A senior Chinese official yesterday gave vent to his frustration over the fact that the Asian nation was not allowed to join the IDB along with South Korea prior to the annual meeting this year. At the same time Ma Delun, assistant governor at the People's Bank of China, stressed that China "remains fully determined to join" the Bank. The chief obstacle is the need to resolve certain "technical issues," Ma told Emerging Markets.
The central banker's disappointment contrasted sharply with the satisfaction voiced by Bank of Korea governor Seung Park who described Korea's formal admission in March to the IDB, as a "bridge" that would link his country's economy more closely with Latin America. Ma, however, said China feels "deep regret" at being left out.
IDB president Enrique Iglesias acknowledged the existence of "political difficulties" over China's application to join the IDB in an interview with Emerging Markets on Thursday but added that he wanted them to join as soon as possible. Sources say that the US is opposed to China joining while it is still receiving loans from the World Bank. Ma referred to these as "technical difficulties."
Ma claimed to be unaware of any objection from Japan (which for long was the only Asian member of the IDB). But sources said that Tokyo is not eager to see China join and donate funds to the IDB while the country is still receiving official development assistance from Japan. IDB membership also gives access to civil engineering and other public works contracts where China could compete with Japan.
The issue points up what many see as the growing rivalry among Japan, China and South Korea for economic influence in Latin America, particularly in view of the rich energy and raw material resources of the region. Governor Park underscored this point yesterday when he suggested at a seminar that Latin America could provide Korea with raw materials in return for Korean technology.
Yoshihiko Morita, deputy governor and managing director of the Japan Bank for International Cooperation – Japan's official yen loans and credits agency – told Emerging Markets that Japan could no longer offer Latin America the same kind of strong growth rates and investment that a fast-expanding China can. But he noted that the Japanese private sector is again stepping up investment in Latin America after a long downturn.
China's attraction for Latin America was highlighted by Ma, who told a seminar that trade between China and Latin America had leapt by 600% in value over the past 10 years and had grown by just under 50% to $40 billion last year alone. China imported nearly $22 billion of goods from Latin America in 2004 against some $18 billion of exports to the region, he added. Iglesias too noted that China's soaring trade with and investment in Latin America was a big reason behind a surge to 5% in the region's overall growth last year.
China will not be deterred from pressing for membership of the IDB, Ma said, while noting that Iglesias will be visiting Beijing for talks with Chinese officials on this and other issues following the annual meeting. "China remains firmly determined to join the Bank and will make every effort to complete relevant preparations at the earliest date," he said. "We believe that as the largest developing country, China's accession to the Bank will provide a new platform for economic cooperation with Latin America."
Sources familiar with the issue of China's bid to join the IDB say that another barrier is the reservation expressed by certain Central American republics that have close diplomatic or economic relations with Taiwan. Asked about this, Ma said that China would do its best to "create a win-win situation" for all the Latin American countries that might be affected by its membership of the IDB.