The opening of the Beijing Olympics at the Bird’s Nest Stadium on Friday marks the start of serious work for the two Latin American presidents who made their unusual offers of success during the Winter Games.
from Argentina Alberto Fernandez and Ecuadorian William Lasso in China they are seeking support for national economic priorities – a sign of both Beijing the impact is growing in Latin America.
Fernández will meet with Chinese President Xi Jinping on Sunday, where he is expected to sign Argentina to Belt and Road Initiative. Argentina will become the largest Latin American country to join China’s leading investment and infrastructure project so far.
Lasso, who will also meet with Xi, as well as Chinese Prime Minister Li Keqiang, is on a two-way mission. It wants to renegotiate the terms of Ecuador’s $ 4 billion debt, while launching negotiations with China on a Free Trade Agreement (FTA).
The 2022 Winter Olympics were surrounded by controversy, and countries like the US, UK and Australia launched diplomatic boycott they refuse to send their representatives to the Games because of the human rights situation in China.
The two Latin American leaders will join leaders from Russia, Qatar and Thailand in choosing to participate.
Especially for Argentines, travel time to Beijing is delicate. The Fernández administration has just reached a framework agreement with the IMF restructure $ 44.5 billion in debtbut a final agreement at staff level is still pending, and the IMF said it is still working with its counterparts in Buenos Aires.
Some observers are concerned that by now going to Beijing and meeting with Xi, Fernández is sending the wrong message to the fund and its main shareholder – the United States.
“This is not the time to leave,” said Patricio Giusto, director of the Sino-Argentine Observatory, a think tank in Buenos Aires. He said the trip could potentially deal a “big blow” to Argentina’s hopes of ending the agreement with the IMF.
But the left-wing Peronist government has dismissed the concerns, saying the trip has been underway since Fernández took office in early 2020. Its purpose is “not to offend anyone” but to promote Argentina’s national interests, a source close to the president told the Financial Times.
In addition to joining the Belt and Road, Argentines could seek more credit from China. The two countries have a $ 19 billion currency swap agreement dating back to 2009 and Buenos Aires wants to expand it by about $ 3 billion.
Argentina’s net foreign exchange reserves are almost depleted, and estimates say they fell below $ 6 billion in December, while the country has to pay $ 2.8 billion to the IMF next month. If the agreement with the fund fails or is blocked by the Argentine Congress, Fernández may need a contingency plan to prevent a debt crisis.
Debt is also a problem for Ecuador. During Rafael Corree’s left-wing government from 2007 to 2017, the Andean nation became heavily indebted to China and agreed to repay many oil loans. Lasso said Correa has agreed to unfavorable terms for Ecuador and instead wants to return in cash, releasing more oil for sale in the spot market, where prices are high.
Lass’s second stated goal is a free trade agreement, after years of steady growth in Ecuador’s trade with China. China absorbed 15.8 percent of Ecuador’s exports in 2020, up from just 3.9 percent in 2015. The Chinese buy oil, shrimp, bananas, cut flowers, cocoa and lumber from Quito.
The shrimp industry grew especially fast Ecuador, a nation of less than 18 million people, is now the largest exporter of shrimp in the world. Half of those exports go to China, where the growing middle class is acquiring a taste for seafood that was once considered a luxury.
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But Ecuadorian shrimp growers pay a 2 percent tariff on exports to China, while banana growers pay a 10 percent tariff. Lasso wants the free trade agreement to abolish those penalties.
“The government’s proposal is for the agreement to be signed within a year,” said Gustavo Cáceres, head of the Ecuador-China Chamber of Commerce. “It is a very ambitious goal, but China is very important to us. It is our second largest trading partner after the United States. ”
Sebastián Hurtado, head of Ecuador’s political risk consulting firm Prófitas, said Lass’s trip to China could act as a “pressure mechanism” to remind the Biden administration that Quito also wants a free trade agreement with Washington and is a small but important partner in region.
WITH Peru and Chile after turning left in the recent election, and Colombia may do so later this year, Lass’s government could only be a right-wing administration in the Andes by the end of 2022.
“Ecuador is currently in a geopolitically interesting position,” Hurtado said. “It has some leverage over the United States.”