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| China has been looking to increase its investment in the Latin American region |
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.
Many of the
Latin American countries are still at a development stage and are building new
infrastructure in a bid to boost growth in their economies.
Meanwhile,
China, which has the world's largest foreign exchange reserves, has been
looking to for new areas invest some of its cash.
At the same
time, China's infrastructure development companies have been keen to tap into
new markets to expand their business.
Analysts
said that the offer of a credit line by China, may turn out to be a win-win
situation for both sides.
They
explained that Latin American nations could benefit from Beijing's expertise,
while Chinese firms may play a big role in developments of these projects.
"China
has the manpower and the technical skills required to undertake massive
infrastructure projects and also the deep pockets to fund them," Charles Chaw
of China Knowledge Consulting told the BBC.
"They
have proven their ability with success in their own country."
Increased
trade
Latin
American countries are also rich in natural resources and China is one of the
biggest consumers in the world of those resources.
Beijing
imports various commodities, including iron ore, copper and corn from these
countries.
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| China is one the world's biggest consumer of natural resources |
Meanwhile,
China, which is known for the manufacture of low-cost goods, has been looking
to increase its exports to the region as it faces slowing demand from key
markets such as the US and Europe.
Premier Wen
said that China was keen to double its trade with the region to $400bn over the
next five years.
However, he
said that for that to happen, both sides will have to work towards easing trade
barriers.
"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," Premier Wen said.
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.
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