<p>Fourteen months after El Salvador became the first nation to adopt bitcoin as a legal tender, the bankruptcy of cryptocurrency exchange FTX and resulting crash in prices of other cryptocurrencies have pushed the country's leaders to announce the signing of a free trade deal with China.&nbsp;</p>

<p>El Salvador Vice President Félix Ulloa said that China had offered to buy country's $21 billion in foreign debt as part of free trade deal.</p>

<p><strong>WATCH |&nbsp;<a href="https://www.wionews.com/videos/world-business-watch-el-salvadors-bitcoin-experiment-60-million-lost-525320">World Business Watch | El Salvador's bitcoin experiment: $60 million lost</a></strong></p>

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<p>As for conventional legal tender, the country had adopted US dollar as national currency in 2001. However, Salvadoran economists say that the debt financing from China would mean a definitive break from the US and move the country closer to China, Russia and Turkey.</p>

<p><strong>China-El Salvador ties: On rise since 2018</strong></p>

<p>In 2018, El Salvador ended its relationship with Taiwan. Following the strategically significant move in Beijing's favour, the Chinese agreed to build a stadium and a library in the country of 6.5 million people. Beijing also plans to convert the port of La Union into a logistics hub.</p>

<p><strong>China-El Salvador trade deal: A compulsion for President Bukele</strong></p>

<p>El Salvador has to pay €667m ($688m) for a Eurobond amortisation by January next year. Amortisation refers to the process of reducing or paying off a debt with regular payments. President Nayib Bukele had announced in the beginning of 2022 that the country would issue bitcoin-denominated bonds to pay off national debt. The President had famously forecasted that the price of bitcoin would reach $100,000.&nbsp;</p>

<p>However, the recent crypto crash has thrown President's Bukele's hopes of crypto-based rescue of country's economy into disarray. The bitcoin price currently hovers around $16,000.</p>

<p><strong>ALSO READ |&nbsp;<a href="https://www.wionews.com/world/bitcoin-has-the-fifth-worst-collapse-in-financial-history-report-533494">Bitcoin plunges, records the fifth-biggest collapse in financial history</a></strong></p>

<p>Experts also say that the debt-financing from China doesn't come cheap.&nbsp;</p>

<p>“China acts as a payday lender, they make good money off of these deals,” Evan Ellis, a senior associate at the Washington DC based Centre for Strategic &amp; International Studies was quoted as saying by The Guardian. “But they often find a way to tie the loans to long-term commercial and strategic benefits opening the way for Chinese companies.”</p>

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Fourteen months after El Salvador became the first nation to adopt bitcoin as a legal tender, the bankruptcy of cryptocurrency exchange FTX and resulting crash in prices of other cryptocurrencies have pushed the country's leaders to announce the signing of a free trade deal with China.

Fourteen months after El Salvador became the first nation to adopt bitcoin as a legal tender, the bankruptcy of cryptocurrency exchange FTX and resulting crash in prices of other cryptocurrencies have pushed the country's leaders to announce the signing of a free trade deal with China. El Salvador Vice President Félix Ulloa said that China had offered to buy country's $21 billion in foreign debt as part of free trade deal. WATCH | World Business Watch | El Salvador's bitcoin experiment: $60 million lost × As for conventional legal tender, the country had adopted US dollar as national currency in 2001. However, Salvadoran economists say that the debt financing from China would mean a definitive break from the US and move the country closer to China, Russia and Turkey. China-El Salvador ties: On rise since 2018 In 2018, El Salvador ended its relationship with Taiwan. Following the strategically significant move in Beijing's favour, the Chinese agreed to build a stadium and a library in the country of 6.5 million people. Beijing also plans to convert the port of La Union into a logistics hub. China-El Salvador trade deal: A compulsion for President Bukele El Salvador has to pay €667m ($688m) for a Eurobond amortisation by January next year. Amortisation refers to the process of reducing or paying off a debt with regular payments. President Nayib Bukele had announced in the beginning of 2022 that the country would issue bitcoin-denominated bonds to pay off national debt. The President had famously forecasted that the price of bitcoin would reach $100,000. However, the recent crypto crash has thrown President's Bukele's hopes of crypto-based rescue of country's economy into disarray. The bitcoin price currently hovers around $16,000. ALSO READ | Bitcoin plunges, records the fifth-biggest collapse in financial history Experts also say that the debt-financing from China doesn't come cheap. “China acts as a payday lender, they make good money off of these deals,” Evan Ellis, a senior associate at the Washington DC based Centre for Strategic & International Studies was quoted as saying by The Guardian. “But they often find a way to tie the loans to long-term commercial and strategic benefits opening the way for Chinese companies.” WATCH WION LIVE HERE You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here.

Crypto crash forces El Salvador into China's economic circle of influence

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Crypto crash forces El Salvador into China's economic circle of influence