While China is strengthening its trade and investment relations with Latin America and the Caribbean, the US retains the upper hand in greenfield foreign direct investment (FDI) in the region. The US is intent on keeping the geopolitical lead to fend off Beijing’s growing influence in its southern neighbour. This is also true for financial services investments – for now.
According to data from fDi Intelligence, in 2017 US companies’ FDI into the region was four-and-a-half times that of China’s: $17.28bn against $3.83bn. But investments in financial services hubs tell a more nuanced story, as the US’s $352m and eight financial services projects run very close to China’s $280.9m, which, through a single investment by Shanghai-based New Development Bank, neared the US total.
Indeed, the capital investment in New Development Bank’s offices in Brazil are estimated to be equal to that of the new São Paulo premises of Washington-based Inter-American Development Bank’s (IADB's) private sector arm – the largest investment from the US in the review period. Interestingly, the largest individual financial services investments from both economic superpowers were by development banks.
When it comes to source cities from the US, Washington leads by some distance, though the $280m IABD investment. This is much more than the rest of the US city combined.
In the context of the geopolitical power struggle that is emerging over Latin America, the US’s overall FDI levels into Venezuela are also noteworthy. Beijing has been accused of supporting the ruinous Venezuelan administration that has brought the country to the brink of collapse, through policy bank loans to Caracas in exchange for oil. While the US has imposed a number of sanctions on Venezuela, it continues to direct investment to its oil sector. In 2017, this amounted to $1.1bn, the fourth largest total US investment in a single Latin American country that year.
