When the soon-to-be number 1 economy in the world takes notice in a tiny little country like Ecuador, you better listen.
Chinese and Ecuadorian officials announced this week that an enormous loan of $1 billion dollars has been approved and will be given from the Chinese government to the Ecuadorian government.
The money will be used by the Ecuadorian government for governmental projects and state spending.
One stipulation was set that notes that at least 20% of the funds need to be spent on oil projects that directly benefit Chinese companies in Ecuador.
The Ecuador government is notorious world wide for simply not paying loaned money back (aka a high risk play).
Personally, I don’t think the Chinese ever expect to see their money back.
But they are certainly not stupid, I believe they are simply buying friends and leverage (aka power) for some big future plans in Ecuador.
This deal certainly was good for Ecuador, some of the funds will go directly to projects that positively impact investors, like road and bridge construction. One big plus of the current administration NO ONE can deny is that a lot of $$ has been spent in those areas and great strides have been made. Ecuador is more accessible than it was 5 years ago.
So why do you think China is investing BIG in Ecuador? Please leave your thoughts in the comments below…
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The Chinese are smart and have a huge amount US dollars tucked away. By “giving” money to countries that have commodity resources they someday can controll those commodities and trade with a new currency that will benefit them. For the Chinese, it’s all about controll of natural resoures and money. Say good bye to the US dollar! Better start working on how to bow to someone and get use to rice.
Hi Dom,
I think China is after Ecuador’s natural resources. The roads and bridges being built with the 1 billion is serving to facilitate transportation of the natural resources to the ports for shipping. I think this is unfortunate, I was hoping the deal wouldn’t go through!
I hope China’s influence will not extend further. I wouldn’t want to see more chinese products saturating the market and squeezing out Ecuadorian products.
Correa has been on the right track so far, but China is a big influence. I heard China was also encouraging Chinese people to branch out and take trips to South America, Ecuador in particular. I just hope that a balance can be maintained where the added influx of tourism will not affect the environment and cause any damage to the fragile ecosystems, especially in areas like the Galapagos Islands.
Thanks Ric and Celine, very insightful, I agree with both of you!