China deepens level of involvement in Brazil

Brazil’s President Dilma Rousseff, left, and China’s Premier Li Keqiang pose for a photo at the Planalto presidential palace, in Brasilia, Brazil

The visit by the Chinese Prime Minister Li Keqiang, to Brazil last week, nearly a year after one by President Xi Jinping, deepened the level of engagement between the two economies as well as with Latin American countries that historically have been closer to the United States of America.
During the visit, with a delegation of 150 businesspeople, Li Keqiang and President Dilma Rousseff signed 35 deals worth USD53 billion, including agreements for export of meat for human consumption, energy and infrastructure involving major companies such as Petrobras, Vale and Embraer.
The main investment announced is a railway between the Midwest region of Brazil and the Pacific, crossing Peru, work on which would facilitate the export of Brazilian products to China, now carried out through ports on the Atlantic Ocean.
A USD50 billion fund will also be created to finance infrastructure projects in Brazil, run by Brazilian bank Caixa Econômica and the Industrial and Commercial Bank of China.
Oliver Stuenkel, a professor of international relations at the Getúlio Vargas Foundation (FGV) in São Paulo, said the visit raises the level of what is currently a commercial relationship, in which the Chinese buy mostly raw materials from Latin American countries and sell industrial products, with a new engagement that supports the development of these economies.
“These are actions that will make China a political and economic player in the region for many decades and then it will be impossible to cut it out of the equation,” said the analyst, cited by BBC Brazil.
Brazil, the largest Latin American economy and China’s largest trading partner worldwide, with total trade of nearly US$78 billion in 2014 in Brazil’s favor, was the high point of an eight-day tour of the region that also took in Colombia, Peru and Chile. In January the Chinese President announced that Beijing would invest USD250 billion in Latin America in the next decade.
The visit comes at a time when, as an alternative to institutions linked to the United States such as the International Monetary Fund, China is expected to increase its supply of credit, especially with the launch of the New Development Bank (NBD), which brings together China and its BRICS (Brazil, India, Russia and South Africa) partners, as well as the newly created Asian Development Bank for Infrastructure and Investment (Baii).
In Central America the construction of the Nicaragua Canal, considered the world’s largest engineering project, is already underway funded by a Chinese businessman. This new canal will be an alternative to the Panama Canal in linking the Atlantic and Pacific oceans.
Jaseon Marczak, of the US Atlantic Council, says it is “important for Latin America to diversify its economy and develop, and Chinese investments can help achieve this goal.”
Among Brazilian analysts who welcomed the results of the visit, Marcelo Zero said on Brazilian website 247 it was, “a great goal for Brazil’s foreign policy and a concrete and substantial expression of confidence in the country.”
With oil company Petrobrás alone three cooperation agreements were signed in the amount of at least USD7 billion, involving the China Development Bank and the Export-Import Bank (ExIm) of China.
Other agreements provide for construction of the metallurgical complex of Maranhão, financing for the purchase of 40 aircraft from Embraer by China, cooperation in nuclear technology and creation of the automobile hub of Jacarei, in São Paulo as well as another related to funding for building 14 ships of 400,000 tons each to transport iron ore.
The agreements also extend to science, with the signing of a memorandum of understanding for the development and launch of the sixth Sino-Brazilian satellite, CBERS 4a, in 2018. MDT/Macauhub