Sunday 19 Aug 2018 | 10:01 | SYDNEY
Sunday 19 Aug 2018 | 10:01 | SYDNEY

China: Buying Costa Rican bonds with alacrity


Fergus Hanson


18 September 2008 14:39

In 2007, Costa Rica switched its diplomatic recognition from Taiwan to China,  but only last week did Costa Rica's constitutional court force the Government to release details of the deal with China. It shows that, in return for switching diplomatic recognition, China agreed to buy US$300 million Costa Rican bonds using its US$1.8 trillion in foreign exchange reserves, as well as provide US$130 million in aid and other incentives. The deal would see China earn 2% on at least the first US$150 million worth of bonds.

With the recent warming in cross-Strait relations, and Taiwanese calls for a truce in diplomatic competition, it will be interesting to see whether China continues to offer such lavish packages to Taiwan's 23 remaining allies.