China Agrees to US$53 Billion Investment in Brazil

By Jay Forte, Contributing Reporter

RIO DE JANEIRO, BRAZIL – The government announced that on Tuesday (May 19th), during the official visit of Chinese Prime Minister Li Keqiang, investment agreements worth US$53.3 billion will be made in the areas of agribusiness, auto parts, equipment transport, energy, railways, highways, airports, ports, storage and services.

China is already Brazil’s most important trading partner, worth US$6.5 billion in 2003 and growing to as much as US$77 billion by the end of 2011. Chinese investments in Brazil have also leaped from US$292 million in 2009 to US$20 billion in 2010, an interdependence that has been accelerated by Brazil’s economic growth.

The Political Secretary-General of the Ministry of Foreign Affairs, Ambassador José Alfredo Graça Lima, said the amount includes some projects already underway and, most, in the planning stages. “This figure of US$53.3 billion, very close to US$50 billion [is going towards] new projects,” said Graça Lima.

Among the most anticipated announcements for the visit, are the opening of the China market of beef from Brazil. The ban has been in place since 2012 when a case of mad cow disease was reported in the state of Parana. Brazil started to export beef to China in 2009 and by December 2012, before the embargo was announced, the annual volume had reached US$37.7 million.

Also the completion of the sale and delivery of the first batch of the Brazilian aerospace company Embraer aircraft, a total of forty, to the Tianjin Chinese Airlines, both commitments were made during the state visit of the President Xi Jinping to Brasilia in July 2014.

In 2011 Embraer was under investigation by the United States Securities and Exchange Commission (SEC) on suspicion of violating the U.S. Foreign Corrupt Practices Act (FCPA). At the time Embraer, the fourth largest producer of aircraft in the world, announced it was undertaking an internal investigation into its operations.

In relation to investment projects, an example of which are already in development is the controversial hydroelectric plant of Belo Monte, and the connection to consumer power centers in the South and Southeast.

Among those who are not yet running, is the construction of Railroad Transoceanic, in partnership with China and Peru, and which should facilitate the flow of grains, among other products, from the Midwest to the Pacific Ocean.

“This trilateral cooperation to build a transoceanic railway is an emblematic example and will allow the creation of an export corridor for grain from the Midwest and also for animal protein,” said the ambassador.

Asked about the motives of China to provide such a large amount of resources in Brazil and the risk of the growing influence of the Asian country in South America, Graça Lima said that he sees no “hidden agenda” in greater diversification of Chinese investment in the country and the region.

Li Keqiang is expected to reach Brasília late afternoon of Monday (May 18th) and will be received by President Dilma Rousseff at Planalto Palace on Tuesday morning. By the end of the morning they are scheduled for the signing ceremony and the press statement.