Repositioning Chinese development finance in Latin America: opportunities for green finance

Repositioning Chinese development finance in Latin America: opportunities for green finance

China is one of the largest creditors of Latin American and the Caribbean and has loaned the region more than $125 billion since 2005. However, the  composition of China’s financing in the region has been concentrated in commodity related sectors that are currently on the decline.

This policy brief notes the extent to which Chinese finance is concentrated in new green economy sectors, and finds that China is not taking full opportunity of the potential in this sector. Moreover, as the global commodity boom has declined, much of China’s investments in the region have been exposed to significant risk, including prominent environmental and social risks. Despite great strides whereby the Chinese government has established a series of guidelines on greening overseas investment over the last few years, China’s development banks and companies are lacking the policies and staffing to identify and fully mitigate such risks.

This policy brief reviews the green profile of Chinese development finance in LAC and analyses environment related risks and policies for Chinese overseas investment. It also outlines the opportunities of green finance in LAC and how blending instruments can mobilise green financial flows that are beneficial for both China and LAC.
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