When the Brazilian government acknowledged late last year that the deforestation rate in its Amazonian territories had risen by nearly one-third over 2012 figures, environmentalists were glum. Brazil’s success during 2005-10 in reducing the deforestation rate by nearly 80% had been hailed as a significant assist in the fight against global warming.

If that progress was being undermined, environmentalists said, much of the blame lay with a 2012 revision to Brazil’s Forest Code, passed by Brazil’s Congress under heavy pressure from the nation’s powerful agricultural lobby. The new law included measures that many of its critics said would contribute to deforestation, among them amnesty for some property owners who had cleared their land in excess of government limits. Big agricultural interests, these critics said, could now feel confident that even if they flouted the law, they would receive amnesties in the future.

Rarely mentioned in such analyses, however, was the growing role of China in Brazil’s domestic politics as it acquired interests in Brazil’s agricultural frontier. That relationship, experts now say, was hiding in plain sight. With China in 2010 purchasing US$30 billion of Brazil’s exports, including huge quantities of soy, China may have had a significant influence in empowering Brazilian agribusiness to press for weakened forest protections.

A report by Brown University researchers Guy Edwards and J. Timmons Roberts explores that dynamic as well as China’s influence on Latin American environmental and climate policies. “China’s rapidly increasing investment, trade and loans in Latin America may be entrenching high-carbon development pathways in the region,” says the report, titled “A High-Carbon Partnership? Chinese-Latin American Relations in a Carbon-Constrained World.”

China is becoming ever more involved in Latin America’s economy, stimulating carbon-intensive activity in particular. It is the top destination for the exports of Brazil, Chile and Peru, and since 2005 has provided more than $75 billion in loans to Latin American nations. China’s public oil companies are heavily invested in oil and gas projects in Brazil, Argentina, Peru, Ecuador and Venezuela. And it has made substantial loans and acquired commercial interest in industrial, mining and hydroelectric projects throughout the region.

Such engagement, the authors of the Brown report suggest, affects not only development patterns in the region, but also the balance of power within Latin American governments. Chinese loans and investments may be strengthening the relative influence of “domestic constituencies and ‘dirty’ ministries (e.g. ministries of mining, agriculture or energy) vis-a-vis environmental and climate change ministries and departments,” the report notes.

China not alone

China is not the only country whose investments fuel such impacts, of course. U.S., Canadian and European companies have stoked carbon-intensive development in Latin America for decades, frequently causing environmental damage in the process.

In a new report to the Inter-American Commission on Human Rights (IACHR), seven civil-society groups—six from Latin America and one from the United States—contend Canadian mining companies have taken a serious environmental toll in the region. And litigation still rages over soil and water pollution allegedly caused in the Ecuadorian Amazon by a subsidiary of the U.S. company Texaco when it was managing partner of oil operations there in the 1970s and 80s.

But with China undergoing its own industrial revolution, it has become a “driver of a new wave of environmental degradation in Latin America,” according to Kevin Gallagher, an associate professor of international relations at Boston University. Its huge demand for metals, for example, is driving up prices, which encourages U.S. and Canadian firms to get further involved in lucrative but environmentally harmful mining activities, says Gallagher, who did not participate in the Brown study.

In Venezuela, holder of the world’s largest oil reserves, China now looms large in the development of the Orinoco region’s carbon-rich, heavy crude. China, which lent Venezuela over $46 billion in 2005-12, plans to buy one million barrels of oil a day by 2016, a twenty-fold increase in a decade. In doing so, China is boosting Venezuela’s ability to contribute to a high-carbon future, analysts say, pointing out that if current practices continue, those extractive activities will occur within a context of relatively weak environmental regulation.

Environmentalists also cite China’s role in Ecuador. A report issued recently by the U.S.-based environmental group Amazon Watch says China is helping to finance a $10 billion refinery on the Ecuadorian coast and by mid-2013 was receiving 83% of Ecuador’s oil exports in exchange for large loans to the Ecuadorian government.

Way forward

Though experts criticize the impact of Chinese investment in the region, they’re quick to assert China could play a powerfully positive role. China is a world leader in renewable energy technology, they point out, and Chinese producers of wind turbines have supplied loans to Brazil, Bolivia and Argentina, sometimes at interest rates 50% lower than local banks offer. China’s Yingli Solar, one of the world’s largest solar-panel makers, has shipped equipment to two projects in southern Peru.

Still, China’s net impact has been to push Latin America in the opposite direction, towards more natural-resource extraction, carbon-intensive industry and large-scale agriculture—often with negative effects on forests, experts say.

The Brown analysts say China’s involvement in the region may be hardening the negotiating position of some Latin countries in climate talks. Those talks are expected to enter a crucial phase at the summit scheduled for Dec. 1-12 in Lima, Peru. China and Brazil, among other nations, have resisted binding global limits on carbon emissions, insisting on the historic responsibility of the developed world to adopt them instead.

“China has indicated an eagerness to cooperate with the region on climate change, but we’ve not seen much of that yet,” says Guy Edwards, one of the paper’s co-authors. “Still, there is tremendous opportunity to cooperate, especially in the realm of renewable energy, and it could make a very important difference.”