beyondbrics

Fear and loathing about Chinese investors playing in America’s “backyard” stepped up a notch this week with the FT’s scoop on a Chinese proposal to build a railway across Colombia to rival the Panama Canal.

China’s rampant appetite for Latin America’s natural resources contributed to the region’s buoyancy throughout global economic recession and to the relatively new stability in countries such as Peru.

Its desire for coal in particular presents an opportunity to Colombia, which even before this year’s catastrophic floods had targeted infrastructure as a key obstacle to ongoing growth.

The world’s fifth-biggest coal producer pays through the nose to get coal from its mountainous interior to its ports on a sub-par road system, one of the factors behind Colombia’s recent nationwide truck-driver strikes.

So if China wants to invest in Colombia, then president Juan Manuel Santos – like many of his counterparts in the region – is all ears.

But in the great playground of international trade, there are swings and roundabouts.

Chinese companies’ terrible labour and environmental record in Africa has not gone unnoticed in Latin America, which wants to break the centuries-old resource curse.

And China is not the only investor knocking on Latin America’s door.

As China’s ambassador to Colombia, Gao Zhengyue, was at pains to point out in a recent interview with the FT, China is the new kid on the block. It may have put a scare into the US by usurping America’s role as the top trading partner of many Latin nations, but in competitive bidding processes, China is often losing out to big private investors from Brazil or Europe.

Santos has no time to waste in advancing an ambitious reform agenda. Given security improvements and the country’s abundant coal deposits, Colombia is in a strong position to dictate terms of infrastructure, oil, gas and mining concessions.

It’s interesting that comments on the Colombian “dry canal” story in Colombia’s leading daily, El Tiempo, were split between horror and hope.

If Colombia and its peers want to realise that hope and banish the fears associated with Chinese investment, the onus is on them to make sure their industry oversight and regulation bodies are up to a much, much bigger job.