The other side of the Silk Road: Chinese investments in Latin American infrastructure

Editorial The other side of the Silk Road: Chinese investments in Latin American infrastructure The consolidation of the People’s Republic of China as a new world power can be considered an unquestionable fact (Shambaugh, 2013, p. 4). Also, the growing presence of China in the whole world is evident; in the case of Latin America, China is now a critical commercial partner and an investor in the region (Economic Commission for Latin America and the Caribbean, 2015, 37–38). This is because China has an urgent need to ensure the natural and energy resources that it needs to guarantee its industrial and urban development (Wigell, 2016, p. 5). Thus, Chinese interest in mineral resources, especially iron, copper, aluminum, bauxite, silver, zinc, lithium, nickel, lead, and tin, has become conspicuous (Rold´an et al., 2016, p. 39). However, China’s presence in Latin America has gone beyond the acquisition of natural resources, because the region represents an excellent opportunity to establish commercial operations with the United States from a strategic position (Das, 2016). Growing economic expansion in Latin America has also been fostered by geopolitical considerations, especially in Central America and the Caribbean, because the strengthening of international economic ties is a successful way to promote the ‘‘One China’’ principle. At present, the interests of China in Latin America are considerable, with Chinese companies and brands reaching more and more notoriety. This phenomenon has different causes, among them, China’s achievement of recognition as a world power, its desire to strengthen its currency, its search for advantages derived from free trade, and its promotion of economic development in different world regions. This promotion forms a link in which three types of actors—the State, companies, and quasi-governmental organizations—are involved, through an accurate and integral strategy, in the development of robust economic ties with the region (Yang, 2015, p. 298). ‘‘The other side of the Silk Road: Chinese investments in Latin American infrastructure’’ is a special issue of the journal of Competition and Regulation in the Network Industries. In this issue, academic experts analyze the impact of Chinese investment in Latin America and its effects on corruption control, regulatory quality, and government effectiveness. In addition, the political alignment between China and the countries of Latin America and the Caribbean that have received increasing Chinese investment is analyzed. Furthermore, new forms of cooperation that have become fundamental elements in the establishment of Chinese multidimensional relations and that are part of its new cooperation strategies in the Latin American region, including several examples of Chile, are presented. Finally, the suitability of Latin America to join the Belt and Road initiative and become the Eastern Wing of this initiative is discussed. The issue begins with the article, ‘‘The causality between Chinese investment in Latin America and the governance indicators’’ written by Bernal, Perez, and Ramirez, in which they analyze the causal relationship between China’s outward foreign direct investment (FDI) and various governance indicators for the main Latin American countries. The authors found a long-term relationship between China’s external FDI and three governance indicator variables: corruption control, regulatory quality, and government effectiveness. These results align with financial theories. Competition and Regulation in Network Industries 2020, Vol. 21(1) 3–5 ªThe Author(s) 2020 Article reuse guidelines: sagepub.com/journals-permissions DOI: 10.1177/1783591720902922 journals.sagepub.com/home/crn CRNI CRNI However, the most interesting finding of this article is the causality of FDI for the control of corruption, regulatory quality, and the effectiveness of the government, which implies that after Chinese investment, there is a change in the perception of these variables in the recipient country. These findings illustrate how China’s presence in Latin America has helped different Latin American governments to implement policies and regulations that promote private investment and improve the quality of public services. In the article ‘‘Exploring non-traditional foreign investments in Sino-Latin American relations: The Chilean case,’’ Borquez analyzes how China and Chile have increased their bilateral ties, thanks to a comprehensive strategic partnership that increasingly involves the development of traditional and nontraditional foreign investment. The article describes the measurement nontraditional foreign investment using economic cooperation parameters, including horizontal and vertical investments. In addition, it explains how in recent decades new forms of cooperation have emerged based on the creation of a hub in which both countries use their competitive resources in search of a mutual benefit. These new forms of cooperation have become fundamental elements in the establishment of Chinese multidimensional relations and are part of the newpathofcooperationintheLatinAmericanregion. In the findings, it is explained how Chile is one of the countries that has hosted the largest number of central platforms led by China in South America: The Southern Optical Fiber Project, the China-Chile Joint Astronomical Data Center, and China-South America Transpacific cable are some of the projects carried out under this form of cooperation. Finally, as the Belt & Road Initiative (BRI), or New Silk Road, continues to grow in size and scope, some questions remain unanswered. Valderrey, Montoya, and Sanchez in their article ‘‘Latin America: the east wing of the New Silk Road’’ discuss the skepticism of the main purpose of the BRI. The authors analyze the lack of a homogeneous contribution to the initiative, using a new tool to evaluate the participation of member countries. The comparisons take into consideration five collaboration variables established as the basic components of the BRI. As a special case, they analyze 10 countries in Latin America whose lands and seas are not part of the project, but which have recently increased their interaction with China. However, so far, few Latin America countries had joined the BRI. The authors use the proposed mechanism to compare 10 active BRI members versus 10 nonmember countries in Latin America. Their findings show the suitability of the region to join the initiative and be the East Wing of the BRI. We believe that this special issue sheds light on China’s relationship with Latin America and, more specifically, on Chinese investment in this region. This topic is analyzed from several angles, and many are the questions and concerns that have been raised and that have been left open for future research. We hope to contribute with this issue to the knowledge and the interest in China-Latin America relations. Miguel A. Montoya Tecnologico de Monterrey. Architecture, Art and Design School, Mexico Mauricio Cervantes Tecnologico de Monterrey, Business School, Mexico Daniel Lemus-Delgado Tecnologico de Monterrey. Social Sciences and Government School, Mexico Otto Regalado-Pezua ESAN Graduate School of Business, Peru 4Competition and Regulation in Network Industries 21(1) References Das, S. (2016). How important is Latin America on China’s foreign policy agenda? The Diplomat, 16 November. http://thediplomat.com/2016/11/how-important-is-latin-america-on-chinas-for eign-policy-agenda/ Economic Commission for Latin America and the Caribbean. (2015). Am´ erica Latina, el Caribe y China: Hacia una nueva era de cooperacio ´n econo ´mica. Author. Rold´an, A., Castro, A., P´erez, C., & Robert Ellis, P. E. (2016). La presencia de China en Am´ erica Latina. Comercio, Inversio ´n y cooperacio ´n econo ´mica. Universidad EAFIT. Shambaugh, D. (2013). China goes global: The partial power. Oxford University Press. Yang, Z. (2015). The roles played by three categories of actors in China’s engagement in Latin America to develop economic ties with the region. Journal of Chinese Political Science,20(3), 289–300. https://doi.org/10.1007/s11366-015-9363-1 Wigell, M. (2016). China’s advance in Latin America: Geostrategic implications for Europe, the US, and the Region itself. The Finnish Institute of International Affairs. Montoya et al. 5