In midst of the slowing economy, China has been offering large amounts of money to several Latin American countries in the form of loans, and development funds. The New York Times reported on April 15th that,
“China has been negotiating deals to double a development fund in Venezuela to $12 billion, lend Ecuador at least $1 billion to build a hydroelectric plant, provide Argentina with access to more than $10 billion in Chinese currency and lend Brazil’s national oil company $10 billion. The deals largely focus on China locking in natural resources like oil for years to come.”
“China’s trade with Latin America has grown quickly this decade, making it the region’s second largest trading partner after the United States.”
China’s recent policies issued by MOFCOM have seen a trend in the simplification of procedures both for in-bound and out-bound investments. Most notably was the recent announcement by the State Council to allow exporters and importers to use the Chinese yuan to settle trade settlements.
“One of China’s new deals in Latin America, the $10 billion arrangement with Argentina, would allow Argentina reliable access to Chinese currency to help pay for imports from China. It may also help lead the way to China’s currency to eventually be used as an alternate reserve currency. The deal follows similar ones China has struck with countries like South Korea, Indonesia and Belarus.”
China has also been planning loans for oil exploration in the region.
“Just one of China’s planned loans, the $10 billion for Brazil’s national oil company, is almost as much as the $11.2 billion in all approved financing by the Inter-American Bank in 2008. Brazil is expected to use the loan for offshore exploration, while agreeing to export as much as 100,000 barrels of oil a day to China, according to the oil company.”
Source: New York Times
