Against the US-led boycott, Argentina and Ecuador strengthen relations with China

After meeting between Alberto Fernández and Xi Jinping, both countries pledge to intensify actions around China's Road and Belt initiative. Ecuador expects to close a trade agreement with China at the end of 2022

Chinese President Xi Jinping hosted a banquet during the Beijing 2022 Winter Olympics
Chinese President Xi Jinping hosted a banquet at the Great Hall of the People at noon on Saturday to welcome guests from around the world who attended the Beijing 2022 Winter Olympics opening ceremony. Photo: Xinhua/Xie Huanchi

While the United States and other Western countries promoted a boycott of the Beijing 2022 Winter Olympics opening, two Latin American countries attended the ceremony. They used the event to strengthen ties with the Chinese government. The presidents of Ecuador and Argentina, Guillermo Lasso (on Saturday) and Alberto Fernández (on Sunday), respectively, left meetings with Xi Jinping promising new efforts towards cooperation.

Ecuador plans trade deal with China and opens talks on debt

President Guillermo Lasso said that Ecuador hopes to close a trade deal with China at the end of 2022 and open a formal debt renegotiation with the Asian country.

China has become Ecuador’s top creditor over the past decade, with millions of dollars in long-term credit tied to the delivery of crude oil, significant investments in hydroelectric and mining projects, and other loans.

“In China, we had a productive meeting with President Xi Jinping,” Lasso posted on Twitter. “We have achieved great results in trade openings, cooperation in health, and debt renegotiation.”

READ ALSO: Lasso proposes labor and economic reforms to reactivate Ecuador’s economy

At the meeting, the two countries signed a memorandum of understanding to pave the way for a trade agreement at the end of the year, which would benefit Ecuadorian exports of shrimp, bananas, cocoa, and minerals.

Lasso, who took over in May, said more trade and foreign investment were vital to spurring the economy of the COVID-stricken and illiquid country.

“This would increase the market by nearly $1 billion more in export opportunities,” Trade Minister Julio José Prado told reporters. “And that means we can almost double the exports that we make to China in various products.”

Countries have agreed to initiate talks on debt renegotiation as Ecuador seeks to improve its payment terms and interest rates.

According to Foreign Minister Juan Carlos Holguin, Ecuador is also trying to decouple the delivery of oil from outstanding debts to Chinese banks worth about $2.2 billion, which would free up about $400 million a year in potential expenses.

Later on Sunday, Exterior Commerce Minister Julio Jose Prado said that Ecuador is expecting a planned trade deal with China to increase commerce between the two countries by about 35%, though the South American country will seek to protect some local industry.

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China, Argentina pledge closer ties on currency, ‘Belt and Road’

China and Argentina pledged on Sunday to deepen strategic cooperation on trade, currency, and the infrastructure-focused Belt and Road Initiative, the government and state media said.

The leaders, who met on the sidelines of the Beijing 2022 Winter Olympics, agreed on a five-year plan for agricultural cooperation and identified key areas to grow and diversify trade and investment in the sector.

China is a major buyer of Argentine soybeans and beef. It also has a major currency swap deal with the country, which helps to bolster its dwindling foreign reserves. Fernandez is battling to revive the economy of Argentina, a major grains producer.

Argentina‘s government said in a statement that the two sides had highlighted the importance of the currency swap between their central banks and agreed to continue “strengthening cooperation” in this regard.

The two also signed a memorandum of understanding related to China’s signature Belt and Road initiative, a platform for Chinese investment in railways, ports, and highways worldwide.

“This strategic decision will allow the national government to sign different agreements that guarantee financing for investments and works for more than $23.7 billion,” Argentina‘s government said. The Chinese side did not give such a figure.

READ ALSO: As Peronists make things difficult, IMF chief says ‘hard work’ still ahead on Argentina deal

In a 40-minute meeting, Xi and Fernandez agreed to cooperate and invest in areas such as green and sustainable development, as well as digital economy.

China is willing to share development opportunities with Argentina and help it expand exports and upgrade its industries, China’s foreign ministry quoted Xi as saying.

He was quoted as saying the two countries should deepen cooperation in trade, agriculture, energy and mining, infrastructure, investment and financing, anti-epidemic efforts, the digital economy, green development, and other areas.

(Partly translated and co-written by LABS)

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