Orville Schell, Arthur Ross Director of the Center on U.S.-China Relations at the Asia Society, spoke with the Associated Press earlier this week about China's recent direct investment spree in Latin America. For countries like Brazil, Argentina and Venezuela, among others, China is a great foreign investment alternative to the U.S. and the World Bank — while in exchange, China gets the resources it needs for continued economic growth.
The AP article comes one month after the Center on U.S.-China Relations published a report on Chinese direct investment, An American Open Door?, with a launch event featuring U.S. Secretary of Commerce Gary Locke.
"I don't know of any other government which has done this sort of securing of rights for commodities and natural resources so systematically around the Third World as China, and they've used a whole host of new financial instruments to do this," Schell told Ian James of the AP. "China's been very, very prolific in spreading its investments around Africa and Latin America, even though the terms aren't ideal."
Debts owed to China by these Latin American countries will be paid back in commodities, especially oil shipments. While the U.S. is still the leading investment source in Latin America, China is quickly catching up.
"This is a real tipping point moment, of which the Chinese investments in commodities and extractive resources of Latin America is just the opening bell," Schell said. "Who's got the money? And it's not the United States any longer. It's China. This is the next great pool of (foreign investment) that the world is going to reckon with in myriad ways."