies addressing Chinese policy toward Latin
America through these lenses, especially in the realm of aid and inter-
national finance (Gallagher, Irwin, and Koleski 2012; Gonzalez-Vicente
2012; Hongbo 2017; Kaplan 2016; Liang 2019; Maggiorelli 2017; Myers
and Wise 2016; Stallings 2016; Stanley and Fernández Alonso 2018;
Vadell 2019; Wu and Wei 2014; J. Xu and Carey 2015).
With the aim of understanding the ways in which political actors
shape aid and development finance, the study assumes that develop-
ment cooperation is a specific expression of ED. According to Okano-
Heijmans (2011, 29–30), ED is “the use of political means as lever-
age in international negotiations, with the aim of enhancing national
prosperity, and the use of economic leverage to increase the political
stability of the nation.” It involves a mix of foreign policy objectives and
financial, economic, and commercial tools, and, conversely, economic
and commercial objectives and political tools in a certain environment
(Okano-Heijmans 2011, 27). This is typically a foreign policy practice

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 What LED to the Boom?

that is based on the premise that “economic/commercial interests and

political interests reinforce one another and should thus be seen in tan-
dem” (Okano-Heijmans 2011, 34). Thus, this analytical approach also
assumes that the state is neither the only player nor a coherent unity
conducting ED (de Haan 2011; Szatlach 2015). It takes into account
the instruments, the theaters, and the processes. Hence, the questions
of “what” (formats or instruments), “where” (theaters), and “how” (pro-
cess) inform the question of “why” (motivations).
In his seminal study of China’s economic statecraft, Norris (2010) notes
that China uses economic and financial tools as instruments of foreign pol-
icy. Brautigham (2012, 815) emphasizes that Chinese business and politics
are often intertwined. Like their Western counterparts, Chinese scholars
have produced the term isjingji waiiao [ED] to denote the diplomatic activ-
ity concerned with securing economic objectives, and the instrumental use
of economic means to achieve national strategic objectives (Norris 2010,
17). For Yao (2015, 1061), China’s ED is closely related to “the country’s
dream of regaining its past glory of fuqiang (wealth and power),” but also
to preserving the political legitimacy of the communist regime in Beijing.
China’s approach to ED as an integral part of its economic statecraft
has undergone significant changes in recent years, embracing the provi-
sion of public goods across aid and finance policies (Jiang 2011; Lai 2017;
Xiaotong 2016). Rana (2011) states that the official agents—the foreign
and economic ministries, the diplomatic and commercial services—now
engage in dynamic partnerships with an array of companies. In fact, Chi-
nese ED has been designed to serve Beijing’s commitment to modernize
the country. This has been already highlighted in the country’s “Going
Out” policy and the 12th Five-Year Plan (2011–2015), and emphasized by
the new generation of leaders at the 18th Party Congress in early 2013
(S. Zhang 2016). On the whole, Chinese ED is pragmatic, economically
oriented, and independent. At the macro-level, the president, prime min-
ister, State Council, and the Chinese Communist Party shape the grand
strategy. At the micro-level, agencies, officials, bureaucracies, and interest
groups (i.e., SOEs and local governments) vigorously compete for influ-
ence to defend their interests tenaciously (S. Zhang 2016).

China’s Economic Diplomacy and Its Development Cooperation

Policy
To describe the different forms of development cooperation, I
use van der Veen’s (2011) concept of frames. A frame is a “particular
approach to an issue area, which specifies a particular goal relevant to

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that issue, and which likely suggests a metric to use in assessing the dif-
ferent policy options available” (van der Veen 2011, 30). Development
cooperation policy is a “composite and multitool frame” that serves as
the answer to the question “Why should we give development coopera-
tion?” Different outcomes are often determined by differences in what
state actors see as the goals of a particular policy, and how these goals
are pursued by domestic actors at the international level (van der Veen
2011, 14). His general assumption is that there are wide range of plau-
sible goals associated with different development cooperation formats
and sectoral priorities. This makes it possible to show that development
cooperation is not the same tool at all times and everywhere.
As defined by Malacalza and Lengyel (2011), development coopera-
tion demarcates a broad area of international action in which reimburs-
able and nonreimbursable modalities of support can operate. Grants
entail a classic donor-recipient political relation, primarily representing
the participation of the highest political levels in line with the political pri-
orities established by the executive branch and MOFA. By contrast, the sig-
nature of a loan agreement is the result of an open trade-off between the
different actors implicated (often government agencies, policy banks, and
companies) in a particular political and economic decision of promoting
trade or/and investments to countries with sufficient repayment ability.
Motivations are closely linked to the choice of formats or modalities.
The Chinese approach to development cooperation makes the distinc-
tion between foreign aid and market-based development finance. Two
white papers on Chinese aid identify three different types of foreign
aid: grants, interest-free loans, and concessional loans. Other forms of
aid include debt relief, “free” or low-cost technical assistance, access to
scholarships (or training programs), tariff exemptions, outright gifts
of buildings, equipment, or other capital goods (State Council 2011,
2014). Grants finance the construction of stadiums, hospitals, schools,
and other medium and small social welfare projects, while interest-free
and concessional loans are used to help the recipient country construct
public facilities (Lengauer 2011). Table 1 identifies six empirically exist-
ing forms of aid (grants, debt relief, technical assistance, interests-free
loans, scholarships in the donor country and concessional loans).
There are some key differences in what is defined as aid by China com-
pared with OECD/Development Assistance Committee (DAC) member
states (Lin and Wang 2016). China includes military assistance, the con-
struction of sports facilities, and subsidized loans for joint ventures and
cooperative projects, which are excluded from Official Development

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 What LED to the Boom?

Table 1.
Formats of Chinese Development Cooperation.

Format Instruments Comments

Aid Grants
Debt relief
Technical assistance
Interests-free loans
Scholarships in the donor
country
Concessional loans CHEXIM
•• interest rate 2% to 3%
•• 15 to 20 repayment years,
including 5 to 7 years’ grace
•• must be repaid (Zhang 2018, 1).
Market-based Export credits CHEXIM
development Official loans at market CDB
finance rates (commercial loans) China Construction Bank
Strategic lines of credit Agricultural Development Bank
provided to Chinese of China.
enterprises Bank of China
Industrial and Commercial Bank of
China (Zhang 2018, 1)
Source. Author’s own elaboration based on D. Zhang (2018).
Note. CHEXIM = China EximBank; CDB = China Development Bank.

Assistance. Meanwhile China excludes scholarships for students study-

ing in China, the costs of refugees inside the host country, and donor
administrative costs (Bräutigam 2011, 756). As table 1 shows, China’s
market-based and reimbursable development finance goes beyond its
traditional official aid program, including export buyers’ credits, official
loans at market rates, and strategic lines of credit provided to Chinese
enterprises, with the two SOBs—China EximBank (CHEXIM) and the
CDB—playing key roles (Carter 2017). CHEXIM provides concessional
and commercial loans. The CDB does not give official development aid,
providing non-concessional loans at market rates. Examples include
the loan-for-oil deals, which are provided for large- and medium-sized
infrastructure projects in recipient countries in exchange for oil com-
mitments (Bräutigam and Gallagher 2014).
All existing analyses of Chinese development cooperation policy
used in this study apply single-case studies. The present research adopts
a qualitative comparative analysis method, which is well suited to middle-
range theorizing and the introduction of regional ontologies instead

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of universal claims. This allows one to generalize results to the whole

Latin American region. It also allows one to employ the comparative
case-based and inductive approaches often used in qualitative research
(Devers et al. 2013, 1). Ragin and Sonnett (2008, 1) also emphasize
that “case-oriented explanations of outcomes are often combinatorial
in nature, stressing specific configurations of causal conditions. Rather
than focus on the net effects of causal conditions, case-oriented explana-
tions emphasize their combined effects.”
For J. Xu and Carey (2015, 3), tracking Chinese development coop-
eration is a “difficult and contested field of research.” This article gathers
information about committed outflows drawing on “AidData’s Global
Chinese Official Finance Dataset” from 2000 to 2014 (AidData 2017),
which provides statistics on underreported financial flows of aid and
development finance. Given the relative weakness of Chinese aid’s statisti-
cal system, there are other initiatives to estimate its scale in Latin Amer-
ica. The “China-Latin America Finance Database” by Inter-American Dia-
logue provides current information only on Chinese policy bank loans by
country, lender, sector, and year since 2005 (Gallagher and Myers 2017).
Although the data from AidData may not be accurate or complete due to
the focus on commitments that is driven by news reports and interviews
rather than official disbursements (Bräutigam 2013), the assessment of
this database together with the State Council’s white papers enables a
tentative comparison between aid and development finance trends.
Naturally, this article does not intend to open every “black box” in
Chinese ED and development cooperation decision making. Its purpose
is more modest, but nonetheless valuable—namely, to provide a prelimi-
nary understanding and framework to examine the combined motiva-
tions involved in China’s ED decision making. It also aims to enhance
scholars’ ability to analyze the choices and policies of Chinese develop-
ment cooperation.

Mapping the Boom of Chinese Development Cooperation in Latin

America
The reference period (2000–2014) coincides with the boom of Chi-
nese bilateral development cooperation and the influence of the “Go
Global” policy in Latin America. Premier Zhu Rongji initiated this policy
in 2000 as a natural extension of the “Going Out” policy that has been
part of China’s ED since 1998 and became a component of the Five-
Year Plan for National Economy and Social Development in 2001. Since
joining the WTO in 2001, China began to design a political, economic,

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 What LED to the Boom?

and financial strategy to encourage and support firms with compara-

tive advantage to invest overseas and expand their transnational opera-
tions. “[T]his has led to a dramatic increase in outward foreign direct
investment, rising from an average annual outflow of US$0.5 billion in
1980–90, to over US$31.6 billion in 2001–12” (Wu and Wei 2014, 784).
China’s demand for copper, crude oil, iron ore, and soybeans made
Latin America a natural partner for trade (Liang 2019). With a focus on
financing the primary areas of development and the logistics for trade
and business, China increased its loans, grants, and export credits in
Latin America to over US$46.5 billion in 2000–2014, through bilateral
agreements in which state agencies, SOBs, SOEs, the private sector,
and other actors interacted to produce a variety of links (see Table 2).
Chinese finance tops sovereign lending over same period from either
the World Bank or the Inter-American Development Bank (Gallagher
and Irwin 2015). In 2015, China started to work toward using a single,
regional body like the Community of Latin American and Caribbean
States (CELAC) to coordinate finance and special funds to the region.
The China-CELAC Cooperation Plan 2015–2019 was adopted at the First
Ministerial Meeting of the China-CELAC Forum.
China’s development cooperation in Latin America between 2000
and 2014 was primarily conducted by first-range actors. Major decisions
concerning foreign aid and the One China policy were usually made at
the top level of the Chinese government, through the Central Working
Group on Foreign Affairs, chaired by the president and vice president,
and including the vice premier and the State Council. Second-range
actors are the Ministry of Finance (multilateral aid), MOFCOM and
MOFA. Grants and interest-free loans were managed by MOFCOM, con-
cessional loans by CHEXIM and the CDB, and official loans at market
rates by the CDB, CHEXIM, and other policy banks. MOFA played an
advisory role to MOFCOM on foreign aid, and worked with MOFCOM
in shaping specific aid packages. Beyond the three major ministries,
there were also a multitude of national, provincial, and local actors
involved in development projects, including Chinese embassies and eco-
nomic counselors’ offices (D. Zhang and Smith 2017).
Almost all top-down initiatives appeared to be supportive of the
One China policy because they advanced through bilateral state-to-
state mechanisms and MOFCOM’s aid commitments (Yang 2015).
Chinese enterprises simultaneously benefited from a bottom-up
approach, when competing to get loans and forge local networks in
one or more areas for developing business. “Going Out” as an industrial

380 WO R L D A F FA I R S
 Table 2.
Frames and Theaters in the Boom of China’s Development Cooperation in Latin America (2000–2014).
(Theater 1) (Theater 5)
OPEC South American (Theater 2) (Theater 3) (Theater 4) Pacific Alliance
Theaters member countries The Caribbean Basin MERCOSUR Peru and Bolivia (excluding Peru)

Formats A market-based development An aid-based frame, A market-based A market-based A market-based development

finance frame combining market-based development finance development finance finance frame
Market-based developing frame frame, combining aid Market-based
development finance Aid Market-based Market-based development finance
99.67% 64.97% development development 99.49%
Aid Market-based finance finance Aid
0.06% development finance 99.9% 62.07% 0.51%
35.04% Aid Aid
0.1% 35.62%
Sectoral An access-to-energy frame, A support-to-government A more-than-market A mining-based frame, A business-development
allocation combining support to social frame, combining the frame, combining combining support to frame
infrastructure development of multiple energy generation, multiple sectors Energy Generation and
Energy Generation and sectors transport and Communications Supply
Supply Action Relating to Debt logistics for trade 30.71% 53%
46.69% 49.33% Energy Generation Transport and Storage Communications
Other Social Trade and Tourism and Supply 25.39% 31%
infrastructure and 20.63% 49.44% Industry, Mining, Banking and Financial
services Transport and Storage Transport and Construction Services
20.91% 15.60% Storage 15.57% 12%
Other Multisector 46.16%
10.46% Communications
2.75%
Committed $19.133 $12.217 $10.898 $2.595 $1.712
outflows (in

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million US$)

Source. Prepared by the author with data supplied by AidData (2017).

381
Note. OPEC = Organization of the Petroleum Exporting Countries.
Bold-faced values: Total sum of all market-based development finance and aid.
 What LED to the Boom?

Table 3.
Committed Outflows of China’s Development Cooperation by Format and
Country in Theater 1, 2000–2014 (in Million US$).

Other loans
Concessional Loans at (official
Grant loans market rates finance) Unspecified Total
Ecuador 6.8 4.3 8,549.5 240 8,800.6
Venezuela 9,890 391 52 10,333
Total 6.8 4.3 18,439.5 631 52 19,133.6
% 0.04% 0.02% 96.37% 3.30% 0.27% 100%

Market-based
Aid development finance
0.06% 99.67%
Source. Prepared by the author with data supplied by AidData (2017).

policy strategy is part of China’s proactive diplomacy in the field. It was

designed to encourage and support firms with comparative advantage
to invest overseas (Yang 2015).
To identify the wider frames in which China promotes its political
and economic objectives, this article identifies five different and specific
theaters in which Chinese ED operates (Table 2): OPEC South Ameri-
can member countries (Venezuela and Ecuador), the Caribbean Basin
(Antigua and Barbuda, Bahamas, Barbados, Costa Rica, Cuba, Dominica,
Grenada, Guyana, Haiti, Jamaica, St. Lucia, and Suriname), MERCOSUR
countries (Brazil, Argentina, Paraguay, and Uruguay), Peru and Bolivia,
and the Pacific Alliance (Mexico, Colombia, and Chile, excluding Peru).

Theater 1: OPEC South American Countries

Chinese development cooperation in Venezuela and Ecuador was
organized around the economic, developmental, and commercial objec-
tives of ensuring its secure access to oil, support to social infrastructure,
and contributing to the expansion and development of Chinese compa-
nies (see Table 4). In this respect, intense actions were undertaken in
Venezuela, with the largest proven oil reserves in the world, and in Ecua-
dor, the other Latin American member of the OPEC which, combined,
received US$19 billion in loans between 2000 and 2014 (Table 3). This
implied that lending would stimulate investment better if these countries
with limited foreign currency reserves were allowed access to market-
based development finance. The deals specify that the recipient country

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Table 4.
Committed Outflows of China’s Development Cooperation by Sectoral Allocation in
Theater 1, 2000–2014 (in Million US$).

Sectoral allocation Total T1 %

Energy generation and supply $8.933 46.69
Other social infrastructure and services $4.000 20.91
Other multisector $2.002 10.46
General budget support $1.400 7.32
Industry, mining, construction $1.261 6.59
Transport and storage $759 3.97
Government and civil society $240 1.25
Agriculture, forestry, and fishing $232 1.21
Communications $170 0.89
Health $131 0.68
Education $2.9 0.02
Unallocated/unspecified $1 0.01
Total $19.133 100
Source. Prepared by the author with data supplied by AidData (2017).

would increase its oil supply to China and that China would invest in
the recipient’s agriculture, infrastructure (housing), mining, and energy
production, providing support for health, education, housing, and other
social infrastructure projects (Table 4) (Bräutigam and Gallagher 2014;
Downs 2011; Giacalone and Ruiz 2013; Wang and Li 2016).1
Chinese loans-for-oil to Venezuela and Ecuador typically flowed
through two main conduits. They were either disbursed directly to
national governments as public finance under a top-down governance
framework, or extended to companies on a bottom-up basis, forming a
joint fund, a joint venture, or mixed companies.2

1Apart from Venezuela and Ecuador, China has negotiated loan-for-oil deals with six

different countries: Angola, Bolivia, Brazil, Equatorial Guinea, Ghana, and Russia
(Gholz, Awan, and Ronn 2017).
2CNPC and Petroleum of Venezuela (PDVSA) were the major actors in these loan

agreements. In other areas, CRCC led the construction of a railway between Tinaco and
Anaco, while a mixed socialist agro-industrial enterprise between China’s Helongjiang
Xinliang Grains and Oil Group Co. Ltd. and PDVSA-Agrícola built grain storage areas,
rice and soy cultivation, and the production of balanced animal food in the Orinoco
Belt. Other projects included collaboration between the Chinese Electric Appliances
Corporation and the Venezuelan Corporation of Intermediate Industry. These funds
also financed five metro lines, a train from Cúa to Encrucijada, and a highway (Downs
2011).

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 What LED to the Boom?

Chinese market-based development finance also heavily supported

investments in resource extraction and infrastructure projects in Ecua-
dor since 2008 (Gonzalez-Vicente 2013). China was responsible for 57
percent of the total foreign investment in this country from 2005–2015
(Krauss and Bradsher 2015). Two loan-for-oil deals were signed with
PetroChina, CNPC, and the CDB in 2010 and included the participation
of the Ministry of Finance of Ecuador, forming a structure similar to the
China-Venezuela joint fund. As some Chinese enterprises have evolved
from former ministries—such as PetroChina from the Ministry of Petro-
leum—they are implementers of central government objectives (Gonza-
lez-Vicente 2011). By contrast, commercial contracts between Ecuador
and Chinese hydroelectric companies resulting from a call for public
tenders and private projects have led to intense competition between
Sinohydro, Gezhouba, HydroChina, and CNEEC (Garzón and Castro
Salgado 2018, 35). This explains, in part, the decision to advance eight
Chinese hydroelectric projects financed by CHEXIM and the CDB (Castro
Salgado 2014, 58). In the mining sector, the competition between the
China Railway Construction Corporation Limited (CRCC) and Tongling
Non-ferrous Metals Group Holdings Co. Ltd. created EXSA, a consor-
tium of the two SOEs (Garzón and Castro Salgado 2008, 31).

Theater 2. The Caribbean Basin

Historically, so-called “Checkbook Diplomacy” has driven Chi-
nese frame toward the Caribbean basin (Will 2012). This subregion
reemerged as the crucial battleground where a dozen struggling nations
became ensnared in the cross-strait dispute between China and Taiwan.
This led to an aid-based political competition granting nonreimbursable
funding to states as a way to encourage them to de-recognize Taiwan or
China (Erikson and Chen 2007).3 The spark igniting the conflagration
was domestic change in Taiwan. When Chen Shui-bian and his pro-inde-
pendence Taiwanese Democratic Progressive Party won the presidential
election in 2000, China increased its use of targeted aid, grants, and
loans that directly thwarted Taipei’s efforts. This quid pro quo strategy
was successful, as the cases of Dominica in 2004, Grenada in 2005, and

3Central America and the Caribbean is home to eight of the 18 countries globally that
retain ties to Taiwan: Belize, Guatemala, Haiti, Honduras, Nicaragua, Saint Cristobal
and Nieves, Saint Lucia, and San Vicente and the Grenadines. Recently, Panama in
2017 and the Dominican Republic and El Salvador in 2018 established ties with China
(Malacalza 2019).

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Costa Rica in 2007 demonstrate (Wenner and Clarke 2016). Neverthe-

less, the election of President Ma Ying-Jeou (2008–2016) marked a turn-
ing point in Taiwan’s foreign policy stance toward China. He called for a
“diplomatic truce” and China appeared to have accepted his proposal at
least until 2016 (Lemus Delgado 2017). However, this did not preclude
the end of the provision of Chinese official loans to construction firms,
as evidenced by the cases of Antigua and Barbuda, Bahamas, Jamaica,
Cuba, Trinidad and Tobago, Dominica, Costa Rica, Guyana, and Suri-
name presented in Table 5. MOFCOM’s grants and interest-free loans
for infrastructure were the major tools in this frame.
Beijing’s rapprochement with Costa Rica in 2007 was handled in a
top-down manner (De Hart 2018). It was perhaps the most controver-
sial due to its proximity to the United States and its history as one of
the last holdouts of diplomatic recognition for Taiwan. China gave a
US$134 million grant for a stadium and US$791 million in loans (Table
5), signed a free trade agreement, and agreed to partially finance a Chi-
natown district in San José, the renovation of a Caribbean-bound high-
way, and the construction of a major oil refinery (De Hart 2012). The
stadium was a gift, designed and constructed by AFEC, with imported
Chinese laborers and materials. In the case of the highway, CHEXIM
agreed to finance US$395 million that would be tied to a commercial
contract with Chinese SOE, China Harbor Engineering Company (De
Hart 2012, 14).
“Carrots” offered by Beijing to Cuba to strengthen historical and
political ties have been also economic, including the forgiveness of
US$6 billion in previous Cuban debts to Chinese banks (see Tables 5
and 6). In these activities, the Chinese strategy consisted of exercis-
ing soft power through aid (mainly grants, debt relief, and donations)
rather than through market-based development finance (Ellis 2014a).
However, Chinese loans have also been given to promote trade and
tourism in Jamaica, Barbados, Antigua, and Barbuda, and the Bahamas.
For example, CHEXIM loaned US$2.6 billion in 2011 to Bahamas, the
richest country in the Caribbean basin, for the construction of the Baha
Mar Resort. Official loans to Chinese construction companies have also
contributed to promote investments in the newly constituted Mariel
trade zone in Cuba (Table 5).

Theater 3. MERCOSUR
Brazil, Argentina, Uruguay, and Paraguay have become central to
the supply of soybeans, grains, and meat, along with cotton, pulp, and

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386
Table 5.
Committed Outflows of China’s Development Cooperation by Format and Country in Theater 2, 2000–2014 (in Million US$).

Loans at Other
Debt Debt Concessional Export market official
forgiveness rescheduling Grants loans credits rates finance Unspecified Total
Antigua/Barbuda 61.8 45 106.8
Bahamas 37.6 2.548 2,585.7

WO R L D A F FA I R S
Barbados 2.6 2,6
Costa Rica 134.6 395 296 100 9.6 935.2
Cuba 6,000 7.2 8.4 70 6,085.6
Dominica 68.1 46.8 70 184.9
Grenada 68.6 68.6
Guyana 20 71.2 162.8 38.9 293
Haiti 8.9 8.9
Jamaica 550.3 193.7 300 12.07 398 1,454.2
St. Lucia 20.3 20.3
Suriname 5.3 0.5 287 292.9
Trinidad/Tobago 0.1 27.6 150 177.7
Total 6,020 7.2 1,038.4 871.4 300 3,076.07 894.1 9.6 12,217
% 49.28% 0.06% 8.50% 7.13% 2.46% 25.18% 7.32% 0.08% 100%

Market-based development
Aid finance
64.97% 35.04%
Source. Prepared by the author with data supplied by AidData (2017).
 Ber nabé Malacalza

Table 6.
Committed Outflows of China’s Development Cooperation by Sectoral Allocation in
Theater 2, 2000–2014 (in Million US$).

Sectoral allocation Total T 2 %

Action relating to debt 6.027 49.33
Trade and tourism 2.520 20.63
Transport and storage 1.906 15.60
Other social infrastructure and services 521 4.26
Other multisector 340 2.78
Agriculture, forestry, and fishing 241 1.97
Health 231 1.89
Industry, mining, construction 91 0.74
Energy generation and supply 71 0.58
Education 60 0.49
General environmental protection 58 0.47
Unallocated/unspecified 58 0.47
Communications 30 0.25
Government and civil society 20 0.16
Emergency response 17.9 0.15
Water supply and sanitation 14 0.11
Business and other services 3 0.02
General budget support 2 0.02
Support to NGOs and government organizations 0.1 0
Total 12.217 100
Source. Prepared by the author with data supplied by AidData (2017).
Note. NGOs = nongovernmental organizations.

tobacco (Turzi 2016). Food and energy security concerns have been
central to the motivations for Chinese development finance that was
channeled principally through the CDB. As China’s per capita income
advanced, along with the acceleration of urbanization, its strategies to
ensure resources started to become global. According to Yang (2015,
298), the strategy provided a “stimulating environment for the further
development of Chinese commercial enterprises in Latin America.”
There is a relevant literature on how Chinese market-based devel-
opment finance became a tool of a neo-developmental rationale
that guided the process of Chinese state internationalization. The
major thrust of this paradigm is that large-scale infrastructure invest-
ments and strong railway systems are crucial to improving the export
logistics, linking production from the soybeans complex to ports in

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 What LED to the Boom?

Table 7.
Committed Outflows of China’s Development Cooperation by Format and Country in
Theater 3, 2000–2014 (in Million US$).

Loans at Other official

Grants Export credits market rates finance Total
Argentina 4,359.9 4,359.9
Brazil 0.1 1,330.5 5,127.7 6,458.3
Uruguay 10.7 11.6 57.5 79.8
Total 10.8 1,330.5 9,499.3 57.5 10,898.2
% 0.10% 12.21% 87.16% 0.5% 100%

Aid Market-based development finance

0.1% 99.9%
Source. Prepared by the author with data supplied by AidData (2017).

the Pacific (Gallagher and Irwin 2015; Gallagher, Irwin, and Koleski
2012). For Wilkinson, Wesz, and Lopane (2016), all these efforts in
MERCOSUR reveal a “more-than-market” frame, which entails a wide
range of initiatives such as loan agreements, land purchases, long-
term contracts, joint ventures, direct investments in infrastructure,
and logistics for trade.
Economic and commercial drivers have guided China’s frame to
development cooperation in MERCOSUR (food, energy, roads, trans-
port, and trade). Argentina and Brazil, the most industrialized econo-
mies of South America, were two of the four major recipients of official
loans at market rates (see Tables 7 and 8). They are good examples of
how China supports enterprise internationalization through the provi-
sion of official loans at market rates for infrastructure projects such
as bridges, airports, ports, highways, railways, and metros (Alves 2012;
Turzi 2016; Vadell, Araujo, and Serqueira 2016). Beijing acknowledged
the problems that inadequate infrastructure in the Southern Cone
poses to trade, when imports become more expensive on their way to
the Chinese market because of insufficient roads and highways (Gransow
2015, 7).
The oil and hydroelectric sectors were central to the Chinese frame
in this theater, when they engaged in competitive bidding to implement
projects, with or without local partners. It then used the contacts and
loans as vehicles for developing business in competition with other com-
panies. One example concerns the loans to Petrobras, CNPC, Sinopec,

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Table 8.
Committed Outflows of China’s Development Cooperation by Sectoral Allocation in
Theater 3, 2000–2014 (in Million US$).

Sectoral allocation Total T3 %

Energy generation and supply 5.388 49.44
Transport and storage 5.030 46.16
Communications 300 2.75
Industry, mining, construction 100 0.92
Business and other services 38 0.35
Water supply and sanitation 30 0.28
Other multisector 6 0.06
Health 2 0.02
Education 1 0.01
Emergency response 0.2 0.00
Total 10.898 100
Source. Prepared by the author with data supplied by AidData (2017).

and the Brazilian National Development Bank to develop oil reserves

and its discoveries in the pre-salt layer of the Santos Basin (Hirst 2009).4
The loan agreement was signed between the Ministry of Economy of
Argentina and the CDB, the Industrial and Commercial Bank of China,
and the Bank of China (Stanley 2018). One interviewee underscored
this process:

there was a competition between Gezhouba Group and Sinohydro in

Argentina, but the first one had forged strong personal relationships
with Electroingeniería. After a series of twists and turns, China commit-
ted a US$4.7 billion line of credit for the construction of two hydro-
electric dams on the Santa Cruz River in Patagonia in July of 2014. The
planned dams became the largest ever built by a Chinese company
overseas.5

4Another very clear case that illustrates some of these tendencies was the Argentinean

hydroelectric project. The Belgrano Cargas railway project has been directed to the
purchase of locomotives and wagons and it has sought to rehabilitate the railway line
in the Belgrano network, linking the Argentine heartland with the Pacific coast and
China (Stanley 2018, 88).
5Skype interview by author with Juan Uriburu Quintana, an Argentine official involved

in the loan negotiation with the CDB and Chinese hydroelectric companies in Argen-
tina, September 26, 2018.

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 What LED to the Boom?

Theater 4. Peru and Bolivia

Peru and Bolivia received similar but special treatment. The econo-
mies of these Andean countries are heavily concentrated in mining proj-
ects located in indigenous areas, in a social context of vulnerabilities and
high poverty rates. This is clearly an important and central issue. Mining
and metal sectors supply the means for a large part of productive activi-
ties—from iron ore for steel girders, to the minerals and metals that are
processed into the components of cell phones. Yet China lacks the nec-
essary quality and quantity of copper, gold, iron ore, and silver reserves
to meet the demand of its domestic market.
Bolivia is the poorest country in the Southern Cone, but its bridg-
ing location at the geographic center of South America allowed it to
become a hub for energy and transport flows (Ellis 2016). Besides
donations in kind of equipment, vehicles, and consumer goods, one
important use of Chinese official loans was to improve Bolivia’s defi-
cient infrastructure, which made it difficult to get natural resources
to market. Between 2009 and 2011, La Paz received four CHEXIM’s
loans for infrastructure and telecommunication developments (Stall-
ings 2016).6
Beijing’s frame in Peru was also undertaken in response to the local
demands of the largest ethnic Chinese community, present in the region
since the 19th century (Gonzalez-Vicente 2012).7 The Chinese thirst for
minerals in Peru created considerable tensions in local populations,
which are located in environmentally sensitive and indigenous terri-
tories. The Chinese development cooperation frame thus combined
finance to extractive industry developments with grants, and conces-
sional and commercial loans for projects in health, education, culture,
and employment (see Tables 9 and 10).8 In 2004, China agreed to
fund the construction of a “friendship center” for US$1 million, in San

6According to Stallings (2016), the largest Bolivian joint venture under this bilateral
framework is the El Mutún mine, said to be “the largest iron ore deposit in Latin
America.”
7The two countries signed a bilateral free trade pact in 2009, and a so-called “compre-

hensive strategic partnership” underlines Chinese–Peruvian relations. Peru is currently

home to the largest ethnic Chinese population in Latin America (see Gonzalez-Vicente
2012, 49).
8Chinese mining investments in Latin America are concentrated in Peru, Ecuador,

Bolivia, Chile, Mexico, and Argentina (Gonzalez-Vicente 2012, 48).

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Table 9.
Committed Outflows of China’s Development Cooperation by Format and Country in
Theater 4, 2000–2014 (in Million US$).

Loans at Other
Concessional Export market official
Grant loans credits rates finance Unspecified Total
Bolivia 36.9 875.8 30 846.3 503.5 60 2,352.6
Peru 6.5 5.2 181 50 242.8
Total 43.5 881 30 1,027.3 553.5 60 2,595.4
1.68% 33.94% 1.16% 39.58% 21.33% 2.31% 100%

Market-based development
Aid finance
35.62% 62.07%
Source. Prepared by the author with data supplied by AidData (2017).

Table 10.
Committed Outflows of China’s Development Cooperation by Sectoral Allocation in
Theater 4, 2000–2014 (in Million US$).

Sectoral allocation Total T 4 %

Communications 797 30.71
Transport and storage 659 25.39
Industry, mining, construction 404 15.57
Unallocated/unspecified 212 8.17
Energy generation and supply 207 7.98
Business and other services 180 6.94
Other multisector 109 4.20
Government and civil society 9 0.35
Other social infrastructure and services 5 0.19
Health 4 0.15
Water supply and sanitation 4 0.15
Emergency response 0.6 0.02
Education 0.5 0.02
Agriculture, forestry, and fishing 0.08 0.00
Total 2.595 100
Source. Prepared by the author with data supplied by AidData (2017).

Borja and to expand the Arzobispo Loayza National Hospital in 2007.

However, as Chinese mining companies in Peru felt the pressure from
indigenous communities, Chinese diplomacy prioritized those issues on

WINTER 2019 391

 What LED to the Boom?

which economic infrastructure could contribute to social integration

(Flannery 2013).9

Theater 5. Pacific Alliance (Excluding Peru)

China’s frame in Mexico, Chile, and Colombia was motivated, among
other factors, by the need for Chinese firms to access the market and
to face global competition. These countries represent a significant eco-
nomic force: a third of Latin America’s gross domestic product, and
all forged ahead on indicators of institutional performance that bring
them closer to OECD standards.10 However, despite the apparent repu-
tation for efficiency, security, and the rule of law, Chinese market-based
development finance to these countries between 2000 and 2014 ranked
among the lowest in the region (Table 11). The reason for this is that
easy access to credit from multilateral banks and international capital
markets limited the need for Chinese finance in these countries, even
if they were interested in China’s programs of technical assistance and
training (Stallings 2016).
China’s frame in these countries promoted few commitments, which
were concentrated primarily in financial facilities, and logistic support for
enterprise internationalization (Table 12). According to the evolution of
Chinese exports to Latin America from 2000 to 2014, Mexico, Chile, and
Colombia have been three of the most important recipients (Comisión
Económica para América Latina y el Caribe [CEPAL] 2015). Chile, along
with Venezuela and Brazil, is one of the three countries in the region that
exhibited trade surpluses with China, and it was the first Latin American
country to sign a free trade agreement with Beijing in 2015. Chinese mining
companies in Chile engaged with both governments to identify areas where
commercial and development interests intersect. This led the CDB to pro-
vide commercial loans to create joint ventures or to advance investments.11

9Chinese investments in Peru include the Morococha silver mine, the Pampa de Pongo

(iron ore), the Galeno, Hilorico and Pashpap (copper and gold), the Toromocho
deposit (copper), the Rio Blanco deposit (copper), and the Marcona Mine (iron ore).
The Shougang Corporation in the Marcona mine since 1992 and Minmetals and Chi-
nalco are the largest Chinese mining SOEs operating in the Andean region (Gonzalez-
Vicente 2012, 49).
10Mexico became a member of the OECD in 1994, Chile in 2010, and by 2018 Colom-

bia is in the process of joining (Wise and Ching 2018).

11An example of this was the case of China Minmetals and the operations ensuring the

supply of copper. Loan arrangements in this thematic field were decided at the com-
pany level from a bottom-up basis (Gonzalez-Vicente 2011, 407).

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 Ber nabé Malacalza

Table 11.
Committed Outflows of China’s Development Cooperation by Format and Country in
Theater 5, 2000–2014 (in Million US$).

Loans at Other official

Grant Export credits market rates finance Total
Chile 3 150 900 200 1,253
Colombia 0.8 78.8 79.6
Mexico 5 375 380
Total 8.8 150 1,353.8 200 1,712.6
% 0.51% 8.76% 79.05% 11.68% 100%

Aid Market-based development finance

0.51% 99.49%
Source. Prepared by the author with data supplied by AidData (2017).

Table 12.
Committed Outflows of China’s Development Cooperation by Sectoral Allocation in
Theater 5, 2000–2014 (in Million US$).

Sectoral allocation Total T 5 %

Energy generation and supply 903 53
Communications 525 31
Banking/financial services 200 12
Industry, mining, construction 75 4
Emergency response 8 0
Government and civil society 0.2 0
Total $1.712 100
Source. Prepared by the author with data supplied by AidData (2017).

By contrast, given their different export specialization, Mexico and

Colombia reported an overall deficit with Beijing, which has risen con-
stantly since the start of the century (CEPAL 2015). Chinese investment
projects in energy and infrastructure in Colombia registered continu-
ous growth, although lacking support from SOBs. Imbalanced trade
has been a sticking point for Mexico’s manufacturing sector, which
faced competition from China in both domestic and U.S. markets (Wise
and Ching 2018).12 According to Dussel Peters, Armony Enrique, and

12For Wise and Ching (2018, 15), since the 1990s, Mexico began filing anti-dumping
complaints against China and, with an eye toward preserving its privileged access to
the U.S. market under NAFTA, Mexico was “the very last holdout vote on China’s 2001
entry into the World Trade Organization.”

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 What LED to the Boom?

Shoujun (2018, 64), the projected high-speed train from Mexico City
to Querétaro was the most relevant Chinese infrastructure project pro-
posed in Mexico, but it was canceled in 2015.

Discussion and Conclusions

This article considers development cooperation as tool of ED. It can
be defined as an instrument by which the state creates its political and
economic relations with other actors in international relations. It also
makes the distinction between China’s foreign aid (grants and conces-
sional loans) and market-based development finance (official loans at
market rates). In general, aid entails a top-down political decision of
providing nonreimbursable resources to a foreign government, whereas
market-based development finance is the result of a bottom-up set of
interactions among agencies, policy banks, and state-owned or private
companies which sometimes act as pioneers in the decision making.
This article demonstrated that there are at least five different the-
aters resulting from the diverse mix of formats and sectoral priorities
that give meaning and purpose to the interactions. The general conclu-
sion is that China intensified its development cooperation to the region,
employing aid as a tool of statecraft and embracing market-based devel-
opment finance as an instrument to create new investment and trade
opportunities for Chinese companies. However, this study has found
considerable variation within the theaters. Indeed, market-based devel-
opment finance was a key element for assisting companies to develop
offshore business in the infrastructure, energy, and transport sectors in
Venezuela, Ecuador, Brazil, Argentina, Peru, and Bolivia. By contrast,
aid policy was central for supporting the One China policy in the Carib-
bean basin through grants and interest-free and concessional loans. As a
result, development cooperation represents a contextual and multipur-
pose category (see Tables 13 and 14).
The findings here suggest that it is no longer productive or accurate
to view the Chinese state as unitary. Its command over ED and develop-
ment cooperation is increasingly shaped by political and economic driv-
ers. At the micro-level, China has to deal with the reality that SOEs are
turning into powerful market actors, and this has a profound impact not
only on the policy-making process but also on shaping China’s ED in a
way that serves more certain firm-level and commercial interests than
top-down designs. Particularly, oil, hydroelectric, and mining companies
in South America seemed to have stronger influence within Chinese
state policy and central government plans.

394 WO R L D A F FA I R S
 Table 13.
Committed Outflows of China’s Development Cooperation by Formats and Theaters in Latin America, 2000–2014
(in Million US$).

(Theater 1) (Theater 5)
OPEC South (Theater 2) (Theater 4) Pacific alliance
American The Caribbean (Theater 3) Peru and (excluding
Formats member countries Basin MERCOSUR Bolivia Peru)
Debt forgiveness $6.020
Debt rescheduling $7
Export credits $300 $1.330 $30 $150
Grant $6 $1.038 $10 $43 $8
Loan (excluding debt $19.074 $4.841 $9.556 $2.46 $1.553
rescheduling)
Concessional loans $4 $871 $881
Loans at market rates $18.439 $3.076 $9.499 $1.027 $1.353
 Other loans (official finance) $631 $894 $57 $553 $200
Total general $19.133 $12.217 $10.898 $2.595 $1.712
Source. Prepared by the author with data supplied by AidData (2017).
Note. OPEC = Organization of the Petroleum Exporting Countries.

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395
 Table 14.
Committed Outflows of China’s Development Cooperation by Sectoral Allocation in Latin America, 2000–2014 (in Million US$).

396
(Theater 1) (Theater 2) (Theater 5)
OPEC South The (Theater 4) Pacific alliance
American member Caribbean (Theater 3) Peru and (excluding
Sectoral priorities countries Basin MERCO-SUR Bolivia Peru)

Action relating to debt $6.027

Agriculture, forestry, and Fishing $232 $241 $0.08
Banking and Financial services $200

WO R L D A F FA I R S
Business and other services $3 $38 $180
Communications $170 $30 $300 $797 $525
Developmental food aid/food security assistance
Education $2.9 $60 $1 $0.5
Emergency response $17.9 $0.2 $0.6 $8
Energy generation and supply $8.933 $71 $5.388 $207 $903
General budget support $1.400 $2
General environmental protection $58
Government and civil society $240 $20 $9 $0.2
Health $131 $231 $2 $4
Industry, mining, construction $1.261 $91 $100 $404 $75
Non-food commodity assistance
Other multisector $2.002 $340 $6 $109
Other social infrastructure and services $4.000 $521 $5
Support to NGOs and government organizations $0.1
Trade and tourism $2.520
Transport and storage $759 $1.906 $5.030 $659
Unallocated/unspecified $1 $58 $212
Water supply and sanitation $14 $30 $4
Total general $19.133 $12.217 $10.898 $2.595 $1.712

Source. Prepared by the author with data supplied by AidData (2017).

Note. OPEC = Organization of the Petroleum Exporting Countries; NGOs = nongovernmental organizations.
Bold-faced values: Total sum of all market-based development finance and aid.
 Ber nabé Malacalza

I also highlight the need to improve our understanding of the close

link between motivations and frames involved in Chinese aid and devel-
opment finance. The general conclusion is that China intensified its
development cooperation to the region, employing aid as a way of politi-
cal pressure and market-based development finance as a tool to create
new investment and trade opportunities for Chinese companies. How-
ever, this study has found considerable variation among the theaters.
Indeed, market-based development finance was a key element for assist-
ing companies to develop offshore business in infrastructure, energy,
and transport sectors in Theaters 1, 3, 4, and 5. By contrast, aid policy
was central for supporting the One China policy in Theater 2 through
grants and interest-free and concessional loans. Two types of drivers are
common for all theaters: developmental drivers that involve support
to economic and social infrastructure projects; and commercial ones
focused essentially on opening up new export markets for products and
helping Chinese companies to invest and set up manufacturing plants
in foreign markets.
The findings also suggest that foreign aid and market-based develop-
ment finance are separate processes with their own dynamics, but can
sometimes be complementary. Foreign aid implies a broad spectrum of
donation initiatives and highly visible projects (stadium diplomacy) in
line with the One China policy. By contrast, the CDB and CHEXIM’s
loans at market rates were the result of an open trade-off between
ministries, policy banks, and business companies. This was the case in
the Chinese approach to the South American OPEC and MERCOSUR
countries, which derived from different forms of state and finance inter-
nationalization—primarily driven by the entrepreneurial logic of oil,
transport, and construction companies. Yet Chinese engagements also
relied on the complementary use of both formats, with the top-down
model of foreign aid and the open governance model of market-based
development finance shaping interactions in the Caribbean basin and,
to a lesser extent, in Peru and Bolivia.
China is, it seems, working bilaterally on a case-by-case approach with
each state. Having a better understanding of who is in charge and how
those actors are related to one another and to Chinese official policy
would offer a clearer prescription for the way forward from a Latin
American point of view. It might also highlight who are the potential
winners and losers of Chinese policy in Latin America and allow us
to think about Latin American development more robustly. The con-
tribution of Chinese ED to Latin American development nevertheless

WINTER 2019 397

 What LED to the Boom?

depends on a variety of internal and external factors that this article did
not try to capture.
Finally, this study also has significant implications for scholars exam-
ining Sino-Latin American relations. If China’s ED, and its develop-
ment cooperation, is not a homogeneous strategy, it is also important
to remind ourselves that Latin America is also diverse—multiple nation
states with different histories, experiences, and paths to economic and
social development. This article sheds light on the variegated nature
of China’s development cooperation from a case-by-case basis. While it
focused on Latin America and covered a rich body of empirical data, the
analysis here can also be relevant for the comparative study of Chinese
ED in other regions. The most important point to be made, therefore, is
that the study of the financial dimension of ED should pay closer atten-
tion to historically specific theaters and frames.

Acknowledgments
I benefited from the insightful comments and suggestions of my colleagues Monica
Hirst, Gabriela Villacis, and Clara Nelson Strachan. I am very grateful to the two review-
ers at World Affairs for their appropriate and constructive suggestions to improve the
article.

About the Author

Bernabé Malacalza is a research fellow at the National Scientific and Technical
Research Council (CONICET) based at the National University of Quilmes (UNQ)
in Argentina. One recent publication is “The Politics of Aid from the Perspective of
International Relations Theories,” in I. Olivie and A. Perez, (eds.) Aid Power and Politics,
London, UK: Routledge (2019).

ORCID iD
Bernabé Malacalza https://orcid.org/0000-0003-4369-0534

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