Li Keqiang arrives in Latin America with promise of US$50 billion in infrastructure investments

Premier Li Keqiang began a three-day visit to Brazil on Monday armed with a promise of some US$50 billion in infrastructure investments as his hosts finalise preparations for next year's Rio Olympics.

Li will hold talks on Tuesday with President Dilma Rousseff, for whom the investment bonanza will be a major boon as Brazil battles a fifth straight year of poor growth and spiraling inflation.

Li will then head for Rio to see some of China's investment in the city, due to host South America's first ever Olympic Games in August 2016.

Li will continue a Latin American trip designed to increase Chinese influence in the region by heading on Thursday to Colombia before visiting Peru and Chile.

His tour comes days after Beijing signed accords worth US$25 billion with Russia and US$22 billion with India.

Chinese trade with Brazil has grown exponentially over the past decade, with the Asian giant becoming Brazil's main trading partner in 2009.

Sino-Brazilian trade mushroomed from US$6.5 billion in 2003 to US$83.3 billion in 2012, although China is just the 12th largest investor in Brazil.

"The trade agenda is very important, but at the moment the investment agenda is to a degree more important still," Trade Minister Armando Monteiro said.

Jose Graca Lima, head of Asian affairs at the Brazilian foreign ministry, said that a "second generation" of Chinese investment was under way.

The first involved trade in raw materials and the focus now is on heavy industry and infrastructure.

Brazilian growth rose prior to the current slowdown amid high Chinese commodity demand that has since dropped off.

But Brazilian financial daily Valor quoted Chinese ambassador and former vice-foreign affairs minister Li Jinzhang as saying that the "overdependence on commodity trade could not continue and needed to be transformed" on a wider scale.

Despite that comment, Li Keqiang earlier told Valor in an interview that, despite commodity price volatility, "healthy Chinese demand for these products will hold up long term".

One major mooted long-term infrastructure project is a proposed Chinese-financed US$10 billion rail link stretching some 3,500 km from the key Brazilian port of Santos to the Peruvian Pacific port of Ilo via Amazonia.

Brazil has seen its reputation hit by a huge graft scandal at oil giant Petrobras, but the firm received a boost earlier this year when it signed a US$3.5 billion financing deal with the China Investment Bank.

"China is fulfilling a desperately-needed role of investor in Latin America and the Caribbean. Brazil desperately needs investment," said Charles Tang, chairman of the Rio-based Brazil-China Chamber of Commerce and Industry.

"The US back yard is growing a Chinese back garden, not just in Brazil but all over Latin America."

"We believe in the fundamentals of Brazil," Tang said.

Trade Minister Monteiro said Brazil hoped China would see it as an important production platform for industrial goods in the region and beyond, using Brazil as a fulcrum for serving wider markets.

"Extending exports to China is something we want, but I do not know if we shall be able obtain significant results short term," Monteiro said.

"It would be a better strategy for China to produce in Brazil a range of goods that today we import and China exports, such as electronics."

Li's visit will feature trade delegations some 130-strong from both countries during his Brasilia stay.

In Rio, he will attend the unveiling of Chinese-made trains for a new subway line to bolster public transport in time for the Olympics.

 

Source: South China Morning Post

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