China's Belt & Road: An opportunity for LatAm to improve regulations

China’s Belt and Road Initiative (BRI) raises significant social and environmental concerns for Latin America, but the global infrastructure program also presents an opportunity for the region to improve its regulations.

Rebecca Ray, a senior academic researcher at Boston University’s Pardee School for Global Studies, says that with the end of the commodity boom in 2012 Latin American governments relaxed social and environmental regulations to attract Chinese investments – but this fed social conflicts around projects such as Peru's Las Bambas copper mine, which was developed by China’s MMG and has been repeatedly halted by protests.

“Environmental and social risks weren’t identified early enough because the regulations had been relaxed, and so there have been on-and-off protests,” she explained during a webinar on green governance in the BRI in Latin America and South East Asia, organized by the Wilson Institute.

“There is a possibility, with greater dialogue and coordination, to take advantage of this moment of increased Chinese demand and for Latin America to vocalize to increase the value chain and not simply be a source of commodities and also be a market for manufactured goods.” 

She added that all eyes are now on Chile, Bolivia, Argentina and Mexico as they develop their lithium markets, which China is obviously interested in, while Brazil and Mexico develop electric vehicle manufacturing, another sector in which Beijing is investing heavily. 

Meanwhile, Cecilia Han Springer, assistant director at Boston University’s Global China Initiative, said that energy is another sector in which Latin America could leverage BRI investments to improve green governance, although this will depend on how much local governments are willing to push renewables and move away from coal- and oil-fired generation.

She added that market moves such as the acquisition of Chilean power distributor CGE by China State Grid could also help support these efforts.

“Improving grid infrastructure, including transmission lines, is going to be necessary for countries to integrate renewable energies into their systems.”

The BRI is a global infrastructure and investment program aimed at connecting countries across Asia, Latin America, Europe and Africa through a network of roads, railways, ports, pipelines and other infrastructure projects.