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Bank launch highlight of Xi’s S American tour

BEIJING — Chinese President Xi Jinping left Beijing yesterday for his visit to South America, which will include attendance of a summit of leading emerging market nations to launch a development bank that will advance financial cooperation between Brazil, China, India, Russia and South Africa, collectively known as the BRICS nations.

BEIJING — Chinese President Xi Jinping left Beijing yesterday for his visit to South America, which will include attendance of a summit of leading emerging market nations to launch a development bank that will advance financial cooperation between Brazil, China, India, Russia and South Africa, collectively known as the BRICS nations.

Mr Xi’s trip is expected to begin tomorrow, the official Xinhua news agency reported. His delegation also includes Mr Yang Jiechi, who as State Councillor oversees foreign policy.

Mr Xi was also expected to stop off in Greece on his way to South America yesterday, said Xinhua. The stopover on the Greek island of Rhodes — the second high-level visit to the southern European country in a month — would also see him meeting Greece’s President and Prime Minister.

Chinese Premier Li Keqiang visited Greece last month, where he signalled China would buy bonds when Greece issues debt again, in a show of support for a financially-stricken nation that hopes to become a gateway into Europe for Chinese products.

Bailed out twice after nearly going bankrupt, Greece is hoping Chinese investment will help spur its battered economy to growth again. Beijing, in turn, sees Greece’s strategic location as a portal into both Europe and Africa for the distribution of Chinese products.

During his visit to Brazil, Mr Xi will meet with President Dilma Rousseff as well as other leaders from India, Russia and South Africa to sign off on the New Development Bank and Contingent Reserve Arrangement — an emergency reserves fund — which will cap two years of tough negotiations among the countries.

The signing at the summit tomorrow is seen as a major step for the diverse group, which is known more for its anti-Western rhetoric than coordinated action.

Fears that China, whose economy is larger than that of all the other BRICS put together, could hijack the bank to serve its own interests had cast doubt on its future. Other emerging nations such as Turkey, Mexico, Indonesia and Nigeria could also join as partners at a later date.

The BRICS nations will pool an initial US$50 billion (S$62 billion) in the bank, with each country contributing an equal amount, and seek to gain international clout by offering developing nations alternative financing to the World Bank and International Monetary Fund, long dominated by the United States and Europe.

Many of the bank’s rules of operations, such as future investment in private projects, will be decided after its formal creation at the summit in the Brazilian city of Fortaleza. The bank is expected to make its first loan in 2016.

BRICS leaders will also decide tomorrow which country will hold the first five-year presidency of the bank and whether it will be headquartered in Shanghai or New Delhi.

The tour — which will include state visits to Brazil, Argentina, Venezuela and Cuba — will be Mr Xi’s second to Latin America since becoming President last year.

His tour follows one made by Chinese Foreign Minister Wang Yi in April where he reinforced China’s interest to buy more oil from the region and invest in its infrastructure.

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