China Pledges $10 Billion in New Loans to Latin America

BEIJING: On Tuesday, China introduced new credit lines and visa-free travel for Latin America as part of its efforts to boost engagement with the region, while Brazil cautioned its neighbours against depending too much on foreign economic forces. China will allocate nearly $10 billion in credit lines to Latin American nations to aid development, but in yuan, President Xi Jinping stated during his address at the start of the China-CELAC Forum ministerial meeting, which brought together Latin American and Caribbean officials in Beijing. The credit line, expressed in yuan, seems to be an effort to enhance the international presence of the Chinese currency, as China intensifies its strategic and economic connections with Latin America. At the first China-CELAC Forum in 2015, Beijing proposed $20 billion in funding to assist Chinese companies in investing in infrastructure projects throughout the continent.

"China is engaging in significantly more yuan-denominated transactions of this nature, especially credit swap agreements that facilitate the borrowing nation to operate in RMB instead of USD," stated Eric Orlander, co-founder of the China-Global South Project. However, Brazilian President Luiz Inacio Lula da Silva stated that the region should stay autonomous from global economic forces in light of the worldwide economic upheaval caused by Washington's trade conflicts. Lula stated in a speech at the summit's opening that Latin America and the Caribbean must not turn into a "platform for hegemonic conflicts." Lula stated, "It's crucial to realise that Latin America's destiny is not reliant on others; it does not hinge on President Xi Jinping, nor on the United States, or the European Union. It solely depends on our desire to be great or to remain small." Out of the $240 billion in goods China purchased from Latin America last year, nearly half originated from Brazil, the largest economy in the region.

The China-CELAC forum has served as a means to enhance discussions between China and the bloc regarding trade, investment, and infrastructure collaboration tied to China's Belt and Road Initiative, confronting American geopolitical and economic supremacy in the area. Although the U.S. is an important trading partner in Latin America, certain nations, particularly in South America, have closer economic relationships with China. Brazil, for its part, has been strengthening ties with China, revealing over $4.5 billion in future Chinese investments across various Brazilian industries, including automaking, renewable energy, pharmaceuticals, and semiconductors. 

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Brazilian officials also emphasised a meeting between the presidents as an opportunity to attract investment and enhance Brazilian exports to a nation dissatisfied with U.S. President Donald Trump's tariffs. Tuesday's summit occurs following a weekend of intense trade discussions between the U.S. and China, resulting in both parties agreeing to a 90-day hiatus and lowering tariffs to a baseline rate of 10 per cent. Xi reaffirmed China's position that trade and tariff conflicts produce no victors, stating that "intimidation and oppression will merely lead to isolation," without mentioning the U.S. Besides credit lines, China will also introduce a visa-free policy for five nations in Latin America and the Caribbean, Xi mentioned, without specifying which nations they were. The visa-free policy will be broadened to include additional countries in time. 

Xi stated that trade between China and Latin America surpassed $500 billion for the first time last year, achieving a target he announced ten years ago. That increased from $450 billion in 2023 and only $12 billion in 2000. In 2024, two-way trade between China and CELAC nations reached $515 billion, as reported by Chinese customs data, boosted by the world's second-largest economy increasing its imports of food, timber, energy, and various other commodities. Xi urged Latin America and China to enhance collaboration in clean energy, 5G telecommunications, the digital economy, artificial intelligence, cybersecurity, counter-terrorism, and anti-narcotics efforts. The summit was also attended by the presidents of Colombia and Chile.