Ecuador’s President Rafael Correa Visits China To Plug Oil Shortfall

TND Guest Contributor: Rebeca Morla| PanAm Post | 

On Monday, January 5, President Rafael Correa’s embarked on his first state visit of 2015. Correa headed for Beijing, with his main objective to secure Chinese credit to save Ecuadorian government projects, jeopardized by plummeting oil prices.

Aterrizamos en Pekín. Estamos ya en la China milenaria, una civilización e historia que despiertan admiración a quienes las conocen.

— Rafael Correa (@MashiRafael) January 5, 2015

“We’ve landed in age-old China, a civilization that provokes admiration in all that encounter it.”

Correa has already netted loans worth US$7.5 billion and signed nine bilateral cooperation agreements with his Chinese counterpart, Xi Jinping.

Ecuador’s Deepening Dependence

Correa’s primary task was ticked off the list with the signing of five funding agreements with Chinese banks. After his meeting with Li Ruogu, head of the state-owned Exim Bank, Ecuador renewed credit lines worth $5.3 billion, at a 30-year term and 2 percent interest. The deal was announced by Finance Minister Fausto Herrera, a member of the Ecuadorian delegation in Beijing. According to Herrera, the funding will be used to finance transportation, education, and health-care projects.  

Excelente reunión de Presidente Rafael Correa con presidente de EXIMBANK China, Li Ruogu. Ampliarán financiamiento al desarrollo de Ecuador

— Ricardo Patiño Aroca (@RicardoPatinoEC) January 6, 2015

“Excellent meeting between president Rafael Correa and China EximBank president, Li Ruogu. They’re going to expand lending for Ecuador’s development.”

Furthermore, Herrera revealed through a separate statement that EximBank has put forward $250 million for Ecuador’s planned overhaul of manufacturing, particularly its bid to subsidize induction cookers.

The finance minister said that an agreement for $1.5 billion was signed with China Development Bank (CDB) to help finance Ecuador’s Annual Investment Plan. Meanwhile, he closed two other contracts for almost $500 million with the Bank of China.

Chinese officials have been full of praise for the Quito-Beijing economic relationship. Spokesman for the Chinese Ministry of Foreign Affairs Hong Lei states that financial cooperation between the two countries is “mature and effective.” Hong said that China was sympathetic to the difficulties that oil-producing countries are currently facing.

Over the last six years, Chinese loans to Ecuador have amounted to approximately $12 billion. With the addition of the new accords, Ecuadorian public debt will soar to $35 billion, nearing the ceiling fixed by the government.

No More Visas

Ricardo Patiño, the Ecuadorian minister whose portfolio includes foreign affairs and “human mobility,” joined his Chinese counterpart Wang Yi in abolishing the visa requirements for citizens of both countries.

The “Mutual Exemption of Visas for Ordinary Passports” agreement was somewhat imbalanced, however. Chinese citizens tourists may enter Ecuador without prior permission for a period of 90 days, while Ecuadorians will have 30 days to visit the Asian giant.

A final cooperation agreement was signed between China’s Ministry of Science and Technology and the Ecuadorian body responsible for science and education, Senescyt. The Beijing ministry and and Senescyt agreed to develop a scholarship program for Ecuadorian students wanting to study in China.

Pending accords will be signed on Friday, January 9. In the interim, both Correa and Xi Jinping are due to attend the opening of the first ministerial forum between China and the Community of Latin American and Caribbean States (CELAC) on Thursday.

Edited by Laurie Blair and Fergus Hodgson.

About the author:

Based in Guayaquil, Ecuador, Rebeca Morla is a junior reporter and translator with the PanAm Post. She studies political science and international relations and is an Executive Board member of EsLibertad. Follow @RebecaMorla.

This work was published at PanAm Post and is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.