Friday, September 12, 2008

Cash helped China win Costa Rica’s recognition

(Costa Rica's Vice President Laura Chinchilla)By Graham Bowley
New York Times

As part of an incentive package to persuade Costa Rica to shift its diplomatic recognition from Taiwan to China last year, China used the muscle of its enormous foreign exchange reserves, agreeing to buy $300 million of Costa Rican bonds, documents released in Costa Rica this week revealed.

The deal shows that China is using its $1.8 trillion in foreign exchange reserves, the world’s largest such cache of foreign currency, to further its political goals, despite promises that it would not do so.

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