China Using Loans in Latin America to Push Political, Military Objectives

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SANTA CRUZ, Bolivia—Argentina’s socialist government is scrambling to stem its hemorrhaging currency rates, economic recession, and hyperinflation, while negotiations continue with China over swaps and debt relief.

The nation has an established track record of defaulting on loans, even before China agreed to grant an additional $19 million to the Argentine government in 2020.

China and Latin America relations analyst Fernando Menendez told The Epoch Times that while Beijing’s loans in the region may look risky from a traditional standpoint, in the end, they still come out on top.

“Because if the repayment doesn’t work out, they can just seize assets,” Menendez says.

A large part of Argentina’s economic woes stem from a lack of consistency in macroeconomic policies, according to Institute of the Americas member and University College of London professor, Nestor Castaneda.

Economist Martin Rapetti says the by-product of these policies is evident in the gross domestic product per capita, which is the same today in Argentina as it was during the Peronist regime in 1974. However, there is one notable difference now: income inequality is much higher.

“While China’s fiscal resuscitation of Argentina persists, we see a discernible pattern emerge throughout Latin America, particularly where socialist governments prevail.”

Expanding Its Reach

A November 2021 United States Congressional briefing outlines concerns over China’s expanded influence in the region through lending and investments.

The report states China is deepening its strategic political and military relationships with Latin American nations, noting that cooperation with authoritarian regimes, like that of Nicolas Maduro, has facilitated noticeable “democratic backsliding” in Ecuador, Bolivia, and Venezuela.

In Venezuela, China’s loans top out at $60 billion, the largest amount it has given to a foreign nation, yet the country remains mired in one of the deepest economic recessions in history.

Earlier this year, the US International Development Finance Corporation stepped in and agreed to help Ecuador repay billions of dollars in Chinese loans with the provision of excluding China from its telecommunication network.

By Autumn Spredemann

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