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Wave of investments precedes first visit to Brazil by President of China

A wave of large Chinese investments is preceding the long-awaited first visit to Brazil by the President of China, Xi Jinping, which is expected to seal a number of important commitments between the two governments.

The President’s five days in Brazil are due to begin on 13 July when Xi Jinping will watch the Final of the World Cup in Rio de Janeiro next to Brazilian President Dilma Rousseff, but the high point of the State Visit will be the BRICS (Brazil, Russia, India, China and South Africa) summit in Fortaleza, on 17 and 18 July, according to Brazilian press reports.

In Brasilia, on 17 July, political commitments are due to be signed to invest in improving Brazilian soy and ore logistics and for China to use its sovereign funds to support its companies in Brazil, according to Brazilian newspaper Estado de São Paulo.

The Chinese government wants to ensure that Chinese companies are involved in port and rail projects under tender in Brazil and, particularly, those that are part of the South American integration project and that will allow for transport of ore and agricultural products to ports in the North (close to the Panama canal) and neighbouring countries on the Pacific.

Taking part in these infrastructure projects also makes it possible to improve exports of Chinese products to the region.

China is also available to set up new development agencies in Brazil, using sovereign funds, by boosting the activities of the Development Bank of China in funding medium-sized companies and state-owned provincial companies, also involving Brazilian social and development bank BNDES.

China’s Foreign Trade Minister, Wang Yi, said in April, after a meeting with Brazil’s Foreign Affairs Minister, Luiz Alberto Figueiredo, that Xi Jinping’s official visit would be a “new stage” in the relationship between the two countries, 40 years after diplomatic relations were established.

China, Brazil and the Community of Latin American States (Celac) are due to hold a meeting of leaders and at that meeting plans to establish a China-Celac Forum. The BRICS summit is also expected to create a BRICS development bank.

In Brasilia Wang Yi said there were plans to set up a joint regional strategic plan and an investment fund for development of the region, noting that of the more than US$90 billion in Chinese foreign investment in 2013, just US$16.5 billion was channelled into Latin America and the Caribbean.

Amongst the main investment is one by China’s BBCA Group, of around US$320 million in a maize processing factory, mainly for export, but the most visible investments have been in factories that produce vehicles that are already a common sight on Brazil’s streets.

In the first four months of the year Brazil’s trade with China totalled US$25.921 billion (12.69 percent more year on year). Of the total US$10.62 billion was in Chinese exports to Brazil and the remaining US$15.291 billion were Brazilian sales to China. (macauhub/BR/CN)

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