China Offers Latin American Countries US$10 Billion Line of Credit

Posted by Reading Time: 2 minutes

Jun. 27 – While wrapping up his tour of Latin American on Tuesday, Chinese Premier Wen Jiabao put forth an offer to establish a US$10 billion line of credit through China’s Development Bank to support infrastructure projects in the region. He said China would also create an addition US$5 billion fund to support further cooperation between China and the countries of Latin America and the Caribbean.

“[The Chinese government] will continue to offer economic assistance to countries in the region that are interested,” Wen told the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), according to a Reuters report.

Wen also proposed the establishment of a free trade deal between China and Mercosur – a South American trade bloc made up of Argentina, Brazil, Paraguay and Uruguay. He added that it is China’s goal to roughly double trade with Latin America over the next five years up to US$400 billion.

China has long been interested in enhancing its ties with the resource-rich region, which it relies on for a host of commodities, including agricultural products, minerals, and other raw materials. Latin America, meanwhile, stands to benefit greatly from the Chinese funds as well as their experience in undertaking massive infrastructure projects.

However, in his speech to ECLAC, Wen stressed that China wants to diversify away from only relying on Latin America for its natural resources.

“China wants to have more balanced trade with Latin America … we hope that in the future we can import more types of products, including value-added products,” Wen said.

Meanwhile, Head of ECLAC Alicia Barcena said that she welcomed China’s pledge to improve bilateral trade and add more diversity to Latin America’s exports.

“It’s very interesting that (Wen) came to the region to deliver a message that China isn’t only interested in Latin America’s and the Caribbean’s raw materials, but that it wants a long-term strategic relationship,” Barcena said. “That’s very good news for the region.”

Related Reading

China and Inter-American Development Bank Announce US$1 Bln Investment Fund

China’s Demand for Resources Brings Brazil Closer

Sinopec to Acquire 30% Stake in Galp Energia’s Brazil Unit

The China-Africa Series