China moving into South America

China has been strengthening its ties with Latin America in the last couple of years, looking for new sources of oil and new export markets. Today's Financial Times reports on enhanced ties between China and Ecuador. While most attention has been focused on the US-China rivalry in Asia, it would be well to watch Central and South America in the next few years as China attempts to counter US influence in that region as well. The Financial Times said:

In particular, [Finance Minister] Correa warned that local banks might refuse to roll over short-term government bills due in October, thought to be worth $250m (€207m, ?139m).

However, loans from China, other “friendly countries” such as Brazil, Venezuela and Spain, and the Bogota'-based Latin American Reserve Fund could help cover any financial shortfall, he said.

Ecuador remained fully solvent. “We can pay up to the last centavo of the debt we owe [but] we have to diversify sources of finance,” the minister added.

Ecuador was also looking to China to help boost an oil sector that accounts for 40 per cent of exports.

The government, now headed by President Alfredo Palacio, Mr Gutie'rrez's former deputy, had held talks over a long-term oil sales contract with a Chinese oil company and aimed to attract investment from China, Canada and elsewhere to two multimillion-dollar oil refinery projects. In the biggest, at Jaramijo on the north coast, Ecuador is seeking to raise about $3bn.