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Ecuadorean oil in exchange for Chinese credits, cooperation and war planes

Friday, November 27th 2009 - 08:43 UTC
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President Correa welcomes Chinese investment in the country President Correa welcomes Chinese investment in the country

Ecuador and China signed this week three cooperation agreements worth 442 million US dollars including a loan to buy four warplanes, announced the Ecuadorian government. The two countries are also planning joint operations in developing oil fields in the Amazon zone.

The agreements were signed during the visit of Jia Qinglin, chair of the National Committee of the Chinese People's Political Consultative Conference, who met with President Rafael Correa as part of a tour of Latin America.

According to Correa's office, the economic and technical cooperation agreements include a 1.4 million USD donation, as well as two lines of credit, one for 2.9 million USD payable within ten years, and another for 438 million US dollars to buy the four Chinese military planes, destined for Ecuador's Air Force.

Beijing's direct investment in Ecuador has reached 2.2 billion USD, making it one of the top targets of Chinese investment in Latin America, Qinglin told reporters through an interpreter. Trade between the two countries reached 2.4 billion USD in 2008, a 50% jump compared to the previous year, he said.

Ecuador is also interested in having China’s Sinopec team up with the country’s oil company to develop oil fields in the Amazon region, a project that will require about 1.1 billion USD. Ecuador is Latinamerica’s fifth oil producer, half a million barrels per day. Oil is the country’s main export and helps finance 25% of the national budget.

The joint company will be 60% owned by Ecuador and 40% by China, according to Ecuadorian sources. Oil-hungry China has become a key strategic ally of Ecuador. The two countries also signed a separate 1 billion USD oil-for-cash deal and are in a joint project to develop a hydroelectric dam in Ecuador.

Meanwhile some 300 Chinese investors and business people are meeting in the Colombian capital Bogotá with their counterparts from eight Latinamerican countries in a bid to prop business.

The event, the third of its kind, seeks to “promote Chinese investment in Latin America, identify Latin American products they may be interested in importing, and those that we want to buy,” said Alejandro Ossa, a Colombian trade official.

Latinamerican exports to China reached 68.6 billion USD in 2008, according to official figures, a 42% higher than in 2007. China's main imports from the region include iron, soy beans, oil and other minerals.

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