China boosts foreign investment in Latin America

Natural resources in Latin American countries such as Brazil are a key attraction for Chinese investment

Foreign investment in Latin America grew by about 40% in 2010 to $113bn (£69bn), a UN study has said.

The fastest growing investor in the region was China, which barely registered between 2006 and 2009, but now accounts for 9% of the total.

The report was released by the UN's Economic Commission for Latin America and the Caribbean (ECLAC).

Brazil received the most foreign direct investment (FDI), gaining $48.5bn, followed by Mexico, with $17.7bn.

Commodity search

Alicia Barcena, executive secretary of ECLAC, said the figures highlighted the growing involvement of Latin America and the Caribbean in economic globalisation.

She said that China's interest was expected to continue and contribute to further FDI growth, which is expected to be 25% this year.

Foreign investors have been attracted to the region by its rich supply of commodities, something that is particularly of interest to fast-growing and commodity-hungry China.

ECLAC's report said that 90% of China's confirmed investment in Latin America targeted the extraction of natural resources.

Earlier this week, the International Monetary Fund warned that although the region was growing at a healthy pace, high commodity prices and external financing was pushing growth at a faster pace than some economies were prepared for.

It warned that this was causing overheating in some areas.

Last year, China overtook the US as Brazil's biggest trade partner with more than $56bn in trade.

However, the US still provides the biggest percentage of FDI in the region, accounting for 17% of the $113bn. The Netherlands is next with 13%, with China in third place.