China, Chile ink multi-billion-USD currency swap deal

Premier Li Keqiang is welcomed by Chilean President Michelle Bachelet at the presidential palace in Santiago on May 25. The two leaders also watched a parade of honor guards.[Photo/english.gov.cn]

SANTIAGO -- China and Chile on Monday signed a host of cooperation deals including a multi-billion-US-dollar currency swap pact as the two countries move to enhance their trade and financial ties.

The latest development came after a meeting between visiting Chinese Premier Li Keqiang and Chilean President Michelle Bachelet, who jointly witnessed the signing of a series of bilateral business contracts and governmental accords in areas including politics, trade, finance, mining, agriculture, production capacity and science and technology.

China agreed to grant a quota of 50 billion yuan ($8.1 billion) to yuan qualified foreign institutional investors in the Southern American country, according to a joint declaration issued here Monday after their meeting.

The three-year currency swap deal worth 22 billion yuan ($3.5 billion) signed between the central banks of China and Chile is aimed at promoting the bilateral trade and investment, according to a statement on the website of the People's Bank of China, China's central bank.

The two countries agreed to explore the possibility of upgrading their decade-old free trade agreement (FTA) to further promote bilateral trade and investment, said the joint declaration.

"The two sides believe that it is necessary to explore the possibility of upgrading the FTA to push forward the lasting development of the bilateral trade cooperation," said the document, adding that teams from the two countries will start the work no later than August.

Analysts say that an FTA upgrading is expected to cover more products and bring more tax cuts within the current framework.

Chile was the first South American country to establish diplomatic ties and the first in the region to sign an FTA agreement with China.

Two-way trade between China and Chile reached $34.1 billion last year, four times greater than before the signing of the pact in 2005.

China is also Chile's biggest trade partner as well as largest buyer of copper products.

When meeting with the press, Li said that China had launched the Chilean branch of the China Construction Bank as an official RMB clearing bank, the first such organ in South America.