China offers US$10b Latin America credit
Chinese Premier Wen Jiabao wrapped up a tour of resource-rich Latin America on Tuesday by offering US$10 billion ($12.7 billion) in credit for infrastructure projects and calling for a joint push to combat protectionism.
Wen proposed a free-trade deal with the Mercosur bloc and signed a series of investment accords during the trip to the region, a key source of agricultural and mineral commodities and a growing market for Chinese exports.
"The Chinese government ... will continue to offer economic assistance to countries in the region that are interested," Wen told the UN regional economic body ECLAC in Chile, the world's No 1 copper exporter.
He said China's Development Bank would implement a US$10b credit programme for infrastructure projects. He also said China would create a US$5b fund for co-operation between China and Latin America and the Caribbean.
"We have to combat trade protectionism, broaden the mutual openness of our markets, optimize the trade structure and diversify cooperation in terms of customs and quality control," Wen said. He added that China aims to nearly double trade with Latin America in five years to over US$400b.
Last year, 8.9 per cent of all regional exports were destined for Chinese shores and 13.8 per cent of imports were made in China, as trade between the Asian giant and Latin America and the Caribbean surged nearly 30 per cent in the 2005 to 2011 period, according to ECLAC data.
"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.
The head of ECLAC, Alicia Barcena, welcomed Wen's words to improve trade ties and diversify away from commodities-based 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 told Reuters. "That's very good news for the region."
CHINA HUNGRY FOR FOOD SECURITY
Fears of a hard landing in China, the world's No 2 economy, have sent jitters through Latin America, as the Asian giant's annual growth target for 2012 looks increasingly in jeopardy as demand at home falters and Europe's debt crisis worsens.
"China is also considering the possibility of negotiating and signing agreements for local currency swap agreements ... and increasing the reciprocal creation of bank branches," Wen said.
The Chinese leader also called for co-operation from regional leaders on food security and to that effect invited Latin American and Caribbean agriculture ministers to a meeting in China in 2013.
"We also propose to establish between China and the region an emergency food reserve mechanism of 500,000 tons, which will be used for natural disasters and humanitarian aid," Wen said.
Earlier on Tuesday Wen said China and Chile planned to double bilateral trade flows to US$60b by 2015. China is the world's biggest consumer of metals, including Chilean copper.
"These are two countries that can perfectly complement each other, most of all because Chile is a highly rich country, intensive in commodities that China is going to need to continue growing at the same rhythm," said Benjamin Sierra, financial markets economist at Scotiabank in Santiago.
China has made relatively few major investments in Chile, however, despite being its main trade partner and sharing a free-trade agreement.
On Tuesday, Wen signed accords with Chilean President Sebastian Pinera to strengthen legal safeguards for investors from either country.
In another accord, Chinese renewable energy company Sky Solar, state-backed China Development Bank and Chilean industrial group Sigdo Koppers said they planned to make a Chinese firm's biggest investment in the Andean country by building a US$900 million solar energy park.