Panama, China ink 19 cooperation deals

Panama and China are strengthening commercial and diplomatic relations.

Panama has opened its first embassy in the country and, with China, recently signed 19 cooperation deals, covering areas such as infrastructure, agriculture, electric power, tourism, financing and trade.

The agreements were inked during a visit by Panama's President Juan Carlos Varela to the Asian nation, where he met his Chinese counterpart Xi Jingping.

Among the deals was one to conduct pre-feasibility studies for a passenger and cargo railway that would link the provinces of Panamá and Chiriquí.

Authorities in both countries are also due to start examining the feasability of a free trade deal.

In addition, from March, airline Air China is scheduled to start offering direct flights to Panama.

In terms of financing, Panama's foreign ministry said one agreement concerns the creation of a "collaboration platform" between the ministry and the China Development Bank. This, the ministry said in a statement, will establish the foundations for the "promotion and financing" of major infrastructure projects planned by the Panamanian government, among them bridges, power stations, highways, airports and logistics parks.

As part of this deal, China Development Bank is due to establish offices in the country. And as part of an MOU, the ministry and China Exim Bank will "formalize a cooperation mechanism" and the lender will establish regional offices.

Under a related agreement, China Exim Bank will provide financing facilities to Panamanian state power transmission company Etesa, to be used to hire Chinese contractors. A separate project-financing deal involving Etesa, which could lead to the awarding of long-term loans, was struck with Bank of China.

An MOU under which Panama joins China's multibillion-dollar Silk Road trade corridor project was also inked.

Chinese authorities say they will ultimately lend as much as US$8tn for infrastructure in 68 countries as part of the project, the World Economic Forum (WEF) said in June.

"The aim of the US$900bn scheme, as China explained recently, is to kindle a 'new era of globalization,' a golden age of commerce that will benefit all," WEF said.