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China announced plans to create a $10 billion fund for investment cooperation between itself and its fellow ASEAN (Association of South East Asian Nations) members. Additionally China will provide a $15 billion credit line to its South East Asian neighbors, further extending its influence in the region.China has been making its presence known in multilateral organizations around the globe. Recently pledging increased levels of support for organizations like the International Monetary Fund (IMF) and the Inter-American Development Bank (IDB).Bloomberg reports in this article:The investment fund will promote infrastructure development linking China with the 10 members of the Association of Southeast Asian Nations, while the loans will be offered over three to five years, according to a statement on the Foreign Ministry Web site today citing an interview with Foreign Minister Yang Jiechi.
The measures from the world’s third-largest economy, and one of the few forecast to maintain growth this year, may help speed recovery from the global financial crisis and cement China’s leadership in the region. The nation has already signed currency swap agreements with Indonesia, South Korea, Hong Kong and Malaysia this year to help ease foreign-exchange shortages and aid bilateral trade and investment.
“China is going to take the opportunity of this crisis to further establish itself in Asia,” said Huang Jing, a visiting professor at the National University of Singapore’s Lee Kuan Yew School of Public Policy. “All this will have a huge political and diplomatic impact in the region, in addition to the economic impact.” Check out this link see a post a few weeks back on China & the IMF / IDB.
Li Tao and Zhang Man of Caijing, a financial news publication of China report on the rising influence of China's currency the Renminbi (yuan). The two write:
The cross-border exchange of regional currencies has become an important way to defend against the global economic downturn and promote trade. To circumvent a shortage of dollars and other currencies, as well as reduce exposure to exchange rate volatility, developing countries in eastern and central Asia as well as South America have implicitly recognized the Chinese yuan as a currency for settlements and, in some cases, reserves.
China is willing and eager to help ease liquidity in the financial system... as long as it gets some justified financial clout out of it.
So far China has established the following currency swaps:
Dec 12 - China and South Korea sign a 180 billion yuan currency swap framework agreement.
Jan 20 - China and Japan sign a 200 billion yuan currency swap between the People's Bank of China -- and the Honk Kong Monetary Authority.
Feb 8 - China signs a currency swap agreements with Malaysia's central bank for 80 billion yuan
March 11 - China signs a 20 billion yuan deal with the National Bank of Belarus
March 24 - China signs a 100 billion yuan swap deal with the Central Bank of IndonesiaClick here to read more on this topic from Caijing
March 30 (Bloomberg) -- The central banks of China and Argentina reached an agreement for a three-year, 70 billion yuan ($10 billion) currency swap, Chinese Central Bank Governor Zhou Xiaochuan told reporters in Medellin, Colombia, today.It’s the first such accord between the world’s third- biggest economy and a Latin American nation. The move follows swap accords between China and Indonesia, South Korea, Hong Kong, Malaysia and Belarus.The agreement broadens Argentina’s access to foreign- currency reserves and may ease concerns about the country’s ability to control the peso amid uncertainty over a conflict with farmers over export taxes and legislative elections scheduled for June 28. Argentina wasn’t part of a swap facility program created by the U.S. Federal Reserve for emerging markets, including Brazil and Mexico, last year.
Click here to access this full article from Bloomberg
