Cleared Cerrado in Mato Grosso, Brazil. Photo by Rhett A. Butler
China has been investing heavily in Latin America’s natural resources and crude oil. Recently, the country even pledged to invest $250 billion over the next decade to strengthen its presence in the region, and compete with the U.S. But this increasing Chinese trade and investment in Latin America is also increasing environmental and social conflict, finds a new report published by Boston University.
“The press is full of stories about what China’s rise to the world’s largest economy means for Latin America,” Rebecca Ray, Research Fellow at Boston University’s Global Economic Governance Initiative, and co-author of the report, told mongabay.com. “So the time was right to take an evidence-based approach to the topic.”
By analyzing data from eight countries in the Latin American region, researchers looked at whether China has indeed been an independent driver of social and environmental change in Latin America and the Caribbean, and if the performance of Chinese investors differed from other international investors in the region.
According to the report, the Asian giant’s impact on Latin America’s environment is far greater than that of other investing countries. Exports from Latin America to China – which are concentrated in sectors of agriculture and extractive resources like oil and gas – use about twice as much water, compared to overall exports, according to the report. In 2012, for instance, Latin American countries exported about 100 billion cubic meters more water to China than was imported. This is nearly the volume of Lake Nicaragua, the report notes.
“These differences set the stage for potential conflicts, as mines and plantations for export to China compete with surrounding communities for water,” Ray said.
The report states exports to China also emit more than 12 percent greenhouse gas per dollar, when compared with other exports. Greenhouse gas emissions increase further if deforestation for the purpose of commodity transport is considered. A study in 2012 found that nearly 80 percent of Latin America’s deforestation, occurring in Brazil, Argentina, Paraguay, and Bolivia, was closely associated with export-related agriculture.
Moreover, these exports support fewer jobs than the overall exports from the region. So as China’s share in Latin America’s exports increases over the next decade, local employment benefits will go down, the authors note in the report.
Overall, Ray explained, China’s economic activity affects Latin America in three major ways. First is through Chinese investors. Second is the boom in commodities that Chinese demand creates, often resulting in increased production of commodities even without Chinese investors. And third is through Chinese financing of Latin American infrastructure projects.
For instance, researchers in Brazil found that Chinese investment has been a major driver of deforestation of the Amazon forest, which in turn opens up the forest to human encroachment and affects movement of wildlife. These investments include Chinese-funded roads, canals and railroads to move goods to ports. Chinese demand for soy, too, has resulted in large-scale clearing of Cerrado savannah in Mato Grosso, Ray said. The Cerrado is one of Brazil’s most threatened ecosystems.
Overall, Brazil’s deforestation rate has declined significantly, with a 70 percent drop in its Amazon deforestation over the past decade. However, recently released data for 2014 indicates that downward trend may be ending. According to figures from Imazon, a Brazilian NGO, the number of 2014 forest alerts was well more than double that of 2013.