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China To Invest $50 Billion In Brazil Infrastructure, Primarily To Construct Brazil-Peru Rail Link

China, BrazilChina is set to invest $50 billion in new infrastructure projects across Brazil in a move that could be a big boost to bilateral ties.

“There are about $50 billion in new projects. We need to wait till the end of the visit to specify the [exact] figures and what kind of projects it will be,” Brazil’s Foreign Minister Jose Alfredo Grasa Lima told reporters on Thursday.

According to reports, a deal is set to be signed by banks from both countries when Chinese Premier Li Keqiang visits Brazil this week to hold talks with Brazilian President Dilma Rousseff slated for May 19.

Caixa Econômica Federal, Brazil’s top mortgage lender, and the Industrial and Commercial Bank of China (ICBC) will create a $50 billion fund for Brazilian infrastructure investments, according to a report from Reuters.

The infrastructure fund will be financed entirely by ICBC, however both banks will need to set up regulatory framework to decide on the projects, Reuters reports, adding that the plan will be formally announced during Li’s trip to Brazil this week.

The primary function of the fund is said to finance the construction of a railway link that spans the continent from Brazil’s Atlantic coast to the Pacific coast of Peru in an effort to reduce the cost of exports to China.

Why? Soy, oil, and iron ore top a list of products that China imports from the Latin American nation, making it China’s largest trade partner. The new rail link will allow Brazilian ore and soya to be shipped from Pacific ports in Peru to Asia, thus bypassing the Panama Canal.

The fund will also finance projects in energy and agricultural sectors, in addition to a joint-venture to produce steel in Brazil.

In 2014, Chinese loans to Latin America reached $22.1 billion, surpassing the combined lending of long-established institutions like the World Bank and the Inter-American Development Bank, according to estimates from the Inter-American Dialogue.

Since 2005, China has provided more than $119 billion in loan commitments to Latin American countries, the Inter-American Dialogue estimates.

China Investment in Latin America


Last month, the China Development Bank opened a $3.5 billion line of credit for Petrobras, as the Brazilian state-owned oil company struggles amid a massive corruption investigation.

In January, Chinese President Xi Jinping pledged to invest $250 billion in Latin America over the next decade in a push to boost resource-hungry China’s influence in a region that has long been dominated by the United States.

Over the past 12 years, bilateral trade between the two countries has increased tenfold — from $8.3 billion in 2001 to $83.3 billion in 2013.


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