The new development paradigm which China has entered known as the “dual circulation,” has been seen as a great opportunity by Ecuador as it seeks to maintain the growth of its non-oil exports. Last August, and for the first time in 20 years, this South American country showed a positive trade balance with China, marking a way forward for bilateral trade during the post-pandemic era.
Ecuador’s ambassador to China Carlos Larrea and his wife Anabell Arguello in a Hunan TV program promote Ecuadorian products in September 2020. Photo courtesy of the Ecuadorian Embassy in China
China Today: Ambassador Larrea, two years have passed since Ecuador joined the Belt and Road Initiative (BRI), which, once in an interview with China Today, the president of Ecuador, Lenín Moreno, mentioned as a “project of large scope and global significance.” What do you think about Ecuador’s decision to join the grand initiative in December 2018?
Carlos Larrea: The new connectivity proposed by China can boost investment in infrastructure and the development of digital economy, which will help to establish an ecosystem that facilitates aspects like large logistics operations and cost reductions. Ecuador signed its accession to the BRI in December 2018, and then in November 2019, it became the first Latin American country to join the Asian Infrastructure Investment Bank to promote economic ties with countries in the Asia-Pacific region, with the expectation also to improve trade routes and open new markets.
However, we have to continue projecting these opportunities on a regional basis, through a sustainable and viable trade policy agenda, which includes the addition of Ecuador into initiatives such as the Pacific Alliance, the discussion of efficient trade agreements, and the passing of regulations and specific public policies aimed at such aspects as promoting a pragmatic business relationship and attracting foreign investment.
China Today: President Lenín Moreno pointed out that the BRI was a mechanism for constructing a more efficient, modern, and interconnected Latin America. In that context, what are the projects that BRI has helped made possible today in Ecuador?
Carlos Larrea: Latin America must refine its strategies together with its pragmatic vision in order to intelligently insert itself into this rearrangement of global governance in which the BRI will have a leading role.
The largest impact Chinese infrastructure projects have had in the region has probably been reflected in Ecuador, as now we have 17 projects under the BRI framework, totaling almost US $10 billion and having created more than 70,000 jobs. From this perspective, Ecuador is a country of particular importance within the framework of the BRI, which has given profound impact on its energy matrix. Therefore, we are in an advanced stage of negotiating the contents of a comprehensive plan for the implementation of the Belt and Road Initiative.
The Chinese presence is currently picking up in oil, hydropower, wind power, and thermoelectric power generation, infrastructure projects, telecommunications, and large-scale mining. In a more dimensioned and developed business scenario, such as the one now proposed by China, Ecuador seeks to increase private investment by rolling out a series of infrastructure projects worth more than US $1 billion and calls for confidence in the reforms that the government has started.
China Today: The BRI is also deployed in other axes such as the “Health Silk Road,” which has been key in the delivery of medical supplies and the organization of videoconferences on COVID-19. What would you highlight about this joint working relationship that emerged in 2020?
Carlos Larrea: Ecuador, within the framework of the comprehensive strategic partnership, has negotiated with China important donations and supplies of biosafety material that comply with all the quality standards established by the Chinese government. Aid continues to arrive in Ecuador and can be quantified by tons of input.
On June 16, 2020, the leaders of Ecuador and China held an important telephone conversation. President Xi Jinping confirmed that he will continue to strongly support Ecuador in the battle against COVID-19, will do his best to provide the necessary assistance and will explore cooperation opportunities in areas such as research and production of vaccines and medicine.
On July 23, an important meeting was held via videoconference between the foreign ministers of CELAC (Community of Latin American and Caribbean States) and the People’s Republic of China. The Ecuadorian Foreign Minister, Luis Gallegos, called for joint efforts to ensure that vaccines for COVID-19 are classified as a global health public good. He also pointed out that equitable access and fair distribution of all essential technologies, supplies, and products must be guaranteed to combat the virus, and it would be necessary to achieve greater support from international financial institutions to the region. His Chinese counterpart, Wang Yi, declared China’s decision to grant US $1 billion in credit to countries in the region for accessing vaccines and medicine.
China Today: On August 13, Ecuador and China signed a sanitary protocol to facilitate the export of frozen white shrimp and prevent the coronavirus from being transferred for example on the outer packaging. What other measures have been taken to guarantee the safety of exporting products as important to Ecuador as shrimp?
Carlos Larrea: We keep in constant contact with the Chinese authorities, in order to carry out a joint effort to guarantee the quality and safety of Ecuadorian exports.
One of the most important export industries that has implemented comprehensive biosecurity control measures in coordination with the General Administration of Customs of China is the shrimp industry. Within this framework, as you mention, on August 13, 2020, we signed a sanitary protocol to facilitate the export of frozen white shrimp of Ecuadorian origin to China, and we are presently negotiating to conclude a new document that aims to specify inspection and quarantine requirements of fishery products.
We have supported our export sector and reaffirmed our commitment to fine-tune every detail of the production chain and intensify inspections that the Ecuadorian authorities have been carrying out on packers and exporters. We will carry out all the necessary actions based on scientific evidence and technical criteria stipulated by the WHO and the Food and Agriculture Organization of the United Nations, so as to guarantee the quality of our products. I should mention that this bilateral work with China, which we have now also extended to banana farms, has been successful and many other countries have emulated it for its effectiveness.
China Today: In the fifth plenary session of the 19th Central Committee of the Communist Party of China, a development paradigm was proposed that has been called “dual circulation,” with emphasis on the domestic market. What opportunities has that opened up for Ecuadorian exports?
Carlos Larrea: It is of vital importance that non-oil exports continue to grow and diversify the exportable basket and markets. The challenge we are facing now is how to introduce them into the market for consumers to enjoy.
The “dual circulation” generates a unique conjuncture to increase China’s domestic consumption. We are talking about a market of 1.4 billion inhabitants. Both countries have two strongly complementary economies that are known for significant trade and investment exchange: China is Ecuador’s second largest trading partner, while Ecuador is China’s 10th largest trading partner among Latin American and Caribbean countries. In 2020, for the first time in 20 years, Ecuador presented a positive trade balance in the month of August. Ecuador mainly exports crude oil and premium quality products, especially shrimp, bananas, and cocoa, and imports machinery, cars, and steel from China.
