Uruguay strikes deals with China worth of USD 528 million Government officials on official visits are usually required by protocol to talk of taking bilateral relations to a higher level.

But when Xi Jinping, China’s vice president, uttered the words during a visit to Uruguay, it smacked of the latest chapter in China’s concerted campaign to boost ties with the region’s big agricultural, energy and mineral providers.

China has poured millions into the region and is actively eyeing strategic opportunities, as the FT and beyondbrics have highlighted in the past. Is it now Uruguay’s turn?

Gerardo Penadés, a senator, said the vice president had invited Uruguayan companies to set up shop in China and “mentioned the possibility” of China’s development bank establishing itself in Uruguay, according to this story in El País newspaper. China’s ICBC has already been reported to be eyeing the Argentine assets of its partner, Standard Bank.

China is Uruguay’s second biggest trading partner, after Brazil, and the Chinese appear to see Uruguay as a convenient hub for the Mercosur market. Geely International last month signed a $40m deal with Uruguay’s Nordex to produce cars, saying Uruguay has been chosen to start South American operations given its geographical location and skilled labour force. Sandwiched snugly between Brazil and Argentina, it is also an ideal entry point to those larger markets.

Uruguay has talked favourably about supporting a trade pact between Mercosur and China, though no such deal has yet been officially mooted. Negotiations on just such a deal between the bloc and the European Union have had a rocky ride and are far from over yet.

China is Uruguay’s third export market, and one that is growing strongly. Bilateral trade last year reached a record $2.63bn, a rise of nearly 70 per cent over 2009, and in the first quarter, bilateral trade has soared 47 per cent compared with the first quarter of 2010, according to China’s Xinhua news agency. Xi will sign soy, wool and dairy deals worth $520m during his visit.

Uruguay chiefly sells China soya beans and wool and imports autoparts, computer equipment and motorbikes. Chinese companies are also thought to be eyeing telecoms and port, shipping and rail projects in Uruguay, while Uruguay would like to sell agribusiness knowhow.

Oiling relations is the fact that Luis Almagro, Uruguay’s foreign minister, was his country’s ambassador to China until last year. He is looking for ways to boost trade “but of quality goods, not commodities,” he says. Watch this space.