Where Does It All Go?
Many of the largest overseas acquisitions ever undertaken by Chinese state-owned enterprises (SOE) occurred in 2010.
Of the 22 most expensive overseas SOE acquisitions, four were in Latin America, four were in Canada—all in the oil sector—
and one was in the U.S. (Lenovo purchased IBM’s personal computing division in 2005.)
#3 (2010, BRAZIL):
Sinopec acquired a 40% stake of
Repsol YPF Brasil S.A. (oil) for
#9 (2010, ARGENTINA):
China National Offshore Oil
Corporation acquired a 50% stake
of Bridas Corporation (oil) for
#19 (2010, BRAZIL):
State Grid acquired Expansión
Transmissão Itumbiara (electricity)
for $1.7 billion
#21 (2006, ECUADOR):
Sinopec acquired the Ecuadorian
assets of EnCana Corporation (oil)
for $1.4 billion
The UN Economic Commission for Latin America and the Caribbean (ECLAC) cautions that country destination of FDI is difficult to
determine from official Chinese data, since the bulk of FDI tends to be channeled through third countries. In the Western Hemisphere those
third countries were two tax-friendly territories: the Cayman Islands and the British Virgin Islands. According to data from China’s Ministry
of Commerce (MOFCOM), over five years, 94. 5 percent of Chinese outward FDI stock directed to LAC ended up in these two countries
combined, and then on to other countries. In terms of the final destinations of Chinese FDI, ECLAC estimates that 90 percent of Chinese
investments in LAC went to natural-resource companies (oil, gas, mining); other key sectors were telecommunications and automobiles.
But it’s not all sweetness and light. Concerns about unfair trade practices have increased, in some cases leading to anti-dumping cases
and complaints before the World Trade Organization (WTO) lodged by LAC countries.
In the WTO, Latin American and Caribbean countries have brought
four unfair trade cases against China (out of a total of 23 against China).
Granting of Refunds, Reductions
and Exemptions from Taxes and
Other Payments, brought by
Mexico (settled in 2008)
Grants, Loans and Other
Incentives, brought by Mexico
Grants, Loans and Other
Incentives, brought by Guatemala
Export of Raw Materials,
brought by Mexico (on appeal)
1We would like especially to thank Mariano Alvarez and Osvaldo Rosales from ECLAC for their assistance. Sources: “The People’s Republic of China and Latin America and the Caribbean:
Towards a strategic relationship” (ECLAC, April 2010); “2010 Statistical Bulletin of China’s Outward Foreign Direct Investment” (MOFCOM, April 2011); “Foreign Direct Investment in Latin
America and the Caribbean, 2010” (ECLAC, May 2011); and “People’s Republic of China and Latin America and the Caribbean: Ushering in a new era in the economic and trade relationship”
(ECLAC, June 2011).
73 Americas Quarterly WINTER 2012