China proposes $10bn loan for Latin America countries

Yuan notes

China has offered to set up a $10bn (£6.4bn) credit line for Latin American countries to support infrastructure projects in the region.

The proposal was made by China’s Premier Wen Jiabao as he wrapped up his visit to the region.

He also proposed a free trade pact between China and South American trade bloc Mercosur, which includes Brazil, Argentina, Uruguay and Paraguay.

China has been keen to increase its trade with the region’s economies.

“The Chinese government… will continue to offer economic assistance to countries in the region that are interested,” Premier Wen was quoted as saying by the Reuters news agency.

Currency swaps
Along with increased trade, Premier Wen also pushed for currency swap agreements with the region’s economies.

The agreements allow respective central banks to swap currencies and can be used by firms to settle trade in local currencies rather than in US dollars.

Beijing has been using these pacts as part of its push for a more global role for its currency, the yuan.

Last week, it announced a swap agreement with Brazil worth $30bn and Premier Wen said that Beijing was keen to making similar deals with other economies in the region.

“China is also considering the possibility of negotiating and signing agreements for local currency swap agreements… and increasing the reciprocal creation of bank branches,” he said.

China has also signed similar agreements with other trading partners such as Japan, Australia and Hong Kong.


BBC has the full article

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