Is China making its biggest ever bet on Latin America? If we do consider the huge amount of money that the Chinese government has been pouring in the region over past two years, then the answer is resoundingly 'yes'.        

Consider this, in 2015 Chinese banks sanctioned nearly $30 billion in loans to Latin American countries. That is more than double what Chinese banks had sanctioned in 2014. Curiously enough, it is also more than the combined money offered last year by the World Bank and the Inter-American Development Bank to Latin American region.

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China's newfound generosity towards Latin American does not stop here. The Chinese government has reportedly made available an additional $35 billion aid for constructing various infrastructure projects like roads, bridges and railways.

This overture towards Latin American countries, however, has not come out of blue. In recent years, China has been consciously warming towards South American countries. Last year, China hosted all Latin American presidents in Beijing for the very first time.

All About the Economy

Today, any country's geopolitical actions and decisions are motivated by economic compulsions and so is China's growing bonhomie with South American countries. But the obvious question that pops up is what can 'investment-hungry Latin American countries' offer to China. Well, the answer is 'raw material.'

China is hungry for crucial raw materials like iron, oil, soy and all types of food. Something that most Latin American countries have in abundance. Most South American countries are apparently more than happy to trade off raw materials in exchange for the financial goodies that China has to offer.                

There is another economic advantage that China will probably derive from all its huge infrastructure projects in Latin America. These projects will create thousands of jobs for overseas Chinese workers. Actually most of China's overseas projects come with a condition that a huge percentage of the jobs will be outsourced to overseas Chinese workers.

While economic issues are certainly overdriving factors, China's alliance with South American countries is also propelled by its overarching thirst to increase its global influence. Most prominent Latin American countries like Brazil, Argentina and Chile prefer 'China' over 'America.' That is most probably because they see China as 'less interfering' than America in their internal politics.    

All said and done, it is still early days to predict the future of the friendship between China and the South American region and how this bet will pay for Beijing.

TagsLatin America, china