* Beijing likely to support extra capital for IADB
Beijing will also probably buy bonds issued by the Inter-American Development Bank (IADB), Huang Zhilong from the Institute of Latin America, a think-tank that is part of the Chinese Academy of Social Sciences, said in an interview.
Across Latin America, governments are cutting budgets and seeking financing to ward off the squeeze from sliding raw material prices and dwindling exports. Huang said China would support Latin governments' efforts to boost economic growth.
Buying more Latin American bonds would fit into Beijing's stated strategy of diversifying its $2 trillion foreign exchange reserve portfolio and forging closer political ties with countries that are big exporters of commodities to China.
"But Latin American bonds are known for their high risk, so the actual purchase volume wouldn't be huge. China's foreign exchange authorities will be very cautious," Huang said.
To help sustain the flow of goods despite a dearth of trade finance, Zhou signed a 70 billion yuan currency swap with Argentina on Sunday so Buenos Aires can pay for Chinese imports in yuan instead of hard-to-come-by dollars. [ID:nPEK111298]
It is China's first bilateral currency swap with Latin America, but Huang said the yuan may come to be used more widely to settle trade with the region; China's oil imports from Venezuela, for example, could theoretically be settled in yuan.
"For instance, despite all the talk about the IADB, China only has a 0.004 percent stake in the organisation," he noted.