Report: Colombia Is Unprepared for Potential Influx of Chinese Companies and Funding

Despite the recent growth of exports from Colombia to China and the high-profile participation of Chinese companies in domestic development projects, the Andean nation is not ready for the potential influx of public and private investment from China that may be coming in the future, according to a new report. 

The report, produced by Colombia Risk Analysis and Cifras & Conceptos, concludes that there remains a pervasive “lack of knowledge and understanding” among both government officials and business owners “around the way in which China operates,” a dynamic that could put them at a disadvantage in potential business or development deals with any Chinese firm.

“The Colombian government is unprepared for a deepening of its relationship with China from an economic, geopolitical, strategic, and oversight standpoint,” states the 47-page breakdown of the nations’ trade and business relations. “This is not simply about the current trade imbalance between the two countries or the lack of a clear, coherent, and sustained foreign policy approach from Colombia. It also relates to the way in which institutions with a control and oversight role will be challenged by issues arising from Chinese infrastructure companies, as has already been the case both in Latin America and elsewhere around the world.”

“There is a lack of knowledge and understanding about China and the way in which it conducts business amongst Colombian public officials, the business community, and the wider public.”

– Colombia Risk Analysis report

Overall, Colombia’s trade relations with China are strong. The Asian nation is Colombia’s second biggest import partner, after the United States, and data from the Observatory of Economic Complexity (OEC) shows that 8.7% of Colombia’s exports go to China. Oil makes up the majority, while agricultural products represent a growing proportion, per the OEC.

The Colombia Risk Analysis report also notes that people have a generally positive perception of the country, with two-thirds (67%) of the general population agreeing that there is a need to expand the relationship between the two countries. But the report found that ignorance remains about how Chinese companies conduct business despite rising familiarity due to their involvement in high-profile projects such as the Hidroituango dam construction and the Metro de Bogotá.

“There is a lack of knowledge and understanding about China and the way in which it conducts business amongst Colombian public officials, the business community, and the wider public,” said the report. “This includes a lack of comprehension around the way in which China operates in a rapidly changing and dynamic geopolitical landscape and how that shapes its international foreign and trade activities.”

The report notes that Colombia is not a signatory of China’s Belt and Road Initiative, a Chinese strategy that provides valuable infrastructure funding to countries but remains controversial due to allegations of “debt-trap diplomacy” in which Beijing imposes new agreements if a country cannot make repayments. 

As for now, the report’s authors do not expect Colombia to begin participating in this initiative in the coming years. “It is unlikely that, under the Petro administration, Colombia will sign on to sovereign-debt-funded infrastructure projects, considering the country’s fiscal rule, institutional constraints, and impediments in Congress,” said the report. “Still, China will likely show support for Petro’s dreams of massive infrastructure projects to lift the country’s most rural areas out of poverty as a way to forge closer ties with the government.”

Photo: Beijing. (Credit: anthonychong / Pixabay)