Loan-Backed Construction—The New Model

Paralleling the expanding presence of Chinese companies in the primary product sectors of Latin America and the Caribbean, P.R.C.-based firms have also made significant advances across the region in construction, including work on public buildings, transportation and logistics infrastructures, and commercial facilities. A key part of the Chinese approach has been to bring to the table in a coordinated fashion the company that will do the work and the associated Chinese institution that will finance the project, with a loan relatively free of conditions not tied directly to the project itself. Such a combination has been a significant factor for Chinese companies in winning work in a region where obtaining timely financing for major projects has always been a challenge. The combination has been particularly attractive for regimes such as Venezuela, Ecuador, Nicaragua, and Argentina which, to varying degrees, have rejected or excluded themselves from financing through traditional private and multilateral institutions. It has also been successful with smaller Caribbean basin countries that have historically lacked easy access to capital for large-scale projects. In all cases, it has allowed regional governments from a broad range of political orientations willing to incur debt, to successfully complete infrastructure projects that deliver visible, tangible benefits to their populations, even if the quality of those projects or the terms under which they have been achieved may be questioned.