http://www.kentucky.com/524/story/20027.html

China seeks to join Latin American bank
Posted on Sun, Mar. 18, 2007

China is seeking to join the Inter-American Development Bank, Latin America's largest financing institution, as a way to fuel its economic development and increase its influence in the region, officials said Saturday.

Bank President Luis Alberto will sign an agreement of understanding on Sunday with Zhou Xiaochuan, the head of the People Bank of China, to formalize talks over Beijing's request to become a member. The bank's board of directors is holding their annual meeting here Monday and Tuesday.

Moreno said the bank "will initiate talks among its members on whether China can become a member also."

It could take years before the bank decides whether to accept China's request. If approved, China would become the third Asian nation to join the bank, which has 47 member countries, including South Korea and Japan.

In recent years, China has been seeking greater influence in Latin America. The resource-rich region offers China, the world's sixth largest economy, a reliable source of raw materials and other investment possibilities.

China's membership in the bank also would give it an edge over Taiwan in the region. China has been courting Latin American countries to isolate Taiwan, which also is invested in the region, primarily in aid development and disaster relief.

Only about two dozen countries have given Taiwan diplomatic status, and one fourth of those are in Latin America, most in Central America.

The Caribbean islands Dominica and Grenada in recent years broke ties with Taiwan in favor of China, and Jamaica has opened an embassy in Beijing.

Washington has been keeping a close eye on China's moves into the region over concerns the communist country could undercut U.S. commercial links. China's trade with Latin America has boomed over the past decade and totals more than $40 billion, still only a tenth of U.S. trade in the region.

China offers Latin America abundant investment capital and a market for its raw products such as oil, lumber, aluminum and copper. It is unclear, however, how much China's investment would generate jobs and decrease poverty.

The region has complained that China's low-cost goods, such as textiles, shoes and electronic appliances, undercut Latin American businesses.

The Inter-American Development Bank, the world's oldest and largest regional development bank, is the leading multilateral source of development financing for Latin America and the Caribbean. Its loans to the region last year totaled $6 billion.