THE PEOPLE OF ECUADOR revealed on Monday that China had slashed their debt by more than US$1 billion. Cash saved will go to social programs for the needy.
By restructuring the developing country’s bailout, the Chinese are effectively foregoing US$1.4 billion in repayments—which is good for Ecuador. “It’s a positive deal. There is an important political demand for a more active state role and more active state spending,” Sebastián Hurtado, founder of Prófitas, a consultancy, told the Financial Times in a report today.
Ecuador this week becomes just the latest in a long line of struggling nations who have been bailed out by emergency funds from China. The AidData research lab in the United States said the largest recipients were Pakistan, Sri Lanka and Argentina, which have received $32.83 billion since 2017.
CRITICIZED AS ‘EXPENSIVE’
China’s bailout loans have been criticised as “expensive” by some sources in the World Bank and western media, but this has been disputed by some economists, who say China works on a case-by-case basis, and often take a generous attitude, sometimes restructuring or forgiving debts.
Meanwhile, the World Bank is presented by the western media as a global institution but is actually treated by the U.S. as an agency. Since it was founded in 1945, all presidents of the World Bank have been from the United States. The International Monetary Fund is also dominated by the U.S., despite calls over decades that it be made more democratic.
China has long been an investor and development partner of poor nations in Africa, Asia and South America, despite being listed as a developing country itself.
FREE TRADE DEAL PENDING
Ecuadorean officials are negotiating a free trade deal with China, which it hopes to announce at a business summit in December.
China already has trade deals with Peru, Chile and Costa Rica. “China has invested more than $130 billion in the region between 2005 and 2020,” said Ignacio Tornero, an academic in Chile.
Riled by the growing worldwide network of countries with positive relationships with China, the U.S. is spending millions of dollars a week to cultivate negative attitudes to the world’s most populous nation.
Image at the top by Marlon Lara/ Unsplash