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China is vying to become a shareholder of the Inter-American Development Bank (IDB) to further beef up its economic relations with Latin American economies.
Central bank Governor Zhou Xiaochuan, who is heading a high-profile delegation participating in an IDB meeting in Lima, is lobbying to get access to the bank, as the bank plans to get at least two new shareholders.
On Sunday, Zhou submitted a letter written by Chinese Vice-Premier Huang Ju to IDB President Enrique Iglesias, reiterating China's willingness to join the bank.
Headquartered in Washington D.C., IDB is one of the earliest regional development financial organizations involved in resolving regional issues.
Its aim is to provide financial and technical assistance for Latin American economies to promote their development.
China started to participate in the bank's annual meeting in 1991 as an observer.
It first petitioned the bank to join as a shareholder in 1993.
IDB Secretary Carlos Ferdinand said there is a strong possibility that China and the Republic of Korea will join the bank.
The new members will be admitted through bilateral negotiations that could begin later this year, Ferdinand said.
Under the IDB policy, new members can be admitted if the bank decides to increase the number of shares. But this can only happen when it increases capital.
The other way is for a new member to take over shares from existing members.
China has an opportunity to join the bank this way, as shares in the IDB became available following the former Yugoslavia being divided into separate nations in the 1990s.
Bosnia-Herzegovina decided to give up its shares.
Serbia-Montenegro has not yet made a decision about its shares.
Ferdinand said China has been notified of the availability of the shares and it has expressed interest in joining.
Latin America is one of the main recipients of China's foreign investment, particularly countries such as Ecuador and Brazil.
The bulk of China's investments are in the region's commodities markets, with investment in oil projects in Ecuador, Peru and Venezuela, and minerals in Brazil.
Brazilian and Chinese authorities are negotiating the possibility of an US$2.5 billion investment in an iron ore project.
China's Shougang Group already owns Peru's major iron ore mine.
With these types of deals in place, China has become an important trade partner for Latin American economies.
Bilateral trade between China and Brazil rose 78.7 percent compared with a year ago to about US$8 billion last year, while trade between China and Mexico grew a year-on-year 24.3 percent to about US$5 billion, figures from the Chinese Ministry of Commerce indicate.
Brazil has become China's largest trade partner in Latin America, while Mexico has become the country's second-largest trade partner in the area.
Also last year, trade between China and Chile reached about US$3.5 billion, an increase of 37.5 percent from the previous year.
Sergio Toro, an official with the Chilean Embassy in China, said Sino-Chilean economic co-operation will blossom in the coming few years, thanks to the two countries' high economic growth and frequent business exchanges.
The bilateral trade volume between China and Chile is expected to hit US$10 billion by the end of 2008, and Chilean investment in China will also increase, Toro said.
"We are very, very confident that the bilateral trade volume momentum will continue to rise, after it was sparked off about 10 years ago," he said.
Chile is China's third-largest Latin American trade partner, after Brazil and Mexico.
Iglesias said China represented an opportunity for Latin America, because its demand has increased commodity prices in a substantial way, which is very positive for Latin America.
(China Daily April 1, 2004)
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