May 17, 2022 - World

Interview: Paulina Garzón on Chinese investment in Latin America

Photo illustration: Shoshana Gordon/Axios. Photo: Emilia Hermosa

Chinese investment projects across Latin America are booming, but they can cause significant damage to the environment and indigenous communities, one advocate tells Axios.

The big picture: China is South America's top trade partner, and Chinese banks and companies have built roads, dams, mines, solar power plants, and even a space mission control center in countries across the continent.

  • "Projects tend to perform better when they have good environmental standards in place, when there are mechanisms for the community to communicate," said Paulina Garzón, executive director of the China-Latin America Sustainable Investments Initiative based in Washington, D.C.
  • "You don’t find those kinds of tools among the Chinese banks," she said.

Garzón, who is from Ecuador, has spent the past eight years pushing Chinese institutions in South America to take more responsibility for the environmental impacts of their projects there.

  • "I started doing this work after we started seeing a surge of Chinese investment," she said. "We were very concerned about the lack of environmental standards among the Chinese institutions" and the "lack of access to Chinese regulators, banks and companies."
  • A Chinese hydroelectric dam project in Argentina's far south began in 2015 but halted in 2017 after warnings by environmental and indigenous groups. If completed, the project is also expected to damage nearby glaciers.
  • Another proposed dam in Uruguay will displace indigenous communities and flood local forests and grasslands.

Garzón sees several reasons for the persistent lack of standards and of the tools used to implement them:

  • Chinese institutions are relatively new. Western-led development banks have had decades to create and refine their environmental standards, but Chinese institutions are relative latecomers to South America.
  • Local governments are nervous about questioning China. Because many governments have a complex diplomatic and financial relationship with China, including Belt and Road Initiative projects, "they feel nervous that if they question that project, there are many other things going on with China that can be at risk if they are too critical," she said.
  • China itself lacks a strong civil society. Authorities shut down Chinese community organizations if they act without approval, so large state-owned firms aren't accustomed to accommodating community-based demands. As a result, Chinese institutions abroad haven't created channels to work with community groups to resolve problems, Garzón said, whereas Western-led institutions take this as a part of their normal operational model.

What to watch: The White House has announced a "Build Back Better World" program to compete with China's Belt and Road Initiative in South America and other regions.

  • The Summit of the Americas, a multilateral event held once every three years, will take place next month in Los Angeles — the first time since 1994 that the U.S. will host — but some Latin American leaders are threatening to boycott if the U.S. does not invite Cuba, Venezuela and Nicaragua.
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