China

Petrobras confirms US$5 billion loan from China Development Bank

The state oil firm Petrobras reported on 16 December 2016 that it signed a financing agreement with the China Development Bank (CDB) for a ten year loan of US$5 billion (Valor, Globo G1). The financing is the result of a US$10 billion agreement announced on 26 February 2016 between Petrobras and CDB. Per the agreement, Petrobras will provide a total volume of 100,000 barrels of oil per day to China National United Oil Corporation, China Zhenhua Oil, and Chemchina Petrochemical over the term of the loan, in lieu of making interest and principal payments. The company also signed agreements with these three firms.

 

The agreement is questionable on Petrobras’ end. At an average price of US$50 per barrel of crude oil, Petrobras would effectively pay a 36.5 percent interest rate based on economic cost. However, Petrobras is the most indebted company in the world, with over US$100 billion in long-term debt as of 30 September 2016 and scaling efforts to shed non-core assets to reduce its leverage (Globo G1). As such, their credit options were limited in February 2016, and the US$10 billion agreement with CDB enabled them to raise funds in February without issuing equity, when their stock price was at its nadir (Globo G1). Shares of the firm rebounded in 2016, increasing 266 percent from a low of US$2.71 in February to US$9.91 on 20 December 2016, as the Brazilian stock market rallied in anticipation of Dilma Rousseff’s impeachment and the price of Brent crude oil rebounded from a low of around US$35 in February to the mid-US$50s in December 2016 (Google Finance).

Chinese government requests protection for citizens in Venezuela

The Chinese Foreign Affairs Ministry shared on 19 December 2016 that the Chinese Government requested protection for its citizens residing in Venezuela, following recent episodes of violence and looting due to cash shortages. According to Fernando Cepeda, the President of the Bolívar state Chamber of Commerce, hundreds of businesses were looted in Ciudad Bolívar, and many were Chinese-owned (Efecto Cocuyo). Chinese Foreign Affairs Ministry Spokeswoman Hua Chunying stated the Chinese Embassy in Caracas activated an emergency mechanism to issue security warnings to Chinese residents in Venezuela and urged the Venezuelan Foreign Ministry to take measures to protect Chinese citizens (La Patilla).

Senior Mexican and Chinese officials meet

Mexican Foreign Secretary Claudia Ruiz Massieu met with Chinese State Councilor Yang Jiechi in Mexico City on 12 December 2016 and pledged to strengthen ties between the countries in various aspects (Aristegui). Yang Jiechi also met privately with President Enrique Peña Nieto to he reviewed the agenda of issues regarding the bilateral relationship (Aristegui and Excelsior). The encounter was a follow up from a meeting held in September 2016 between Peña Nieto and Chinese leader Xi Jinping which formalized the creation of the China-Mexico investment fund featuring over US$50 million in various projects. Official figures showed trade between the two nations reached US$74.9 billion at the end of 2015 (Excelsior).

Venezuela and China strengthen industrial relations

The China-Venezuela industrial, scientific, and aerospace sub-committee, led by the China-Venezuela High-Level Commission, met in Caracas on 14 December 2016 to strengthen bilateral industrial relations. Vice President for Social Development Jorge Arreaza stressed the importance of maintaining strong bilateral relations and highlighted China's support for the production of automobiles, housing materials, telephones, and computers in Venezuela (Globovisión). During the meeting, Venezuela and China agreed to 672 new projects, 131 of which are linked to President Nicolás Maduro's Bolivarian Economic Agenda. The nations also signed an agreement for China to provide Venezuela with a heavy cargo transport fleet to increase the government-run Grand Supply Mission's logistical capacity to distribute food by one third (El Universal).

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Venezuela and China sign US$2.2 billion energy deals

Venezuelan President Nicolás Maduro met with a delegation from the state-owned China National Petroleum Corporation (CNPC) in Caracas on 17 November 2016 to sign energy deals worth US$2.2 billion. The agreements cover investments in joint ventures with Venezuelan state oil company Petróleos de Venezuela (PDVSA) where CNPC has a minority holding, such as a deal to increase production by around 277,000 barrels per day in the Orinoco Oil Belt (América Economía). CNPC and PDVSA also agreed to construct an oil refinery in Jienyang, China, that will process over 400,000 barrels of oil per day (Globovisión). According to Maduro, the projects to increase oil production are backed by a Chinese credit line of up to US$9 billion (América Economía).

Ecuador’s debt with China is at least US$ 8.65 billion

It is estimated Ecuador’s debt to China has risen to at least US$8.6 billion, which represents Ecuador’s largest overall debt to any country (El Universo, 11 November 2016). The debt is composed of cash advances from China in exchange for future petroleum sales and Chinese funds to Ecuador during the past 10 years. Since Ecuadorean President Rafael Correa took office, the debt with China has multiplied by over 1,000 percent. Ecuador’s debt to China rose from US$7.1 million in 2007 to US$7.97 billion in October 2016, this was officially reported by Ecuador’s Ministry of Finance (El Comercio). 

Chile works to position itself as a touristic destination for the Chinese market

A delegation representing 40 Chilean businesses from the tourism sector participated in an event held in Shanghai on 15 November 2016 to promote Chile as a varied touristic destination for Chinese tourists. The event was hosted by Chile's Economy Ministry as part of its "Chile Experience" campaign. Director of ProChile (Chile's commercial promotion agency) César Suárez pointed out that Chile and China have very close relations, and the Andean country offers an exotic type of tourism that appeals to the Chinese market (La Nación). While the numbers of Chinese tourists arriving in Chile are still relatively small - numbering little over 15,000 in 2015 - they are growing fast: 2015 showed a 38 percent growth in tourist arrivals from China compared to 2014, and the number has grown a further 58 percent so far in 2016 (Bolsamanía).

Mexico and China strengthen military relations

Mexican military representatives signed a memorandum of understanding (MOU) on academic and military cooperation with China in a move to strengthen and deepen military relations between the two countries (Prensa Latina, 28 October 2016 and El Universal). During their working trip to China, Mexican Secretaries of National Defense and the Navy Salavador Cienfuegos and Vidal Francisco Soberón met with Chinese Deputy Chairman of the Central Military Commission Fang Changlong and agreed on the pact (Prensa Latina). The MOU was signed between China’s University of National Defense and Mexico’s National Defense College and officials hope it will raise their level of military relations to a new height and enhance their strategic partnership in the future (El Universal and Prensa Latina).

Pacific Alliance commands large portion of Valle de Cauca, Colombia exports

On 27 October 2016, El Pais reported the three other Pacific Alliance countries (Chile, Mexico, and Peru) are the main destination for exports from Colombia's Valle del Cauca department – representing 23.3 percent of all exports from the department. Peru accounted for 59 percent of the exports, from Valle de Cauca, indicating there is room to grow in the Mexican and Chilean markets. In 2015, Valle del Cauca sold sugar, electrical material and appliances, paper, cardboard, cosmetics and pharmaceutical products to Alliance members. Furthermore, El Tiempo reported the Pacific Alliance is looking to China's Sichuan province for opportunities after after a business expo presented 140 possible partners in the region. Business interest include, energy, infrastructure, and agro-industry (El Tiempo).

 

Ecuador begins exporting mangoes to China

After thirteen years of negotiations between the Ecuadorian Agro Quality Assurance Agency (AgroCalidad), the General Quality Supervision Administration of Ecuador, and the Quarantine of the People's Republic of China, Ecuador sent its first 20,000-box shipment of fresh mangoes to China on 12 October 2016 (El Universo). Wilson Wong, AgroCalidad district director in Guayas province, explained that if the deal goes well, Ecuador coud begin sending two air shipments of mangoes per week to China. Wong added that negotiations over mango exports have started with Japan and South Korea, as two other Ecuadorian mango firms look to expand their business into Asia (El Telégrafo).