Chinese Economics and International Investments
The People’s Republic of China is a large country located in the Asia Pacific region. A millenary civilization, China currently has a total territory of some 9.6 million square kilometers, which is somewhat smaller than the United States, yet the fourth largest country in the world. Likewise, China has climate regions that range from subarctic to tropical as well as a diverse geography from mountains to deserts and plains. Furthermore, China’s Pacific coastline covers 14.500 kilometers. Today, China has a total population of almost 1.4 billion citizens, about 58% of which live in an urban setting, notably the major cities of Shanghai and the capital Beijing. Meanwhile, the median age in China is 37 years old. In economic terms, China has a Gross Domestic Product (GDP) of approximately US$23 trillion, in terms of purchasing power parity (PPP).
Chinese Economics and International Investments
In recent decades, the People’s Republic of China has become a major financier of projects and loans worldwide as well as a provider of grants that could be considered development aid by some standards. However, what is most interesting is evaluating the projects that Beijing prioritizes and contrasting them against more traditional financing or aid coming from Western countries. Between 2000 and 2014, China financed hundreds of projects mainly throughout Eurasia, Latin America, and Africa. During this time period, in terms of individual projects, China managed the largest amount of projects, over 150 per country, in Tanzania, Sudan, Pakistan, Angola, and Cambodia, amongst others. Meanwhile, in terms of total dollar value, the largest recipients of Chinese financing were Russia, Venezuela, Pakistan, Sudan, and Ethiopia, amongst others.
When considering project financing by category, there is a large disparity between the amount of projects attributed to specific sectors and the aggregate dollar amount allocated per sector. For instance, for individual projects, categories such as health, education, governance, and emergency response were major recipients. However, the total amount of funds (dollar value) allocated to each of these categories accounted for less than 2.0% (respectively) of the total global financing that China distributed. Meanwhile, in terms of dollar value, the categories of energy generation and supply; transportation and storage; and mining, construction, and industry were by far the largest recipients of Chinese funding. In the case of energy generation and supply, this category received over 38% of China’s total foreign investments between 2000 and 2014.
As seen above, the main disadvantage of China’s investment priorities and global financing trends is that it does not contribute sufficiently to key sectors for human development and sustainability, namely health, education, and good governance. This is why, through Farmfolio’s initiatives in Colombia, our CEO Dax Cooke wants both international investors and the local economy to capitalize on agriculture while contributing to sustainable human development. By creating a new and innovative asset class, Farmfolio’s Farmshare offerings contribute socially and economically to the Colombian and Latin American communities where they are settled by empowering them to grow and upgrade their entrepreneurial vision. In this sense, Farmfolio’s investment model is unprecedented when it comes to foreign investment because it provides for innovative, sustainable, and responsible economic development in emerging markets.
(Read more about Economic Outlook for Latin America in 2018)